Houston Office Market
Average annual full-service asking rental rates dropped to $30.05/SF, reflecting a 1.3% decrease year over year. The current average asking rent is a 1.93% decrease from the all-time high of $30.64/SF reported in the fourth quarter of 2023. Overall vacancy rates fell slightly to 25.2% in the third quarter of 2024, down 10 basis points quarter over quarter, but increasing by 30 basis points year over year. Vacancy is trending toward stabilization as the construction pipeline empties and new deliveries slow. Positive absorption in the second and third quarters of 2024 has counteracted the 991,864 SF negative absorption in the first quarter. Year to date, absorption totals -3,751 SF, with positive absorption of 466,840 SF in the third quarter. Total leasing activity closed the quarter at 2.5 MSF, well below the long-term third-quarter average of 4.4 MSF. The average lease size was 3,542 SF, a decrease of 4.4% quarter over quarter and a decrease of 4.1% year over year. Deal volume is down 18.7% year over year as occupiers hold out for a more favorable financing environment and await election results.
Download Houston Office Market Report 3Q24Houston Industrial Market
The market realized 5.7 MSF of positive absorption in the third quarter of 2024, an increase of 26.5% quarter over quarter as demand outpaced deliveries. Overall rental rates grew 4.5% year over year to $9.45/SF, reaching a new all-time high. Construction deliveries fell to 2.8 SF in the third quarter of 2024, while the pipeline grew to 14.4 MSF under construction. Demand reversed course as absorption outpaced new supply, leading vacancy rates to contract by 40 basis points quarter over quarter to 7.1%.
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