HOUSTON - TelAve -- "Houston's office market turned a corner in Q2, posting its first quarterly net absorption gain in a year and pushing year-to-date totals into positive territory.

Although leasing volume softened, construction remains limited and sublease levels have stabilized suggesting an improving market heading into the second half of 2025."

Danny Rice | President

Key Takeaways

• Net absorption positive
• Strong activity in Class A
• Flight to quality continues
• Limited construction

Houston Highlights

Houston's office market reported positive absorption for the first time in a year, with 348,414 SF of positive net absorption during the second quarter to finish mid-year 2025 with a positive 286,575 SF. Tenants are continuing the flight-to-quality trend, with Class A properties posting 313,363 SF of net absorption. Leasing volume has slowed from last year, with quarterly activity decreased to 2.2M SF — representing 17.9% of the previous quarter's volume and 47.8% of the same period last year. The overall vacancy rate improved to 27.4% after reporting a record-high 27.9% for the last two quarters and slightly below the 27.5% from a year ago. Construction activity remains limited, although a new building broke ground during the second quarter in the Allen Parkway/Midtown submarket, becoming the fourth building underway in the Houston area. Class A average asking rents decreased to $33.20 PSF, down from last quarter and from $35.54 PSF year over year, while overall gross asking rents reported a marginal increase to $29.00 PSF from last quarter but a decrease from the same period last year.

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Read the full report at colliers.com/houstonresearch