Houston industrial has been the class asset for a decade. Nine hundred million square feet of stock, a Panama-Canal-expansion tailwind, polymer exports, and the fastest population growth of any US metro. Q3 2026 doesn’t change the long thesis — but it does end the run of unbroken rent growth. Asking rent turned negative year-over-year for the first time since 2010, and vacancy climbed 100 basis points past its 10-year average.

Underneath the headline, the market has clearly forked. Modern bulk over 500 K SF is still absorbing at a healthy clip — Grainger, Foxconn, and Panelmatic each took more than 600 K SF in the trailing twelve months. Sub-25 K SF vacancy has doubled since 2022 as smaller occupiers vacate for newer product. If you own an older asset in the 50–100 K SF range, you are in the fight for the first time in years.

Houston office has been in reset since 2020 and is still in reset. The blended vacancy of 19.9 % flatters a much harder story underneath: Class A trophy at 24.9 %, Class B (3-Star) at 18.6 %, only Class C at a relatively tight 8.8 %. Q1 delivered another 263,000 SF of new supply into a market that gave back 361,000 SF of occupancy — the fifth negative absorption quarter of the last six.

The pricing has adjusted. Cap rates on Class B office are pushing 10 %, on Class C nearly 11 %. That’s the flip side of the vacancy story — buyers who can underwrite the tenant risk and finance the TI package are being handed yield they haven’t seen in a decade. Institutional capital is largely on the sidelines; the active buyers are family offices, value-add sponsors, and owner-users acquiring their own space at meaningful discounts to replacement cost.

Retail is the tightest asset class in Houston — a sentence nobody was writing in 2020. Blended vacancy sits at 5.3 %, tighter than the 10-year average, and Power Center runs at a remarkable 2.7 % (essentially full). New supply is not slowing this: 4.2 M SF is under construction, 1.15 M SF of that broke ground in Q1 alone, and net absorption comfortably outran deliveries at +629,914 SF for the quarter.

Rent growth is the strongest of any Houston asset class right now. Neighborhood centers lead at +3.4 % YoY; Mall, Power, and Strip all print between +2.7 % and +3.0 %. Strip Center is the only subtype with negative absorption last quarter — but the rent print is still positive, which tells you what’s happening at the small-shop end: turnover is elevated, but landlords are re-tenanting at higher rates. That’s a healthy market.

Houston multifamily is the asset class most acutely feeling the supply story. Blended vacancy of 12.7 % is well above the 10-year average, driven by 13,290 units in the pipeline and the last three years of Class A deliveries still working through absorption. Class A rents fell -1.7 % YoY as new supply outran demand at the top of the market. Class B is down -0.9 %. Only Class C — workforce housing — held positive at +0.7 % rent growth.

Look at absorption by class though: Class A took 1,601 units of net absorption in Q1, Class B took 383, and Class C lost 278 units. The demand is at the top, but so is the supply — the market is churning through new deliveries. Class A cap rates at 6.5 % look aggressive against those rent trends; well-located value-add Class B at 6.8 % and Class C at 7.1 % are the more interesting buys for capital that can hold through the delivery wave.

Houston hospitality is in a normalisation year. 2024 was a blowout — natural-disaster-driven demand plus a heavy citywide events calendar drove RevPAR to record levels. 2025 came down, and the trailing-twelve-month prints reflect that: occupancy 59.1 % (down 7.2 percentage points YoY), RevPAR down -7.6 %. This is a return to trend, not a market break.

Then June 2026 arrives, and with it the FIFA World Cup — Houston hosts seven matches including quarter- and semi-final rounds. CoStar’s forecast has RevPAR growing 6.1 % by December. Investor activity is already responding: 77 hotel comps traded in the last twelve months (up from 72 two years ago), and the marquee $284 M Woodlands upper-upscale portfolio in December 2025 signalled institutional appetite is back. Cap rates averaged 8.5 %, with a wide 5 – 12 % range depending on class and location.