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Market Report

Houston Office Market Report

2024 Investment Forecast

Major Medical Office Projects Enlarge Pipeline,
Demonstrating Metro’s Ongoing Diversification

Supply-side pressures less disruptive than they appear. Houston’s office stock is scheduled to expand by over 3 million square feet for the third time in four years. This level of construction without context would be a reason for concern amid softer post-pandemic office utilization. Digging deeper into the pipeline, however, all but three of the 15 most sizable projects are delivering fully pre-leased, mitigating the impact on vacancy this year. The majority of these larger-scale developments are medical office campuses, similar to last year but with a caveat. In 2023, these healthcare-focused projects were primarily located in Houston’s chief industry hub — the Texas Medical Center. This year, the medical office pipeline has fanned out, with projects opening in FM 1960, the Woodlands, Katy Freeway and NASA-Clear Lake. While this reflects the metro’s diversification, Houston’s foundational economic keystones remain in place. Energy producers and engineering firms have a substantial slate of planned 2024 move-ins along the Katy Freeway, helping Houston notch the strongest net absorption among Texas’ major markets this year. Nonetheless, downsizing and consolidation will nudge up marketwide vacancy.
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