Houston Office Market Report | Q4 2023

HOUSTON - Jan. 18, 2024 - PRLog -- "Reflecting back on 2023, the Houston office market experienced a rollercoaster of a year, with absorption being challenged throughout the year but finishing overall positive for 2023 after a strong 4th quarter.

As the market and overall industry continue to adjust to the changes brought on heavily by the pandemic, observable trends have taken shape. Tenant migration and overall demand have narrowed in on the western and northern corridors of Houston, specifically in the Katy Freeway, Westchase and The Woodlands submarkets.

As we progress into 2024, overall economic conditions, especially the jobs market that directly corelates to office space, have remained resilient, fending off potential recessionary limitations. Interest rate hikes have paused providing the investment market better clarity of the road ahead. Although many unknowns remain, the outlook for 2024 is of cautious optimism for the Houston office market after a strong finish to 2023."

Danny Rice | President

Key Takeaways

• Office vacancy rate nudges down
• Sublease space continues decline
• Net absorption positive for Q4 and year
• Leasing volume decreases

Houston Highlights

Houston's office market posted positive net absorption of 753,312 SF during the fourth quarter, reversing the negative totals from the third quarter and ending 2023 with a positive 301,014 SF. The overall average vacancy rate decreased marginally to 22.5% from 22.6% the previous quarter. Leasing activity declined to 1.8m SF for fourth quarter to end the year with 9.8m SF, representing a 27.9% drop from 2022. The Katy Freeway submarket accounted for 29% of that annual total while three other submarkets including The Woodlands, West Loop and CBD leased more than 1m SF each. The under construction pipeline remains limited at 721,503 SF, while four buildings totaling 515,694 SF were delivered during the fourth quarter. Houston's overall average gross rental rates nudged up to $30.11 from the previous quarter but declined from the same period last year. Houston's Class A average rental rate decreased marginally to $35.90 per square foot from $35.96 in Q3 2023.

See the full report here: https://www.colliers.com/en/research/houston/q4-2023-hous...