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Houston’s office landscape is increasingly characterized by a widening gap between high-performing properties and a growing pool of underperforming space, according to Avison Young’s First Quarter 2026 Office Market Report for Houston. The report finds that the market’s overall vacancy rate remains elevated at 27%, but that vacant space is not evenly distributed across the inventory.
Avison Young’s analysis shows that 44% of all vacant office space in Houston is concentrated in just 16.4% of the market’s total inventory. These buildings, described as distressed assets, are largely older properties that lack the amenities now expected by many tenants and are facing mounting performance challenges as demand shifts elsewhere.
In sharp contrast, the report notes that trophy and Class A+ office properties are attracting the lion’s share of tenant interest. This top tier of the market recorded approximately 350,000 square feet of positive net absorption in the first quarter, indicating that more space was leased than vacated in this segment. As a result, direct vacancy among trophy and Class A+ buildings declined to 11.9%, its lowest level since 2015, underscoring the strength of demand for newer, higher-quality product.
Rents at the top of the market are responding to this demand. Full-service gross asking rents for leading Class A+ and trophy buildings surpassed $50 per square foot for the first time in Houston. Within that group, trophy assets reached an average asking rate of $57.71 per square foot, representing a 5.9% year-over-year increase. This rent growth at the upper end contrasts with the challenges faced by older, under-amenitized buildings that are competing for tenants in a market with elevated overall vacancy.
Tenant requirements tracked by Avison Young suggest that demand patterns are continuing to favor higher-quality space. The report indicates that leasing activity is increasingly concentrated within the upper tiers of the Class A segment, reflecting a clear preference among occupiers for buildings that offer modern specifications and competitive amenity packages. This divergence is reinforcing the performance gap across the broader Houston office market.
Within the Class A category, tier 2 buildings have emerged as a key beneficiary of this trend. According to the report, Class A tier 2 assets captured 57% of year-to-date leasing activity, the highest share recorded since 2019. This level of leasing volume for Class A tier 2 properties suggests that tenants are not only targeting the most premium trophy space but are also willing to commit to well-located, high-quality buildings that may sit just below the very top of the rent spectrum, further concentrating demand within the upper half of the quality curve.
The post Houston Office Tenants Concentrate Demand in Top-Tier Class A Space appeared first on CRE Market Beat.
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