Houston Office Market Report

Three major submarkets are outperforming. Houston’s positive net absorption streak extended to three quarters through June 2023, with total occupied stock growing by 2.7 million square feet across those nine months. Roughly two-thirds of that net absorption took place in just a trio of Houston’s 37 submarkets — Katy Freeway, West Loop and the Woodlands. Each of these three areas registered annual vacancy declines of at least 60 basis points in June 2023 as a result, with Katy Freeway’s 270-basis-point reduction leading the charge, and the Woodlands’ 16.1 percent rate ranking as the lowest of that bunch. Strength in these areas is particularly important for metro fundamentals, as they are all among the top four largest by inventory. Nonetheless, the one location absent from this trend is Houston’s urban core, which holds the most supply in the market and continues to face distinct headwinds.