- Trophy office buildings in Houston are near full occupancy, pushing up rents and making concessions rare — and prompting tenants to consider Class-B and older Class-A spaces.
- Landlords like Hartman Properties have boosted occupancy rates by 27% in renovated Class-B assets, capitalizing on rising demand for affordable, ready-to-lease spaces.
- Despite Class-B space still averaging a higher vacancy rate (27.7%) than the city overall, leasing activity is on the rise — up 7% year-over-year and among the highest in the US.
- As tenants are priced out of new product, and few new projects are being delivered, Houston’s overlooked office stock could finally see a path to recovery.
Tight At The Top
Houston’s Class-A office market has tightened significantly, with buildings developed after 2015 posting just 11.7% vacancy, according to JLL — a sharp contrast to the city’s overall 26.3% rate, reports Bisnow. Rents at newer buildings have climbed to $36.14 PSF, pricing out many companies and drying up once-common concession packages.
Enter Class-B
That price pressure is redirecting demand. Landlords of well-located, older properties are reporting stronger leasing activity and healthier economics. Hartman Properties, which owns seven Class-B buildings in the Energy Corridor, has been offering turnkey suites of 1,500 to 3K SF — spaces that lease quickly. The result: a 27% occupancy bump across their portfolio.
“We’re reaping the benefits of our location,” said Margaret Hartman, COO of Hartman Properties. “It’s penciling economically for us.”
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Smaller Tenants, Faster Deals
While Class-A leases often top 9K SF, Class-B demand is coming from smaller users — averaging 2,300 SF — who want flexibility and affordability. Several large Class-B leases have helped boost confidence: Frazer’s 150K SF in Sugar Land, Blue Cross Blue Shield’s 135K SF in Southwest Houston, and Ezee Fiber’s 94K SF.
The Road Ahead
Despite momentum, recovery is still uneven. Class-B vacancy remains higher than average, and demand is still down 24% from pre-pandemic levels. But with trophy space scarce, brokers believe more tenants will adjust expectations — and landlords are ready to capture them.
“Houston’s downturn started earlier than most markets,” said Avison Young’s Ariel Guerrero. “We’re positioned well for a rebound. It won’t be explosive, but it’ll be meaningful.”
Why It Matters
As economic pressures continue and new office construction slows, Houston’s overlooked Class-B segment could become a viable alternative for tenants priced out of premium spaces. For landlords, that means long-awaited relief — and perhaps the first signs of a true market reset.
