Houston Office Market Report | Q2 2026
Market Trends
- Net absorption saw an increase in 2Q 2026, boasting positive net absorption of 425,021 SF. This increase offset the negative absorption seen in the prior quarter, resulting in positive net absorption of 208,782 for the first half of 2026.
- Katy Freeway East submarket saw the largest net positive gain in absorption with Dow Chemicals occupying 203,000 SF at City Centre Six.
- Flight to quality persists, with Class A buildings accounting for over 60% of leasing activity.
- New supply was added to the market, with the delivery of The RO (150,794 SF) bringing year-to-date office completions to 650, 244 SF.
- Gross asking rents rose slightly to $31.35 PSF, marking modest quarterly and annual increases. While asking rents have increased, net effective rents remain below face rents due to landlord concessions.
Absorption turned positive again
Katy Freeway East is the market’s clearest bright spot
No submarket illustrates the flight to quality better than Katy Freeway East. Dow Chemical’s 203,000 SF occupancy at CityCentre Six was the single largest driver of absorption in the quarter, and it helped pull submarket vacancy down 180 basis points to 14.4%. Class A vacancy in the submarket fell even further, dropping 310 basis points.
The submarket also produced two of the quarter’s largest lease transactions: Superior Energy took 56,256 SF at 8020 Katy Freeway, and Capgemini signed for 30,262 SF at 990 Town and Country Boulevard. Class A asking rents in Katy Freeway East now average $64.11 PSF, nearly double the metro average, a reflection of how tight the top of that submarket has become.
CBD’s headline vacancy hides a two tier market
The CBD posted the second highest absorption total in Houston at 135,708 SF, even though overall CBD vacancy remains elevated at 32.1%. That number is misleading on its own. Class A properties drove the bulk of the positive absorption, while older, less competitive Class B and C stock continues to weigh down the average. Newer Class A towers downtown are holding occupancy well; it is the aging inventory that is inflating the headline vacancy figure.
The Woodlands also had a strong quarter, with roughly 233,000 SF leased, including Quanta Infrastructure Solutions’ 30,983 SF lease at 10000 Energy Drive and NAES Corporation’s 28,000 SF lease at 1725 Hughes Landing Boulevard.
New supply has nearly stopped
Rents are rising, but concessions are still doing the heavy lifting
Overall gross asking rents rose slightly to $31.35 PSF, a modest increase both quarterly and year over year. That said, net effective rents remain below face rates because landlords are still offering significant concessions to get leases signed. Asking rent growth on paper does not yet translate into meaningfully higher net rents for landlords.
Houston’s corporate base keeps growing
Houston’s underlying economic story remains a tailwind for the office market. The metro is already home to 27 Fortune 500 headquarters, tying Chicago for the second highest concentration in the country. In the first half of 2026, Expand Energy announced plans to relocate its headquarters from Oklahoma City to Houston later this year. Once that move is complete, Houston’s Fortune 500 count climbs to 28, moving the metro past Chicago into the No. 2 spot nationally.
What this means for occupiers
Download the full report as a PDF
Frequently Asked Questions
Why is Houston’s vacancy rate still around 27 percent if leasing activity is strong?
The headline vacancy rate blends premium buildings with older, less competitive stock. Class A space is absorbing well and tightening in key submarkets, while aging Class B and C buildings continue to sit vacant and drag down the citywide average.
s now a good time for a tenant to negotiate a Houston office lease?
It depends heavily on the submarket and building class. In tight submarkets like Katy Freeway East and the CBD’s newer Class A towers, landlords have less room to negotiate. In submarkets carrying higher vacancy, particularly Class B space, tenants still have solid leverage on rent, concessions, and term length.
