United States: Houston office market - 2025
Houston’s office leasing witnessed a net loss of over 639K SF this quarter after a lengthy list of leases expired and relocating tenants vacated large spaces as expected.
Planned Move-Outs Pull Key Submarkets into the Red
Houston’s office leasing witnessed a net loss of over 639K SF this quarter after a lengthy list of leases expired and relocating tenants vacated large spaces as expected. Most notably, Marathon Oil vacated over 443K SF at 990 Town and Country in Katy Fwy/Energy Corridor after being acquired by ConocoPhillips in late-2024, Apache returned 160K SF of space at Three Post Oak Central in West Loop, and Tetra Technologies vacated nearly 103K SF at 24955 Interstate 45 N after moving their operations to 10000 Energy Dr in The Woodlands last quarter.
As a result, these three major submarkets saw the greatest net losses quarter-over-quarter: Katy Fwy/Energy Corridor (350K SF), West Loop (175K SF), and The Woodlands (78K SF).
Vacancy on the Rise
Direct vacancy rose to 21.5% as numerous spaces were vacated after lease terms expired including Lennar vacating 69K SF at 681 Greens Pky in North Houston District, Envoy Mortgage vacating nearly 40K Sf at 10496 Katy Fwy in Katy Fwy/Energy Corridor, and Terra Energy Partners vacating 36K SF at 3050 Post Oak Blvd in West Loop.
The tally of planned move outs drove Houston’s overall office sector witnessing a net loss of nearly 640K SF during the quarter and 1.1M SF in the calendar year. Despite a slowdown in leasing, mid-to large-size tenants still signed leases this quarter including Fervo Energy and BNY Mellon, both taking space at 811 Main for 53K SF and 27K SF, respectively.
Private Investors End 2025 with Net Portfolio Gains
Office buyers completed 46 property transactions during 2025 with an average sales price of $119 PSF, a decrease of $9 PSF from the third quarter of 2025 and a decrease of $1 year-over-year, according to Real Capital Analytics.
International, institutional, private investors and REITs were all active participants in property trades during 2025. Private investors were the only group to finish the year with net positive investment activity, which totaled $1.4 billion in acquisitions and ended the year with $1.0 billion in net holdings.
Institutional investors, international investors, and REITs were all net sellers during the year with intuitions disposing of $734.5 million in net holdings during the year.