Executive Summary
Downtown Houston’s office market showed continued signs of stabilization in 2025, with improving leasing activity, tightening marketed space, and a gradual shift toward a more balanced occupier base. While the market remains below pre-pandemic leasing norms, the data points to a clearer recovery pattern as tenants continue to make long-term real estate decisions and underperforming office assets are increasingly removed from the competitive market.
Total marketed space declined in 2025, driven by a combination of lease-up activity, reduced sublease availability, and the removal of obsolete or no longer competitive office space from the surveyed inventory. Direct marketed space decreased across Tiers I and III, while Tier II remained essentially flat. At the same time, marketed sublease space fell year-over-year to one of its lower levels in recent years, suggesting that market conditions are improving even as overall availability remains elevated by historical standards. Tier II buildings continue to hold the largest share of direct marketed space, highlighting an ongoing challenge for lower Class A assets that must compete against both highly amenitized Tier I properties and more cost-effective Tier III alternatives.
Leasing activity also improved for the second consecutive year, totaling more than 2.4 million square feet in 2025, a 8.5% increase from 2024 and a 17.2% increase from 2023. New leasing activity rose 18% year-over-year, while renewal activity remained a major driver of total transaction volume. This suggests that more tenants are recommitting to Downtown and, in many cases, are no longer reducing their footprints as aggressively as they did during the earlier post-pandemic period. However, overall leasing volume remains well below long-term historical averages, underscoring that the recovery is still ongoing.
The occupier base remained relatively stable, with energy tenants continuing to account for the largest share of occupied space. However, Downtown’s industry mix continues to diversify, with legal and FIRE tenants increasing their share of total occupancy. Legal and FIRE tenants remain especially concentrated in Tier I buildings, while energy tenants occupy a wider range of building types and price points. This diversification is a positive long-term signal for Downtown Houston, as a broader tenant base can help reduce the market’s exposure to industry-specific disruptions.
Overall, the 2025 Office Story reflects a market moving toward a new equilibrium. Downtown Houston continues to face challenges, particularly around elevated availability, uneven demand across building tiers, and leasing activity that has not yet returned to historical norms. At the same time, the market is showing measurable improvement: marketed space is tightening, sublease pressure is easing, new leasing is increasing, and large and mid-sized occupiers are beginning to show signs of recovery. These trends suggest that Downtown’s office market is not fully recovered, but it is becoming healthier, more clearly defined, and better positioned for long-term stability.
2025 MARKET ANALYSIS
Inventory Analysis
Downtown Houston+’s Office Story measures
the 12-month Downtown competitive leasing cycle
Why do we do this study?
• Proprietary and longitudinal: Report is in its 42nd year of publication, started in 1985 by Stewart O. Robinson
• Downtown’s office inventory is heavily concentrated in Class A space, which accounts for approximately 75% of total inventory. However, performance varies significantly within that Class A segment, with a clear divide between higher-performing and lower-performing properties
• To better capture these differences, surveyed buildings are organized into three tiers. This tiering approach helps highlight trends among Downtown’s top office towers, including newly constructed and recently renovated properties, while also distinguishing them from older or lower-performing assets
• Tier I: Top-tier Class A properties, including the newest, most highly amenitized, and best-positioned office towers
• Tier II: Lower-tier Class A properties that remain competitive but generally lack the same level of positioning, amenities, or performance as Tier I assets
• Tier III: Generally, Class B properties, including older or less competitive office buildings
• A unique Downtown Houston office survey that includes:
• Marketed space
• Large available blocks and full floors
• Tenants by industry
• Marketed sublease space
• Multi-floor tenants
• Large transactions and tenants new to Downtown
• This report surveys buildings that are actively marketing space for lease; it excludes spaces that are owner-occupied and spaces are not being competitively marketed
• Survey conducted January – May 2026, covering all 2025 leasing activity
• Approximately 31.3 million SF surveyed
• 37 office buildings included
• More than 2.4 million SF of Downtown leasing in 2025
• Survey represents 60% of Downtown office inventory, and 81% of leasable Downtown office inventory
Surveyed Buildings
Buildings no longer included in survey due to change in use or marketability:
• 919 Milam
• 500 Jefferson
Summary of Survey Data
Historical / Future Building Deliveries Timeline
Esperson, 1000 Main, &One Allen 1801 Main& The Jones 5Houston Center1415Louisiana&Lyric Tower
Younan Square LyondellBasell Tower 2Houston Center 3Houston Center (Exterior) 4Houston Center 717Texas TCEnergy Tower (PhaseII) GreenStreet HeritagePlaza Two Allen Center Three Allen Center TOTAL Plaza 910Louisiana 1001 Fannin3Houston Center (Interior) 910 Louisiana (Under Cons.)
2025 MARKET ANALYSIS
Marketed Space
Marketed Space
Overview
• In 2025, the market for direct space tightened by 360,000 square feet
• Marketed sublease space decreased year-over-year, from 783,000 square feet in 2024 to 459,000 square feet in 2025
• Tier II and III properties account for 95% of available sublease space
• Tier Breakdown:
• Tier I: The market tightened by 245,000 square feet, with a majority of buildings reducing marketed space compared to 2024. 700 Louisiana and 811 Main saw the largest shares of reduced footprints, both decreasing available space by over 100,000 square feet
• Tier II: The market remained essentially flat, loosening by 5,000 square feet. Performance varied building to building in Tier II space.
• Tier III: The market tightened by 120,000 square feet. While activity varied building to building, Tier III performance is partly due to leasing, but also due to the removal of obsolete space.
• Tier I change in marketed space is primarily due to leasing activity; This trend would be more pronounced, but Hess Tower added over 200,000 square feet of direct marketed space to Tier I inventory.
• Tier II buildings represent 56% of total direct marketed space
• Tier III continues to improve largely due to the removal of obsolete space
Historical Direct Marketed Space
Historical Direct Marketed Space – By Building Tier
Historical (Direct and Sublease) Marketed Space
Loosening Market
Tightening Market
Marketed Space
TAKEAWAYS
• Direct marketed space decreased across Tiers I and III, while Tier II remained essentially flat
• Tiers I and II recorded lease-up activity, while Tier III benefited largely from obsolete space being removed from the market
• Owner-occupiers and conversion activity are creating new opportunities
• Space is being taken offline as public and large entities capitalize on opportunities to purchase office assets at lower costs. Additionally, conversion projects are being pursued for underperforming office properties
• Tier II buildings hold the majority of direct marketed space
• This trend has also been observed in quarterly reporting, where Class B space has outperformed lower-quality Class A product in terms of occupancy
• Overall, marketed space conditions are improving
• Leasing activity has shown signs of improvement, while the removal of obsolete space is helping provide a clearer picture of market fundamentals. Taking underperforming assets offline is a positive development, as these properties can weigh on overall market KPIs
by Bonfire Photo
Photo
2025 MARKET ANALYSIS
Leasing Analysis
Leasing Analysis Overview
• Leasing activity rose 8.5% year-over-year, totaling over 2.4 million square feet
• This marks the second consecutive year of growth in leasing activity
• New leasing activity increased 18% year-over-year, with 845,000 square feet of new leases signed
• These trends reflect broader market trends, with the larger Houston market seeing condensed leasing activity in top-tier buildings, with lower-class buildings struggling to attract tenants.
• While Downtown saw leasing activity improve in 2025, Houston overall saw lower leasing activity compared to previous years.
Tier Breakdown
• Tier I: Tier I recorded strong new lease and renewal activity, though expansion activity was down slightly compared to 2024.
• Tier II: Total leasing activity increased 28% year-over-year. Renewals accounted for 72% of Tier II activity, driven in part by two large renewals totaling approximately 400,000 square feet.
• Tier III: Tier III saw lower levels of new lease and expansion activity, but renewal activity remained strong, increasing 76% compared to 2024.
1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000
SF of Leasing Activity By Year
% of Total Leasing Activity By Type per Year
Activity by Size
New Expansion Renewal
Leases by Size (Tier I)
Leases by Size (Tier II)
Tier II
New Expansion Renewal
Leases by Size (Tier III)
New Expansion Renewal
Leasing Analysis
TAKEAWAYS
• Continued gains in leasing activity point to ongoing market recovery
• Ripple effects from the pandemic, as well as the preceding oil slump, appear to be moderating as the market moves toward a new equilibrium
• Renewal activity surged in 2025
• While renewals are partly a function of market timing, fewer companies appear to be reducing their footprints when renewing
• Tier II properties continue to struggle in attracting new tenants
• Despite accounting for 39% of surveyed inventory, Tier II properties represented only 27% of new leases signed in 2025
• Overall, leasing activity is improving, but remains below historical norms
• Total leasing activity increased 8.5% and 17.2% compared to 2024 and 2023, respectively; however, 2025 leasing activity remained approximately 42% below the 10-year prepandemic average
by
Photo
Egidio Narvaez
2025 MARKET ANALYSIS
Occupier Analysis
Occupier Analysis
Overview
• Occupancy by industry remained relatively stable
• Legal and FIRE tenants increased their share of total occupancy, while energy tenants represented a smaller share of occupied space
• Legal and FIRE tenants continue to favor Tier I space
• Legal and FIRE tenants have 69% and 66% of their total occupancy in Tier I buildings, respectively. By comparison, only 33% of energy tenants’ total occupancy is in Tier I space
• Energy tenants continue to dominate Downtown occupancy
• Despite their share declining, energy tenants still occupy 44% of total occupied inventory
Note: FIRE = Finance, Insurance, and Real Estate
New Downtown Occupiers
Occupier Analysis
TAKEAWAYS
• Downtown Houston’s industry mix continues to diversify
• A more diverse tenant base is important for long-term market stability, as it can help reduce the impact of industry-specific disruptions such as the mid-2010s oil slump
• Energy tenants occupy a wider range of office space
• Energy tenants appear more willing to pursue discounted space rather than focusing exclusively on top-of-the-line office product
• Energy tenants still occupy the most space of any industry
• While the industry mix is diversifying, energy tenants continue to account for approximately 44% of occupied, leasable space
• Mid-sized and large occupiers are showing signs of recovery
• While the number of tenants occupying four or more floors has remained relatively stagnant, tenants occupying one or two full floors are beginning to tick back up
by Maria
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Lysaker
2025 MARKET ANALYSIS
Appendix
Survey Background
• Now in its 42nd year, this survey provides unique insight into the current competitive Downtown office leasing environment through analysis of primary data.
• Findings support building owners, leasing agents, and investors in making informed business decisions.
• Surveyed buildings have proven the ability to compete for tenants within Downtown’s premier office market, organized into three tiers (I, II, and III). It is intended to complement, not replace, traditional market surveys conducted by brokers, owners, or third-party firms.
Survey
Definitions
• Office Inventory: Total office space in all Downtown buildings regardless of building class or survey tier.
• Survey Universe: Downtown’s premier office buildings classified as Tier I, II & III in this Report.
• Owner-Occupied: Buildings fully owned and/or occupied by the owner; includes Chevron’s 1500 Louisiana and 1400 Smith; Hilcorp’s 1111 Travis and Partnership Tower (701 Avenida De Las Americas).
• Energy: Exploration and production (E&P), pipeline, mining, utility, chemical and service providers.
• Legal: Law firms and legal service providers.
• FIRE: Finance, insurance and real estate.
• Other: Professional and business services, information technology, public administration, retail.
• Leased Space: All leased spaced regardless of occupancy status.
• Actively Marketed and/or Available Space: Marketed office space regardless of occupancy and lease status.
• Availability Rate: Direct space currently marketed divided by total amount of surveyed space.
• Leasing Activity: Signed leases during the survey year regardless of scheduled occupancy status and includes direct, sublease, renewals and pre-leasing activity.
• Absorption: Total annual survey change of square feet marketed regardless of occupancy.