Houston Office Vacancy Holds at 25.6% as Leasing Slumps to a Post-2009 Low

Houston's office market is splitting, with tenants crowding into Class A towers as overall leasing keeps sliding.

October 21, 2026

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Houston Office Vacancy Holds at 25.6% as Leasing Slumps to a Post-2009 Low

Good morning. Houston's office vacancy held at 25.6% in Q3, barely moved from a year ago, but the leasing engine is sputtering. Nine-month volume fell to its weakest since 2009, even as new deals leaned Class A.

🎙️ This Week on No Cap: Two multifamily operators on turnover costs, affordability, and whether this is a bubble.

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Market Snapshot

Top Market

By Transaction Volume

Dallas — $129.3M

Properties Sold

All Asset Types

Transaction Volume

Sales Activity

$251.4M

Top Office Submarket

Avg Starting Rent

Far Northwest (Austin)

$83.36 / SF

Texas Office Rent

Avg Effective

$36.36 / SF

Office Rent Growth

YoY Change

-17.1%

*Office metrics courtesy of CompStak; data from 7/1/26 – 9/30/26. Sales metrics courtesy of Actovia; Texas properties reported sold during the week of 9/26/26 – 10/2/26.

Deep Chill

Houston's Office Market Freezes in Place

Houston's office market is stuck in neutral, with vacancy holding at 25.6% even as leasing slides to a pace not seen since 2009.

By the numbers: Vacancy finished Q3 at 25.6%, flat from Q2 and up just 30 bps YoY, per Newmark's 3Q26 report. Leasing cooled to 2.6M SF, down 17.9% from Q2 and 22.4% from a year earlier, a second straight quarterly and annual decline.

A multiyear trough: Year to date, leasing reached 8.9M SF, the weakest nine-month total since 2009, and Q3 volume ran 42.4% below the 16-year Q3 average. Net absorption slipped to negative 31,374 SF for the quarter, though the year remains barely positive.

Source: Newmark Research, CoStar

Class A wins: Quality is where the demand went. Class A deals totaled 1.7M SF, or 65.5% of all leasing, as occupiers kept or upgraded into top-tier towers, while Class A vacancy still edged up 10 bps to 27.0%.

Rents flatten: Average full-service asking rent reached $31.02 per SF, a 2.3% annual gain but about 0.2% under Q2's $31.08 record. Annual rent growth has cooled sharply from 6.4% in Q1 and 8.3% in Q2.

➥ THE TAKEAWAY

What's next: Houston's office story is a flight to quality unfolding in slow motion. Headline vacancy barely moves while leasing thins, so the split between full Class A towers and emptying older stock looks set to widen into 2027.

Around Texas

➥ Hunt Realty is marketing a 30-story NorthEnd tower beside Goldman Sachs’ $709M Dallas campus, an early bet on demand along the emerging Y’all Street.

➥ Oxbow, the team behind San Antonio’s Pearl, will redevelop the 11-acre Dittlinger Mill in New Braunfels into a boutique hotel, shops and riverfront space.

➥ Houston listed its 27-story Bob Lanier building at 611 Walker for sale, pitching a rare downtown block for demolition and a signature redevelopment.

➥ Hines bought Exxir’s Bishop Arts portfolio of four Class A apartment properties and 40,747 SF of retail, a rare institutional mixed-use trade in Dallas.

➥ Houston multifamily owners are bracing for a wave of foreclosure capitulation, as 1960s and 70s complexes financed at $100K per door run near 50% occupancy.

➥ Ascension Seton acquired three Austin-area medical facilities, expanding the health system’s regional footprint as demand for outpatient space grows.

Follow the Money

OFFICEDALLAS Accounting firm BDO leased a full 25,000 SF floor at Harwood No. 14, a win for the district after a brutal year of Harwood losses.

HOSPITALITYDALLAS The Knox, Auberge Collection opened its reservation book for Jan. 29 stays from $1,000 a night, raising the Knox Street luxury bar.

POLICYSAN ANTONIO The city sued Homeland Security to block ICE’s expansion, targeting a $66.1M detention conversion and $51.2M in office leases.

MULTIFAMILYRICHARDSON Ares refinanced its 351-unit Axis 110 near CityLine, plus a Philadelphia sister property, with a $107.5M SMBC loan.

MULTIFAMILYDALLAS The city partnered with Hoque Global on an $85M, 420-unit mixed-income complex, half reserved for households under 60% to 80% of area median income.

OFFICEDALLAS Woods Capital’s 33-story 2100 Ross tower headed to a foreclosure auction over a $79M matured loan, with the building just 53% leased.

📈 CHART OF THE WEEK

Dallas–Fort Worth leads U.S. apartment demand with 25,424 units absorbed through September 2026, highlighting strong renter demand across diverse markets.