Avison Young: Houston’s Commercial Real Estate Outlook for 2026
Rand D. Stephens, managing director of Avison Young in Houston
HOUSTON – (Realty News Report) – Local real estate professionals generally agree that 2019 looks promising for Houston’s property market.
There are sound reasons for optimism. Job growth has been strong: approximately 114,400 new positions were created in the twelve months ending in November. Some skeptics argue those figures may be revised downward, but job gains have remained above the 100,000 mark for several consecutive months. Unemployment is low, and last year set a record for home sales.
Even the office sector, which has been the weakest segment of the market, has shown signs of recovery in recent months.
“I expect we’ll have another good year,” said Rand Stephens, principal and managing director of Avison Young in Houston. “We’ll see the office market continue to improve — it’s just a question of how fast.”
In the fourth quarter the Energy Corridor’s office market showed improvement and stood out as the strongest submarket, according to Charlie Neuhaus of Avison Young. McDermott leased 524,300 square feet at Energy Center Five, while Transocean took 300,000 square feet in the never-occupied Enclave Place building. Vacancy remains elevated, however, at roughly 20 percent.
Investor interest in Houston real estate is increasing, said Darrell Betts, principal and leader of Avison Young’s Capital Markets group. The industrial sector is particularly robust, but available properties to acquire are limited, Betts told attendees at a recent Avison Young press breakfast. Over the next year or two, he predicted, Houston will be seen as one of the top cities for real estate investment.
Houston’s reputation among investors can shift rapidly. In 2015 the city ranked as the top investment market in the Urban Land Institute/PwC annual survey; two years later it had fallen to No. 60.
The industrial market remains strong, though Bob Berry of Avison Young cautioned it may not sustain the rapid absorption levels recorded in 2018. Berry identified the Katy area as an emerging hub for industrial development in the coming years.
