Colliers: Houston office vacancy rate stabilizes, net absorption still negative

HOUSTON – Although the local office market continues to experience net absorption losses, the second quarter saw a negative 262,040 sf—an improvement from the first quarter, according to Colliers’ 2Q2024 office market report.

The overall average vacancy rate remained steady at 26.9 percent for the second consecutive quarter, up from 26 percent year-over-year (YOY).

Leasing activity increased by 3.1 percent from the previous quarter to 2.6 million sf, a 34.8 percent YOY drop. The Katy Freeway West/Energy Corridor submarket accounted for 19 percent of the second quarter’s total leasing activity, The Woodlands represented 14.3 percent, and the CBD 8.3 percent, making up 41.6 percent of the total.

The construction pipeline remains limited with only two buildings totaling 357,117 sf under construction, with one small mass timber project in the Northwest. No properties were completed during the second quarter.

The city’s overall average gross rental rates increased to $30.45 PSF from the previous quarter, down slightly from the same period last year. The Class A average rental rate increased marginally to $35.83 PSF from both the previous quarter and YOY.