- Houston landlords with upgraded, well-located office assets are reporting stronger leasing activity, higher occupancy, and the ability to increase rents.
- DML Capital and Granite Properties cited occupancy gains, revenue growth, and longer hold periods as investors adjust to a slower office recovery cycle.
- The widening gap between top-tier buildings and obsolete Class-B and Class-C properties is reshaping Houston’s office investment landscape.
Houston’s office market is entering a new phase where quality, location, and tenant experience are driving performance. While some landlords are gaining occupancy and pushing rents higher, older buildings without upgrades face a tougher path forward, as reported by Bisnow. The divide between winners and laggards is becoming increasingly clear.
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A divided Houston office market
Houston’s office recovery is increasingly separating high-performing properties from aging assets that may never regain demand. Owners that invested in amenities, renovations, and tenant experience are seeing occupancy improve and rents rise, while a large portion of older Class-B and Class-C buildings continue to struggle.
Panelists at Bisnow’s Future of Houston Office event, said the city’s roughly 24% office vacancy rate masks a sharper divide between buildings attracting tenants and those falling behind. According to CBRE, Houston’s overall vacancy remains above the national office average of about 18%, but top-tier buildings are performing far better, with vacancy averaging 11.7%.
The flight to quality gains momentum
The recovery story is strongest among owners that acquired well-located assets and committed capital to improvements. DML Capital, which entered the Houston office market with a 171K SF, two-building complex in Sugar Land, saw the property move from about 84% leased in 2024 to full occupancy.
DML partner Saleem Lakhani said the firm now owns five office properties and increased assets under management from $300M to $600M in less than a year. Most of its buildings are operating in the high-80% to 100% occupancy range, allowing the company to push rents where market conditions support increases.
Granite Properties reported similar momentum across its Houston portfolio, including the 302K SF 3151 Briarpark Drive in Westchase and the 510K SF Weslayan Tower in Greenway Plaza. The company signed Zachry Engineering to a 53K SF lease at 3151 Briarpark in Q1 2026 and reported revenue growth of 30% to 40% over the past 12 months.
Where tenants are moving
Location continues to determine which office properties succeed. Houston’s population growth has shifted westward, and employers are following workers toward areas near Beltway 8 and Interstate 10, including CityCentre and Memorial City.
Lee & Associates principal Bill Insull said buildings in the area are reaching occupancy levels as high as 95% because companies want to remain close to where employees live. The submarket is now achieving some of the highest rents in Houston, competing with select trophy assets in Downtown.
Energy companies have been a major driver of this shift. Apache Corp. and Bechtel moved from the Galleria area to Westchase, while LyondellBasell relocated from its Downtown namesake tower to Williams Tower. Other corporate users have also consolidated into newer, higher-quality buildings.
Houston office upgrades separate winners
Amenities have become a key differentiator as companies compete for employees who entered the workforce during the remote-work era. Savills Executive Managing Director Lesa Nickelson French said law firms and professional services companies are focused on securing the best buildings they can afford to attract and retain younger talent.
For investors buying older office assets, upgrades are becoming a requirement rather than an option. Beyond Holding Co. CEO Jenny Zhan pointed to food offerings such as lobby delis as one of the most effective tenant amenities, while LandPark Advisors President Bill McGrath highlighted conference spaces, fitness centers, and experiential features such as golf simulators.
Why it matters
The Houston office market’s recovery is becoming less about broad market improvement and more about asset selection. Investors and landlords with capital to reposition buildings may capture rent growth, but obsolete properties could continue weighing on overall market statistics.
Lakhani said many underperforming Class-B and Class-C buildings may need to be removed from the office inventory altogether because they are unlikely to attract tenants without major reinvestment. That dynamic could eventually improve reported occupancy figures by shrinking the pool of unusable space.
What’s next
Houston office investors are likely to extend hold periods as improving fundamentals are offset by changing capital market conditions. Lakhani said owners that previously planned two- to five-year strategies may now need to think in five- to 10-year timelines.
As cap rates compress and leasing momentum improves for quality assets, the next phase of Houston’s office market will likely focus on redevelopment decisions: which buildings receive new capital, which find alternative uses, and which leave the market entirely.
