United States: Houston office market - H1 2026
Direct vacancy ticked up 30 basis points year-over-year to 21.4%. Pipeline nears 100% pre-leased with escalating demand for prime space.
Pipeline Nears 100% Pre-Leased With Escalating Demand for Prime Space
Houston Office market registered 265,000 SF of net gains in the second quarter, driven by tenants signing large leases for prime space in key submarkets. The Woodlands saw the greatest share of space gains, taking down 174,000 SF with help of NAES Corporation’s 28,000 SF lease at Hughes Landing and new leases signed at 10000 Energy Dr including Quanta Infrastructure Solutions Group leasing 31,000 SF and Enerflex signing for 12,000 SF. Following close behind was CBD with 147,000 SF in net gains after 90,000 SF was taken down at 1100 Louisiana. New construction continues to come online largely pre-leased including the metro’s newest office building, The RO, which delivered 151,000 SF of new product in Greenway Plaza fully leased. As it stands now, Houston’s office construction pipeline now totals 331,000 SF.
Vacancy on the Rise
Direct vacancy ticked up 10 basis points quarter-over-quarter and 30 basis points year-over-year to 21.4%. Overall availability ticked up 10 basis points quarter-over-quarter and dropped 20 basis points year-over-year to 26.6%.Prime, Class A product built since 2015 saw 334,000 SF of space gain over the quarter and 848K SF since this time last year with direct vacancy dropping 60 basis points over the quarter and 80 basis points year-over-year to 4.2%. Full-service asking rents ticked up slightly by $0.27 PSF/YR over the quarter now averaging $34.71 PSF/YR, increasing by 60 basis points year-over-year.
Private, Institutional Investors Post Positive Investment Activity
Office buyers completed 24 property transactions during the first half of 2026 with an average sales price of $149 PSF, an increase of $29 PSF from first half of 2025, according to Real Capital Analytics. International, institutional, private investors and REITs were all active participants in property trades during first half of 2026. Institutional and private investors finished the first half of the year with net positive investment activity, International investors and REITs were net sellers for the first six months of 2026 with international investors disposing just under $1.2 billion in net holdings during the year. REITs net selloff was nowhere near as drastic, though, and disposed of a net $66.0 million in assets by the close of first half of 2026.