If you’re looking for office space for rent in Houston, there are many factors to consider. From vacancy rates to convenient locations, these are only some commercial property features to consider before signing a lease. Below is a quick guide to Houston office rentals, the current market landscape, and how to find the best space for your business. 

A BRIEF OVERVIEW OF HOUSTON COMMERCIAL REAL ESTATE (CRE)

Recent CRE trends show the Houston office rental market is starting to stabilize, with landlords developing new strategies to attract and retain tenants. While remote work culture has significantly increased vacancy rates for office space for rent in Houston, recent reports show there are still potential opportunities from this market shift. 

Cost Analysis and Market Comparisons

Office culture is now adapting and showing more promise in a post-pandemic landscape. New product-built offices are only 12.2% vacant compared to older office buildings constructed 20 to 50 years ago at nearly 79% vacant. 

These trends for higher quality and renovated office rentals still show demand from commercial tenants. According to Avison Young, trophy and class A assets are currently outperforming vintage office buildings by 83% of leasing activity. Their report shows the average cost of rent for Houston offices ranges from $16.64 to $42.38 per square foot, depending on location.

Additional findings compared Houston to other major office submarkets in Texas, with Austin having the highest rental rates at nearly $50 per square foot. Dallas had the most inventory at 229 million square feet of office space available. El Paso also had the lowest office vacancy rate at 10%, while Houston was 23%. 

With Houston’s less competitive office market, landlord financial incentives, and stabilizing trends, this city shows more value and opportunities for tenants than other Texas metros.

Key Districts for Office Space for Rent in Houston

Did you know that Houston is the fourth largest city in the nation? As a major U.S. metro, it’s crucial you know which key districts in Houston show the most promise for office rentals. 

Current office market insights for Houston neighborhoods include: 

• West Houston: Engineering and engineering sectors remain the highest in signed office leases.
• Montgomery County: This area has the most retail rental spaces and developments, along with Far Katy North and Far South. 
• Central Business District: This district has the largest office submarkets, including Suburban, Energy Corridor, and Galleria/Uptown. 

Tenants should also understand the type of amenities and business environment to look for in each property to make better-informed decisions. Consider your needs, such as open desks or cubicles, location, strong internet connection, storage space requirements, and valued aesthetics for client meetings. 

Knowing which property features you want to prioritize helps ensure the office is equipped to support your daily operations. 

Lease Negotiation Tips and Strategies 

Now more than ever, tenants can negotiate favorable lease terms as commercial landlords are looking to prevent long-term vacancies. Avison Young reported that in Q4 2023, tenant improvement (TI) allowances and average free rent reached a record high for class-A properties in Houston—up to $65 per square foot and 14 months rent-free! 

Commercial landlords are creating incentives for tenants to resolve the high office vacancies with competitive concession packages, general rental abatement, and TI allowances. These incentives lowered net effective rents as a result to become more appealing to tenants. 

Consider the following lease negotiation tips to save on office rental costs: 

• Consider Longer Lease Terms: Discuss with the landlord if they’re willing to lower base rent or increase TI if you sign for a longer term. They may be flexible to reduce vacancies.
• Negotiate for Larger Escalations at the End of Lease Terms: If you’re relocating offices, you may benefit from lower base rent at the beginning of your lease terms and higher escalations toward the end to reduce upfront costs. 
• Hire a CRE Broker: Tenants should always use commercial brokers because they have stronger negotiation power to back up favorable terms with market insights and expertise. They may also discover unfavorable lease terms in complicated agreements you may not have realized.

When you understand what landlords look for in potential office tenants, you can maximize your negotiation opportunities for the best deal possible. 

Houston CRE Success Stories from Business Owners

While it may seem daunting for business owners to find an office space for rent in Houston in today’s market, there have been numerous success stories. Houston business sectors still benefited from office rentals, contributing to their business growth. They reduced office vacancies by 25% by accommodating hybrid work schedules and offering better amenities.

These property features included relocating buildings where it’s more accessible for public transportation, offering four-day work weeks, and designing modern collaborative workspaces that influenced staff to return to the office. 

According to the Houston Chronicle, companies with the highest lease transactions included oil and gas company EOG Resources, which renewed nearly 370,000 square feet in downtown Heritage Plaza. Additionally, Perry Homes leased 77,200 square feet in a larger and newer office for Houston-based homebuilder’s employees.

As a commercial tenant, it’s important to understand the office market landscape in Houston to ensure you find the best property possible for your business.