The Houston Commercial Real Estate Market

Shanti Ryle

August 27, 2024

A panoramic view of Downtown Houston, Texas at sunset

Nationwide, commercial property buyers, sellers, and tenants are flocking to Houston commercial real estate to participate in the city's fast-growing, resilient market.

The Houston-The Woodlands-Sugar Land MSA features a fast-growing job sector, business-friendly tax benefits, an increasing population, and sprawling mileage of attractive CRE inventory, all of which attract owners and businesses alike to the region. Crexi empowers both entities seeking Houston commercial real estate for sale and the brokers who represent them with an all-in-one platform to buy and sell commercial real estate.

Buyers and tenants can instantly browse Crexi's robust marketplace and refine their search, conduct in-depth research, and identify any one of thousands of Houston commercial property offerings to fit their needs.

On the other side of the transaction process, Houston brokers harness Crexi's powerful listing and lead management tools to connect with buyers and tenants directly. Crexi's suite of broker tools empowers commercial agents with time-saving features, allowing them to discover and communicate with well-qualified leads more efficiently.

To date, Crexi has facilitated the successful closing of over $615 billion in commercial property sales and marketed more than half a million properties worth over $7 trillion in total. Crexi proudly serves Houston, Sugar Land, Missouri City, Pasadena, The Woodlands, and beyond as the region's fastest-growing digital CRE platform.

A view of downtown Houston as seen from a park outside the CBD

The State of Houston Commercial Real Estate

Houston is the second-largest metro in the state and the fifth-largest in the United States. Located in southeastern Texas, the market is the economic hub of the region, with a metropolitan area encompassing nine counties.

The diverse economy is driven by industries such as energy, aerospace, healthcare, and technology. As the home to the Texas Medical Center, the world's largest medical complex, and the Johnson Space Center, Houston is a leader in innovation and scientific advancement.

Downtown Houston has an impressive skyline featuring iconic buildings like the JPMorgan Chase Tower and the Williams Tower. The surrounding areas continuously develop, with mixed-use projects and residential communities emerging to meet the growing demand.

Houston has experienced substantial economic and population growth, making it a hotspot for commercial real estate development. The city's dynamic job market, relatively low cost of living, and business-friendly environment are attracting investors from around the world.

Houston Regional Breakdown

Population growth in Houston is robust, thanks to its diverse economy and attractive living conditions. The city continues to draw new residents with its flourishing job market and affordable housing options, and is ranked as the 3rd fastest-growing metro in the US by the Milken Institute.

The population of the Houston metropolitan area is 7.14 million, and according to statistics from DataUSA.io, it as grown by 1.3% over the past year,
Harris County, where Houston is the county seat, has seen its population soar by over 18% since 2010.
Metropolitan Houston added nearly 140,000 residents last year, about one new resident every 3.8 minutes, according to data from Houston.org.
The cost of living in the metro area is 5.9% below the US average.
The median age in Houston is 35.4, about 90% of the figure in the US.
Per capita income is $39,528 and median household income is $74,863, with nearly 40% of households earning more than $100,000 per year.

A tall set of buildings in Houston's downtown area.

Houston Job Market

Houston's economy is a powerhouse, known as the global energy capital with major companies like ExxonMobil, ConocoPhillips, and Halliburton headquartered in the region. Beyond energy, the city's economy is diversified with strong sectors in aerospace, anchored by NASA's Johnson Space Center, and healthcare, driven by the expansive Texas Medical Center.

Government initiatives such as tax incentives and infrastructure investments have help to drive economic growth and job creation. The Port of Houston, one of the largest ports in the nation, also plays a critical role in facilitating trade and supporting local employment.

GDP for Houston-The Woodlands-Sugar Land MSA is $513.3 billion, according to data from the St. Louis Fed.
The US Bureau of Labor Statistics reports the unemployment rate as 4.0% (May 2024).
The employed population in Houston has increased by 1.9% over the past year, based on information on DataUSA.io.
The metropolitan area is one of the nation's 12 largest metros for job growth, ahead of places like Dallas, Miami, and Los Angeles.
The Greater Houston Partnership reported a substantial increase in new business announcements, with 139 new businesses identified in Q1 2024 alone, marking a 93% rise from the previous period.
Houston's target industry sectors are energy, healthcare and biotechnology, advanced manufacturing, information technology, and the chemical industry.
The largest Houston area employers, ranked by the number of local jobs, include H-E-B, Houston Methodist, Memorial Hermann Health Systems, UT MD AndersonCenter, Walmart, ExxonMobil, Shell Oil, and United Airlines.
Submarkets in Harris County include the Energy Corridor, Midtown, Uptown, and TMC.
R.G. Miller | DCCM has relocated its headquarters to Eldridge Oaks, a Class A, 14-story office building, highlighting Houston's demand for high-quality office space.
Major projects such as the CityCentre Six, a 308,000-square-foot property on Katy Freeway East, are set to commence construction, further underscoring the dynamic growth in Houston's commercial real estate sector.
Houston is home to prominent educational institutions, including the University of Houston, Rice University, and Texas Southern University, which collectively contribute to the city's academic and research environment.
About 36% of residents hold a bachelor's or postgraduate degree, a rate slightly higher than in the US.
Houston's transportation infrastructure is extensive, with major interstates like I-10, I-45, and I-69, the Port of Houston, George Bush Intercontinental Airport (IAH), and the William P. Hobby Airport (HOU).

A monument in Houston sits at the far end of a pond in a park

Houston Industrial Market

The industrial market in Houston is seeing an uptick in vacancy rates due to substantial new supply and a decline in net absorption. At the same time, leasing activity has fallen below long-term averages. Despite these challenges, the market remains landlord-favorable with rising asking rates, although a cautious approach by developers has led to the lowest construction starts since 2016.

Market overview (Cushman & Wakefield Q2 2024 Houston Industrial Report)

Inventory: 575,778,629 SF
Vacancy rate: 6.7%
Under construction: 10,865,729 SF
Deliveries: 10,865,857 SF (YTD)
Net absorption: 9,931,493 SF (YTD)
Leasing activity: 8,100,000 SF (Q2 2024)
Key leases by tenant: Integra Mission Critical, eFulfull, Tigerhawk Logistics
Largest submarkets: Northwest-Far, Southeast-Far, Southwest-Far

Crexi Insights

These are the most recent Houston industrial lease and sales trends from Crexi Insights (as of July 2024):

For Lease (active)

Asking rate/SqFt (median): $10 per year
Median SqFt/listing: 6,728
Days on market: 240
Total listings on Crexi: 1,047 spaces

For Sale (active)

Median asking price: $1.95 million
Price/SqFt: $150
Asking cap rate: 6.9%
Days on market: 185
Total listings on Crexi: 271

Sales Comps (past 12 months)

Median sold price: $1.19 million
Sold price/SqFt: $108
Total sales volume: $1.07 billion
Sold cap rate: 6.2%
Median SqFt sold/transaction: 10,500
Total SqFt sold: 4.07 million
Days on market (median): 234

Find Houston industrial space for rent.

A sunset view reflected on Houston tall buildings in rainbow colors

Houston Office Market

Houston's office market is stabilizing , yet still facing challenges. Despite ongoing net absorption losses, the rate of decline has improved, and leasing activity has seen a modest uptick, particularly in key submarkets like the Katy Freeway West/Energy Corridor and The Woodlands. While the overall vacancy rate has remained steady, rental rates have experienced slight fluctuations.

Market overview (Cushman & Wakefield Q2 2024 Houston Office Report)

Inventory: 187,245,165 SF
Vacancy rate: 29.8%
Net absorption: -1,449,566 SF (YTD)
Deliveries: 0 SF
Under construction: 349,117 SF
Leasing activity: 4,835,084 SF
Key lease transactions by tenant: Health Care Service Corporation, Houston Community College, One Subsea
Largest submarkets: Central Business District, West Loop/Galleria, Katy Freeway West

Crexi Insights

For the latest updates on the office market in Houston, turn to Crexi Insights. Here is the detailed information on the most recent leasing and sales trends as of July 2024:

For Lease (active)

Asking rate/SqFt (median): $19 per year
Median SqFt/listing: 1,506 SF
Days on market: 489
Total listings on Crexi: 5,157 spaces

For Sale (active)

Median asking price: $1.5 million
Price/SqFt: $220
Asking cap rate: 6.5%
Days on market: 225
Total listings on Crexi: 288

Sales Comps (past 12 months)

Median sold price: $1.51 million
Sold price/SqFt: $161
Total sales volume: $243 million
Sold cap rate: 5.7%
Median SqFt sold/transaction: 8,900 SF
Days on market (median): 103

Find Houston office space for rent.

Houston Retail Market

The retail market in Houston remains tight, with a vacancy rate that is holding steady at historically low levels, creating a scarcity of suitable spaces for tenants. Despite minimal new construction and reduction in retail deliveries, leasing activity continues to be robust, particularly in key submarkets such as West/Northwest and Far Southwest. Rental rates have seen modest increases, reflecting the high demand and limited supply, with prime locations commanding significantly higher rent rates.

Market overview (Cushman & Wakefield Q1 2024 Houston Retail Report)

Inventory: 393,810,276 SF
Vacancy rate: 5.2%
Under construction: 3,341,225 SF
Deliveries: 878,357 SF (Q1 2024)
Net absorption: 449,330 SF
Leasing activity: 2,101,368 SF
Key leases by tenant: Game Time, Joe V’s Smart Shop, Cosmic Air, Drop Shots
Largest submarkets (by inventory): West/Northwest, South, Far Southwest, Far Northwest

Crexi Insights

Houston retail lease and sales trends from Crexi Insights (as of July 2024):

For Lease (active)

Asking rate/SqFt (median): $21 per year
Median SqFt/listing: 2,240 SF
Days on market: 312
Total listings on Crexi: 2,719 spaces

For Sale (active)

Median asking price: $1.96 million
Price/SqFt: $264
Asking cap rate: 6.5%
Days on market: 152
Total listings on Crexi: 366

Sales Comps (past 12 months)

Median sold price: $1.11 million
Sold price/SqFt: $237
Total sales volume: $638 million
Sold cap rate: 6.3%
Median SqFt sold/transaction: 4,000 SF
Days on market (median): 182

Find Houston retail space for rent.

A daytime view of tall Houston buildings and surrounding commercial property in the city.

Houston Multifamily Market

Houston's multifamily market is experiencing a slowdown in both net absorption and new construction, with significant drops in new supply and under-construction units. Despite these trends, occupancy rates have only slightly declined, while average monthly effective rents have remained relatively stable.

Market overview (Colliers Houston Multifamily Market Report Q1 2024)

Total housing units: 2,890,739
Multi-unit inventory: 753,050 units
Vacancy rate: 11.6%
Average effective rent: $1,268
Average rent by class: Class A $1,736, Class B $1,254, Class C $980, Class D $764
Deliveries: 3,069 units
Net absorption: 1,322 units
Under construction: 20,702 units