Latest Quarterly Snapshot

Houston's retail market remained balanced in 1Q25, with the vacancy rate inching up to 5.4%, just above the five-year average. This slight increase reflects a market settling into a stable rhythm, with supply and demand largely in sync. While 3.3 million SF of retail space is currently under development, about 40% remains available for lease. Still, brokers report that prime, first-generation space is quickly claimed before hitting the open market, offering little relief for tenants seeking new, high-quality options.

Houston's industrial market remained resilient in the 1Q25, balancing a continued influx of new construction with sustained demand driven by long-term fundamentals such as port activity, population growth, and supply chain expansion. Leasing activity totaled approximately 6.4 million SF, a slight decline from the year prior, marking a return to more normalized levels following several years of exceptional performance. Leading demand came from logistics providers, e-commerce users, and energy-related firms. Net absorption for the quarter reached 1.3 million SF, indicating a steady but more deliberate pace of occupancy. While the market has cooled from its recent highs, tenant interest remains solid, particularly in well-positioned submarkets.

The Houston office market is progressing through a gradual recovery in early 2025, as hybrid work models persist, and companies continue to reassess their long-term space requirements. Leasing activity remains moderate, but several submarkets are beginning to stabilize, driven by a sustained demand for Class A space and a continued flight to quality. Furthermore, the overall vacancy rate remained at 19.8%, highlighting the continued challenge of backfilling large blocks of space left vacant in recent years. While absorption is expected to remain flat or slightly positive in the near term, steady population and employment growth in Houston's suburbs, combined with targeted office redevelopment offers encouraging signs of future momentum.