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Q1 2025 | Houston Office Market Report
eTradeWire News/10803668
HOUSTON - eTradeWire -- Houston's office market in Q1 showed signs of stabilization, with a much smaller negative net absorption of 96,726 square feet compared to the significant give-back of space that occurred in the previous quarter.
The continued flight-to-quality favored Class A and newer buildings — which saw positive absorption — while construction remained limited.
Danny Rice | President
Key Takeaways
Houston Highlights
Houston's office market continues to face headwinds in early 2025 as tenants maintain a strong preference for higher-quality space, driving the ongoing flight-to-quality trend. Despite recording a negative net absorption of 96,726 SF, the figure marks a substantial improvement from the previous quarter's negative 838,462 SF and a similar year-over-year result. Tenants clearly preferred Class A properties, which posted positive net absorption of 55,645 SF. The overall vacancy rate held steady at a historically high 27.9%, unchanged from the prior quarter but up 50 basis points from Q1 2024. Vacancy rates improved significantly for newer properties, underscoring the market's preference for modern, high-quality space. Quarterly leasing activity decreased to 2.4M SF – representing 31.8% of the previous quarter's volume and 34.5% of the same period last year. Construction activity remains limited, with just three buildings totaling 597,413 SF underway, 80.1% of which is preleased. No new projects were delivered or initiated during the first quarter. Class A asking rents decreased to $33.13 PSF, down from $35.03 PSF year over year, while overall gross asking rents fell to $28.92 PSF from $29.90 PSF during the same period last year.
More on eTradeWire News
Read the full report: colliers.com/houstonresearch
The continued flight-to-quality favored Class A and newer buildings — which saw positive absorption — while construction remained limited.
Danny Rice | President
Key Takeaways
- Flight to quality persists
- Net absorption losses slow
- Construction remains limited
- More smaller deals recorded
Houston Highlights
Houston's office market continues to face headwinds in early 2025 as tenants maintain a strong preference for higher-quality space, driving the ongoing flight-to-quality trend. Despite recording a negative net absorption of 96,726 SF, the figure marks a substantial improvement from the previous quarter's negative 838,462 SF and a similar year-over-year result. Tenants clearly preferred Class A properties, which posted positive net absorption of 55,645 SF. The overall vacancy rate held steady at a historically high 27.9%, unchanged from the prior quarter but up 50 basis points from Q1 2024. Vacancy rates improved significantly for newer properties, underscoring the market's preference for modern, high-quality space. Quarterly leasing activity decreased to 2.4M SF – representing 31.8% of the previous quarter's volume and 34.5% of the same period last year. Construction activity remains limited, with just three buildings totaling 597,413 SF underway, 80.1% of which is preleased. No new projects were delivered or initiated during the first quarter. Class A asking rents decreased to $33.13 PSF, down from $35.03 PSF year over year, while overall gross asking rents fell to $28.92 PSF from $29.90 PSF during the same period last year.
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Read the full report: colliers.com/houstonresearch
Source: Colliers Houston
Filed Under: Real Estate
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