While employment gains are starting to slow down to a more normalized pace compared to the rapid rebound experienced in the years immediately following COVID, Houston’s economy remains strong with nearly 90k jobs created over the trailing 12 months ending May 2024. Further, the unemployment rate in the Bayou City remains relatively low at 4.0%. Office-using jobs have grown by almost 9%, with 64,800 new positions added since its pre-pandemic peak. However, there has not been a direct correlation in office space absorption as companies work to become more efficient with their footprints likely due to the adoption of hybrid and remote work arrangements.
Leasing activity in Trophy properties continues to outperform the broader market. As the flight-to-quality trend persists and the construction pipeline remains suppressed, this could lead to rent premiums and shrinking concessions in Trophy properties as the supply of high-quality space options becomes more constrained. Tenants are seeking higher-quality office environments that replicate the desirable aspects of working from home.
