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In the second quarter, Midtown overall net absorption remained positive at 12,300 sq. ft. Class A registered at negative 54,000 sq. ft. and Class B recorded positive 15,800 sq. ft. Companies are attracted to the area’s significant live/work/play amenities and the young, highly educated workforce. It is located centrally amid areas with strengthening demographics including Neartown/Montrose, the Museum District, the Washington Corridor, and Rice Military. And, the area includes Houston’s most affluent enclave, River Oaks. Beyond office product, the area is also now welcoming luxury high-rise multifamily developments.
Midtown’s vacancy rate of 17.2% as of Q2 2021 was outperforming the metro average at 24.4%. The vacancy rate for Class A properties is at 18.5%, and Class B at 16.2%. While the aggregate numbers for the Houston office market haven’t been encouraging, there are pockets of positivity when drilling down into the submarket arena: notably, Midtown—ranking 14th by inventory of Houston’s 23 submarkets—features the 8th lowest vacancy rate among all submarkets. Additionally, Midtown’s 48,000 sq. ft. of year-to-date positive net absorption placed 3rd of all submarkets with over 40 lease transactions signed this year, and it did so while posting the metro’s 3rd-highest average asking rent of $34.02 per sq. ft.
AVERAGE ASKING RATES
Overall full-service average asking rates in Midtown are at $34.02 per sq. ft., which is 16.7% above the metro-wide average of $29.16 per sq. ft. Rates increased $0.87 per sq. ft. quarter-over-quarter and year-over-year by $2.12 per sq. ft., a 6.6% upturn. Class A space (2.4 million sq. ft.) currently has an average asking rate of $38.11 per sq. ft., and Class B space (3.2 million sq. ft.) is registering at $30.18 per sq. ft.
Director of Research
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