Houston Office Market Report | Q3 2026
A flat vacancy rate looks like a market standing still. Houston’s office vacancy sits at 27.6%, unchanged from last quarter and unchanged from a year ago. Read only that number and you miss the quarter.
Underneath the headline, Houston is running two different office markets. One is tightening fast. The other is still losing tenants. Your leverage depends entirely on which one you are shopping in.
Here is what the Colliers Q3 2026 Houston Office Report shows.
The Numbers That Matter
Availability is falling. Overall availability dropped to 26.8%, down 190 basis points from Q2 and 210 basis points year over year. Space is coming off the market even while vacancy holds steady.
Leasing slowed. Tenants signed 2.2 million SF in Q3, down 12.0% from Q2 and 23.7% from Q3 2025. Small and mid-sized deals drove the volume. The largest lease of the quarter was Harris County Flood Control District at 86,743 SF at 4425 Westway Park Blvd in the West Belt.
Absorption barely registered. Net absorption came in at roughly 12,200 SF for the quarter.
Rents keep climbing. Average asking rent reached $34.18 per SF full service gross, up from $33.15 last quarter and $32.13 a year ago. That is a 6.4% annual increase in face rent.
The pipeline is nearly empty. Zero SF delivered in Q3. Only 232,100 SF remains under construction, down from 777,900 SF a year ago. Total inventory shrank by roughly 700,000 SF over the past year.
The Split: Class A vs. Everyone Else
The year-to-date absorption numbers make the divide impossible to ignore:
- Class A: +821,397 SF
- Class B: (756,702) SF
- Class C: (89,661) SF
Class A captured more than 70% of all leasing activity in Q3. Premier Class A buildings now run 12.5% vacancy and 16.8% availability, less than half the market average.
The rent gap reflects it. Class A asks $39.51 per SF. Class B asks $22.38. That $17 spread is the price of quality in Houston right now.
Submarkets Worth Watching
Katy Freeway East is the tightest Class A market in the city. Class A availability sits at 7.2%, asking rents average $62.38 per SF, and the submarket absorbed 533,303 SF of Class A space year to date, including 324,450 SF of new deliveries.
The Woodlands posted 14.0% vacancy and 146,228 SF of positive absorption year to date. Class A rents average $44.75 per SF.
West Loop Class A absorbed 312,569 SF year to date, making it one of the strongest Class A performers in the market.
Katy Freeway West/Energy Corridor led the city in leasing with more than 310,000 SF signed in Q3, about 14% of all Houston activity. Activity is not growth. The submarket still sits at (399,724) SF of net absorption year to date, driven by Class B losses.
The CBD and Greenway Plaza remain under pressure. The CBD posted 32.8% vacancy and (264,988) SF of absorption year to date. Greenway Plaza lost 305,012 SF year to date.
FM 1960 and North Belt both carry vacancy above 44%.
Capital Is Coming Back
Investors bought more than $1.1 billion of Houston office in Q3, pushing year-to-date volume past $3.0 billion. That already nearly matches all of 2025.
The headline deal: Williams Companies acquired Williams Tower for more than $300 million, one of the largest Houston office sales since 2019. Institutional buyers accounted for about 53% of acquisition volume this year.
New ownership means recapitalized buildings. Recapitalized buildings can fund tenant improvements that distressed owners could not.
5 Takeaways for Occupiers
1. Know which market you are in. A tenant targeting premier Class A in Katy Freeway East or The Woodlands negotiates in a landlord’s market. A tenant open to well-located Class B negotiates in a tenant’s market. Same city, opposite leverage.
2. Negotiate net effective rent, not face rent. Asking rents rose 6.4% year over year, yet concessions keep net effective rents below face. Free rent and TI allowances are where the real deal gets made.
3. Do not wait for new supply. With 232,100 SF under construction and zero deliveries this quarter, no wave of new buildings is coming to soften top-tier pricing. Every quarter of Class A absorption shrinks your options.
4. Start early on renewals in tight submarkets. If your lease expires in 2028 or 2029 and you occupy premier space, your landlord already knows availability is drying up. Start the process 24 to 36 months out.
5. Use the ownership turnover. Buildings trading to institutional capital often come with fresh budgets for capital improvements and tenant packages. Ask who owns the building and when they bought it. The answer shapes your negotiation.
Houston’s office market is not one market. Quality space is tightening, rents are rising, and the supply pipeline has gone quiet. Commodity space still offers meaningful leverage. Occupiers who understand that split will make better real estate decisions than those reading only the vacancy rate.
