Houston’s Medical Office Market Tightens as Demand Outruns New Supply
Market Trends
- Houston’s medical office building market saw stronger momentum in the second half of 2025. Net absorption reached 376,898 SF, up 29.8% from the first half, though still 11.0% lower than the same period in 2024. For the full year, net absorption totaled 667,198 SF – a 47.7% decline from 2024’s 1.3M SF, yet strong enough to place Houston No. 4 among the Top 50 markets year over year.
- The market’s 10.9% vacancy rate is the lowest since 2019, improving by 30 basis points from mid-year 2025 and 50 basis points from year-end 2024.
- New deliveries increased to 272,856 SF, up 29.8% from the first half’s 210,205 SF and 55.1% above the 175,896 SF delivered in the second half of 2024.
- Houston also surged to No. 1 nationally among the Top 50 MOB markets for construction activity, with 1.3M SF underway – up from 1.1M SF year over year.
- Asking rents continued their upward trend, with the average NNN rate rising to $24.93 PSF from $24.41 at midyear and $23.93 at year-end 2024.
- Sales activity increased both by dollar value and average PSF from earlier in the year but is down from 2024 totals.
Executive Summary
Houston’s medical office building sector remains a vital component of the region’s healthcare landscape, supported by strong demand and steady institutional investment.
Strong leasing activity has kept pace with new deliveries, pushing vacancy rates lower both quarter over quarter and year over year. For fourth quarter, vacancy dropped to 10.9%, the lowest on record since 2019. The uptick is supported by both a positive net absorption of 376,898 square feet – outpacing the 272,856 square feet of new deliveries during the quarter – and a growing construction pipeline. For the year, the medical office buildings sector gained 667,198 square feet of net absorption and delivered 483,061 square feet of new space.
RevistaMed, a national medical property database provider, shows Houston jumping to the No. 1 ranking for medical office square footage under construction among the Top 50 markets and maintaining the No. 4 spot for year-over-year net absorption. The past 18 months have shown slower absorption, likely tied to reduced quarterly completions. Even so, vacancy has continued to slowly decline during the last several years.
Key Developments Driving Growth
Growth remains anchored by strategic expansions from major hospital systems and medical groups, both on- and off-campus.
- Kelsey-Seybold recently opened two new clinics, a 53,925-square-foot facility at 17814 W. Lake Houston Parkway in Atascocita in the Northeast and a 119,682-square-foot Northwest Campus Hub at 19926 Northwest Freeway. Kelsey-Seybold also has another 36,788-square-foot clinic underway in the Fort Bend Town Center project in Missouri City in the Southwest scheduled for a November 2026 opening.
- Houston Methodist has three projects in progress with two in partnership with Legacy Community Health: a 39,200-square-foot facility in Pasadena in the Southeast and a 26,200-square-foot facility in Acres Homes in the Northwest, both to be completed in April 2026. Additionally, a 65,000-square-foot comprehensive care center is underway in Cinco Ranch in the West for completion in early 2026.
- Memorial Hermann currently has three projects under construction: a 51,800-square-foot building in Mont Belvieu in the East set for completion November 2026, a 100,000-square-foot building in Cypress to be complete in April 2026, and a 51,000-square-foot office/freestanding ER in Bridgeland, targeted for completion in September 2026, with the latter two projects in the Northwest.
- Modern Heart and Vascular recently opened a new 96,543-square-foot location at 18835 McKay in Humble in the Northeast.
Historic Comparison
Market Fundamentals
Houston Medical Office Building Sales Activity
Sales Transactions
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