Houston’s Commercial Real Estate Market Is Changing: How to Keep Up

The Bottom Line

The reality? Single-family home sales fell 36% in 2023, yet the United States has 80 million more people than in 2008—the worst market on record. Demand for housing, retail, and commercial space is outpacing supply, creating major opportunities for CRE investors. Whether you’re investing in office spaces, retail, or industrial properties, adapting to these trends is key. Now is the time to refine your investment strategy.

Why It Matters

Houston continues to be a magnet for businesses and residents, but national CRE trends are shifting fast.

• Multifamily and industrial assets remain strong, while office vacancies are rising.
• Mortgage rates still hover around 7%, impacting financing and property valuations.
• Energy sector stability fuels industrial growth, but office and retail must adapt to new workforce patterns.

Population and job growth should be driving more demand, yet the market is experiencing pockets of distress. Investors who recognize this misalignment—and act strategically—will thrive.

Here Are the Details

How Mortgage Rates and Affordability Are Reshaping Demand

• 30-year mortgage rates peaked at 7.79% in late 2023. They now hover around 7% but remain high compared to early 2021’s 2.65%.
• Projections suggest rates could settle around 6.5% by year-end. While lower, they still impact financing costs for CRE deals.
• Houston home prices are also holding steady, but affordability remains a challenge. This could affect demand for multifamily properties and residential-adjacent commercial developments.

Are you looking to optimize your real estate investment strategy? Let’s discuss the best financing and market entry points.

How Population Growth Creates CRE Opportunities

• Single-family home sales were down 36% year-over-year, yet demand keeps rising.
• Since 2008, the country has added 80 million more people, intensifying the need for multifamily housing, retail, and services.
• Developers are shifting toward build-to-rent (BTR) communities, creating new investment opportunities.

For commercial real estate investors, this means strong demand for multifamily properties, mixed-use developments, and service-based retail. The need for housing drives the need for surrounding commercial spaces. Investing near high-growth residential corridors can yield strong long-term returns. Want to identify high-demand locations for your next investment? Let’s strategize.

Employment Growth and Its Impact on Houston’s Office and Industrial Markets

• Houston added 260K jobs post-pandemic, outpacing national growth trends.
• Downtown office vacancies are now at 32%, with older buildings seeing up to 38%.
• Industrial and logistics properties remain strong, driven by population growth and e-commerce expansion.

While Houston’s job market is thriving, office spaces need to evolve. Investors should look beyond traditional office models and consider adaptive reuse, mixed-use conversions, or high-amenity workspaces. Industrial remains a bright spot. Houston’s growing population demands more warehouses, logistics centers, and last-mile distribution hubs. Investors who recognize these trends will stay ahead.

The Energy Sector’s Long-Term Impact on Houston CRE

• Stable between oil prices are sustaining Houston’s energy-driven economy.
• Energy production remains high, but drilling activity is not expanding rapidly.
• Long-term projections show oil and natural gas will still dominate in 2050.

What does this mean for investors? Industrial properties tied to energy logistics, storage, and supply chain operations will remain valuable. However, traditional office spaces reliant on energy-sector tenants need to diversify. Does your portfolio focus mainly on corporate or office spaces? Now it’s the time to expand onto new market pockets. Want to position yourself in Houston’s strongest sectors? Find the right opportunities with RE/MAX Commercial Advisors Group. Contact us.

Wrapping Up

Houston’s commercial real estate market is at a crossroads. Strong population growth, shifting job markets, and evolving property demand require investors to rethink their strategies.

• Multifamily and industrial remain solid plays.
• Office spaces need repositioning to stay competitive.
• Retail demand follows housing expansion—knowing where people are moving is key.
• The logistics and manufacturing markets are promising.

The best opportunities go to those who understand where demand is rising. Are you ready to align your CRE strategy with Houston’s evolving market?  

Let’s connect and map out your next move.