Office buildings are trading hands at steep discounts, landlords are competing fiercely to retain and attract tenants, and users who were once priced out of ownership are now finding creative ways to get into the game.
Across the country, commercial real estate professionals and occupiers are wondering what’s next. At Oxford, we’re seeing some patterns unfold, giving us a strong sense of where we’re headed in 2025 and beyond.
Here’s what our senior agents are watching and advising clients to consider now.
Fire sale pricing has created once-in-a-decade opportunities
In today’s Houston office market, seeing a building in foreclosure is no longer an anomaly. Nearly every week, our brokers are involved in proposals or negotiations on assets where the ownership group is in default or underwater. In some cases, we’ve seen assets initially valued at $11 million trade for $5 million or less.
For example, a recent transaction involved a law firm purchasing a 45,000-square-foot building listed at $8 million. We submitted multiple offers at $5 million before ultimately securing the property at that same number. What made the deal stand out was the insurance on the property: it was insured for $11 million, the amount the seller had into the building. That gap tells the whole story.
These aren’t isolated events. Office buildings across Westchase, the Energy Corridor, and other parts of Houston are listed or sold at 30 to 70 percent below their pre-COVID values. And while investors are snapping up deals, this is a particularly advantageous time for owner-users to step in and stop paying rent.
Class B and C buildings carry the deepest discounts
The steepest price drops are concentrated in Class B and Class C assets, particularly those built in the 1970s, 80s, and 90s. This trend is evident where location or design limits competitiveness. Landlords are finally pricing assets to move.
In Westchase, for example, we see buildings with asking prices as low as $40 per square foot. One listing involved a multi-tenant, 43,000-square-foot building at that price level. This kind of pricing didn’t exist a few years ago.
For investors, these deals offer high upside, particularly if they are prepared to invest in repositioning assets with upgraded amenities or new leasing strategies.
Class B and C buildings are holding up better in suburban areas like Katy, Sugar Land, Cypress, and Champions Forest. That’s primarily due to a shortage of product and continued demand from businesses looking to stay close to home and reduce employee commute times.
Location matters more than ever
The adage still holds: real estate is about location. However, today, the most crucial aspect of that location is proximity to employees.
After COVID, business owners are more aware that commutes are central to employee satisfaction and retention. That’s why buildings in Katy, Sugar Land, Park 10, and other employee-rich suburbs outperform assets in dense urban pockets with higher vacancy.
Even Class B and C buildings are seeing activity in those strong suburban submarkets despite limited amenities or dated designs. In Sugar Land, for example, there isn’t enough product. Tenants have to choose from a small pool of viable properties, and that’s driving stability in pricing.
Amenities are defining the leasing conversation
Tenant expectations have shifted. Today, employers want their offices to support company culture and employee well-being, which means selecting buildings with amenities that go beyond the basics.
Many companies now see fitness centers, tenant lounges, on-site food service, conference centers, and outdoor spaces as non-negotiables. These features also allow businesses to lease less space by reducing the need for in-suite breakrooms or meeting rooms.
For example, a tenant who downsized from a larger space was initially concerned about losing their breakroom. But once they saw the brand-new tenant lounge being constructed just steps from the suite, it became a win-win. The tenant didn’t need to build out the breakroom, and their team got access to a shared space with TVs, couches, and coffee machines.
Amenities aren’t just perks. They help businesses attract and retain talent and support hybrid work arrangements focusing on intentional in-office collaboration.
Landlords are offering generous lease incentives
Whether relocating, renewing, or renegotiating, this is a window to secure below-market rents, tenant improvement allowances, and significant concessions.
One recent Oxford client received:
- Phased move-in, paying rent on only a portion of the space for two years.
- One year of free rent on the entire premises.
- Turnkey buildout paid for by the landlord.
- $150,000 moving and furniture allowance.
Another client, a law firm, upgraded from a Class B to a Class A-minus building and still reduced their effective rent.
These deals are not reserved for tenants leasing entire floors. Even smaller tenants benefit when working with an experienced advocate who knows which buildings are overleveraged, where institutional ownership is willing to deal, and how to time the negotiation.
Owner-user demand is strong, and supply is tight
Owning a building is an attractive option for small and mid-sized companies with healthy balance sheets. But there’s a disconnect between pricing and availability in the sub-40,000-square-foot segment.
In the urban core, smaller buildings come at a premium. Properties that are only 5,000 square feet and offer limited parking are still fetching $2 million or more. The demand from buyers far outpaces supply, especially in established neighborhoods like Greenway Plaza or River Oaks, where location is everything.
Suburban areas offer a bit more inventory at lower price points, but even there, small buildings with good bones are selling quickly. Ownership may not be realistic for clients with limited budgets or narrow location requirements, and leasing becomes the fallback.
That said, we expect to see more small building opportunities in 2025 as more prominent owners restructure portfolios and new development remains limited.
Post-COVID leasing demand is stabilizing
Headlines paint a dire picture of office demand, but that narrative doesn’t match our day-to-day experience with clients.
Most of Oxford’s office clients have between 15 and 300 employees. These are regional, mid-sized companies, and they want their people in the office. They know their employees by name, value collaboration, and still see their workplace as essential to business success.
Some are adopting hybrid models or reducing their footprints, but they’re still leasing office space and making intentional decisions about where and how to operate. The downsizing trend is real, but it’s industry- and company-specific, and the sharpest pullbacks are coming from the largest corporations.
Looking ahead: Two to three years of continued opportunity
We’re still in the early phases of this office market reset.
Many buildings haven’t yet been forced to refinance at today’s interest rates, but that pressure is coming. As more properties hit the market at distressed pricing and new owners buy in at a lower basis, leasing incentives will likely remain strong. In short, there’s still time to make your move.
If your lease expires within the next 24 months or you’re considering buying a building, now is the time to evaluate your options. The next two to three years will define the long-term trajectory of the office sector in Houston and similar markets.
We’ll help you make the most of it.
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