Houston office activity slowly recovering

Office market fundamentals are slowly improving as the premium segment of the market continues to lead the recovery, according to Avison Young’s Q2 2024 Office Market Report for Houston. The trophy office segment performed well, with 778,000 square feet (sq. ft.) of positive absorption recorded during the first half of 2024, demonstrating strong demand for high-quality space as tenants prioritize modern amenities and functionality.

Leasing activity in the second quarter of 2024 totaled 2.7 million square feet, which remains 36% below the five-year leasing average prior to the Covid-19 pandemic. The slowdown in leasing activity was likely impacted by a more challenging debt and liquidity environment for building owners, preventing larger transactions from proceeding as easily with their lenders, and the shift to hybrid and remote work.

Finally, the report shows that energy-related companies continue to dominate leasing activity, accounting for 30.6% of leasing activity to date.