Smaller Footprints Curb Total Leasing Volume
By Itziar Aguirre
CoStar Analytics
January 22, 2024 | 12:31 P.M.

Despite the total number of office leases last year increasing by 6% from the annual five year pre-pandemic trends, total leasing volume was equally down by about 6%.

Office tenants signed 4,022 leases in the Houston market in 2023, slightly above the 3,786 leases that were signed on average between 2015 and 2019. However, the average size of those leases was about 3,355 square feet, about 13.1% smaller than the average size of leases signed between 2015 and 2019, which was 3,863 square feet. That pushed total leasing volume to 13.5 million square feet, which was 6.2% lower than the 2015-2019 annual average of 14.4 million square feet.

The average lease size is declining for two reasons: fewer large leases are being signed and there is a reduction in office footprint. Office tenants, especially larger occupiers, appear to be more focused than ever on space utilization, and lease expirations are triggering “move-and-shrink” decisions for many larger occupiers. Smaller office buildings are often occupied by local businesses with smaller footprints that are less inclined to offer hybrid or remote work. These trends are not particular to Houston but rather are occurring throughout the country.

In the four years between 2015 and 2019, office tenants signed 33 leases larger than 100,000 square feet, excluding renewals. Since 2020, 24 leases larger than 100,000 square feet have been signed.

Many of the larger leases that have been signed since 2020 represent internal market moves from companies downsizing square footage to a newer or recently renovated building, sometimes just a few blocks away. For example, in early 2026, NRG is expected to downsize and move its headquarters from 430,000 square feet of space it subleased at 910 Louisiana to 255,000 square feet at the recently renovated 51-story Fulbright Tower, just a few blocks away.