Houston Medical Building Market Report | 2026 First Half
Houston’s medical office market delivered a resilient performance in the first half of 2026, absorbing a historic wave of new supply while continuing to push rents higher. For physician groups, healthcare systems, and healthcare real estate investors, the data points to a market where landlords still hold pricing power.
Net Absorption Stays Positive Despite a Rough Q2
The Houston medical office market closed H1 2026 with net absorption of 296,087 SF, a 6.2% increase over the same period in 2025. That’s notable given the market recorded negative net absorption in the second quarter alone. The full-half figure ranked Houston No. 4 among the top 50 U.S. metros for year-over-year net absorption, and Houston posted the second-highest volume of medical office deliveries among those same top 50 metros.
Vacancy Ticks Up as New Supply Hits the Market
Overall vacancy rose to 11.7%, a 30-basis-point increase from year-end 2025’s 11.4%. New deliveries totaled 489,551 SF, up 55.9% compared to the second half of 2025. As those projects came online, the under-construction pipeline fell to 850,521 SF, down sharply from 1.25 million SF six months earlier and 1.425 million SF a year ago.
That declining pipeline matters. Less space in the ground means less competition for tenants down the road, and it’s one reason rents haven’t softened despite higher vacancy today.
Rents Continue Their Upward Climb
Average asking NNN lease rates reached $25.34 PSF in H1 2026, up from $25.14 at year-end 2025 and $24.62 in H1 2025. Rising rents alongside rising vacancy is a signal worth paying attention to: it suggests landlords are absorbing new supply through genuine demand rather than concessions, and that pricing power currently sits with ownership, not tenants.
Investment Sales Volume Jumps 59%
Medical office sales volume topped $230 million through H1 2026, a 59% increase over the same period last year. The average sales price per square foot climbed to $306, continuing an upward trend visible across recent quarters.
Recent notable transactions include:
- MedPlace (170,554 SF) — Medical Properties Trust acquired from Healthpeak Properties, June 2026
- Greenhouse Medical Plaza (116,870 SF) — Edloe Ventures acquired from Transwestern Real Estate Services, March 2026
- Bellaire Medical Plaza (57,988 SF) — Edloe Ventures acquired from Rycore Capital, May 2026
- Memorial Hermann Convenient Care Center (44,000 SF) — Memorial Hermann Health System acquired from Inland Private Capital Corporation, January 2026
The consistent buyer activity from both institutional (Medical Properties Trust) and regional (Edloe Ventures) players signals broad-based confidence in the asset class.
Life Science Sector Gains Real Momentum
Houston remains an emerging life science market relative to established hubs, but H1 2026 brought a headline commitment: Bristol Myers Squibb announced a $2.3 billion investment in a 600,000-square-foot manufacturing campus at Generation Park, the second major pharmaceutical manufacturing investment at that location within the past year.
Houston’s life science inventory now totals approximately 5.0 million SF, with an additional 1.4 million SF under construction, a pipeline representing 27% of existing inventory and underscoring the sector’s growth trajectory.
Key Developments to Watch
- Memorial Hermann has two facilities under construction: a 51,800 SF building in Mont Belvieu (completing November 2026) and a 51,000 SF medical office/freestanding ER in Bridgeland (completing December 2026)
- Houston Methodist opened a 65,580 SF facility at 6601 Cinco Rose Dr in Katy, TX
What This Means for Healthcare Real Estate Decisions
For physician groups and healthcare systems evaluating lease renewals, expansions, or new market entry, the data points to a narrowing negotiating window. Vacancy is rising, but the pipeline that would eventually create tenant leverage is shrinking, not growing. Groups with near-term real estate decisions should engage now, while multiple existing and under-construction options remain, rather than waiting for a supply correction that current construction data doesn’t support.
Frequently Asked Questions
What is the vacancy rate for medical office space in Houston in 2026? Houston’s medical office vacancy rate reached 11.7% in the first half of 2026, up 30 basis points from 11.4% at year-end 2025. Despite the increase, vacancy remains below the 11.5% mark recorded in the first half of 2025, and asking rents have continued to rise alongside it.
Are medical office rents in Houston going up or down? Medical office rents in Houston are rising. Average asking NNN lease rates reached $25.34 per square foot in the first half of 2026, up from $25.14 at year-end 2025 and $24.62 in the first half of 2025. Rents have increased even as new supply entered the market, indicating sustained tenant demand.
How much medical office investment sales activity happened in Houston in 2026? Houston recorded more than $230 million in medical office sales volume through the first half of 2026, a 59% increase over the same period in 2025. The average sales price reached $306 per square foot. Notable transactions included the 170,554-square-foot MedPlace building, acquired by Medical Properties Trust, and Greenhouse Medical Plaza, acquired by Edloe Ventures.
