{"id":12692,"date":"2026-10-29T21:23:55","date_gmt":"2026-10-29T21:23:55","guid":{"rendered":"https:\/\/www.lee-associates.com\/houston\/?p=12692"},"modified":"2026-10-29T21:23:55","modified_gmt":"2026-10-29T21:23:55","slug":"houstons-office-woes-are-getting-too-expensive-to-fix","status":"publish","type":"post","link":"https:\/\/www.lee-associates.com\/houston\/2026\/10\/29\/houstons-office-woes-are-getting-too-expensive-to-fix\/","title":{"rendered":"Houston&#8217;s Office Woes Are Getting Too Expensive To Fix"},"content":{"rendered":"<p>Houston office investors should plan to spend double a building\u2019s purchase price.<\/p>\n<p>Older office buildings need upgrades and renovations that will cost just as much as the building itself to compete for tenants, brokers said at Lee &amp; Associates Houston&#8217;s third-quarter market briefing on Tuesday. And increasingly, they said, landlords getting work done are not able to pay for it.<\/p>\n<p>Brokers check for a mechanic&#8217;s lien, a legal document filed by contractors who haven\u2019t been paid for their work, as a standard practice before bringing tenants to tour an office building, Lee &amp; Associates co-Managing Principal <a href=\"https:\/\/www.bisnow.com\/tags\/chris-lewis\" target=\"_blank\" rel=\"noopener noreferrer\">Chris Lewis<\/a> said. With loans coming due and financial <a href=\"https:\/\/www.bisnow.com\/tags\/distress\" target=\"_blank\" rel=\"noopener noreferrer\">distress<\/a> spreading throughout Houston\u2019s office market, the presence of liens is \u201cquite prevalent\u201d lately, he said.<\/p>\n<p>\u201cThat&#8217;s probably not a good sign that they&#8217;re going to be maintaining the building well,\u201d Lewis said.<\/p>\n<p>Identifying these issues early can prevent trouble later, as tenants have high standards in Houston\u2019s split office market, where rents are rising due to demand for top-tier space. The metro has a direct vacancy rate of <a href=\"https:\/\/www.lee-associates.com\/houston\/2026\/07\/21\/houston-citywide-office-market-report-q2-2026\/\" target=\"_blank\" rel=\"noopener noreferrer\">about 23%<\/a> \u2014 well above the national vacancy rate of <a href=\"https:\/\/www.cbre.com\/insights\/figures\/q3-2026-us-office-market-report\" target=\"_blank\" rel=\"noopener noreferrer\">about 18%<\/a> \u2014 with much of that concentrated in old, poorly located and obsolete buildings.<\/p>\n<p>Tenants may think they\u2019re getting a good deal on an acceptable building recently acquired by a newer investor. But if that investor can\u2019t afford to maintain the building\u2019s mechanical, electrical and other systems, the tenant will be itching to leave long before their lease expires, Lewis said.<\/p>\n<p>\u201cFor the owners that aren&#8217;t putting money into the assets, they&#8217;re going to move,\u201d he said. \u201cThey&#8217;re going to have air conditioning problems. The elevator doesn&#8217;t work. Things like that. You only put up with that for so long.\u201d<\/p>\n<p>There\u2019s been a shift from institutional to local office investors in Houston. Some of them may not realize that their $10M building also needs $10M of work, Lewis said. A lack of capital to invest in maintenance and upgrades will send tenants scattering, unless the building trades to an institutional investor.<\/p>\n<p>\u201cWe are seeing a little bit more institutional capital interest in Houston on the office side than we have seen, but it&#8217;s still not on the radar of the big institutions yet,\u201d he said.<\/p>\n<p>If these buildings are not sufficiently upgraded and maintained or traded, there is a significant chance that they will empty and fall into the obsolete category, for which options are extremely limited.<\/p>\n<p>\u201cMost of these office buildings need to be torn down,\u201d said Jason Dannatt, who specializes in commercial resource capital for Lee &amp; Associates. That includes some midblock office buildings that never should have been built and some 1970s vintage product, he said.<\/p>\n<p>\u201cThere are millions of square feet of office buildings that need to be taken off the sheet because no one will ever occupy them ever again, because they don&#8217;t make sense,\u201d Dannatt said.<\/p>\n<p>In some cases, even <a href=\"https:\/\/www.bisnow.com\/tags\/demolition\" target=\"_blank\" rel=\"noopener noreferrer\">demolition<\/a> is not financially feasible. Asbestos can add tens of millions of dollars to the upgrade or demolition costs, Dannatt said.<\/p>\n<p>But despite the challenges, the continued flight-to-quality trend is pushing market rents to all-time highs. The weighted average asking gross rent rose to about $31.50 per SF in the third quarter, 4% above the 2025 average of $30.26 per SF, according to Lee &amp; Associates data.<\/p>\n<p>\u201cThe good stuff is good, and the bad stuff is bad, and there&#8217;s not much in the middle,\u201d Dannatt said.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Houston office investors should plan to spend double a building\u2019s purchase price. Older office buildings need upgrades and renovations that will cost just as much as the building itself to compete for tenants, brokers said at Lee &amp; Associates Houston&#8217;s third-quarter market briefing on Tuesday. And increasingly, they said, landlords getting work done are not able to pay for it. Brokers check for a mechanic&#8217;s lien, a legal document filed by contractors who haven\u2019t been&#8230;<\/p>\n","protected":false},"author":275,"featured_media":12693,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-12692","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v28.8 (Yoast SEO v28.8) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Houston&#039;s Office Woes Are Getting Too Expensive To Fix - Lee &amp; Associates | Houston<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.lee-associates.com\/houston\/2026\/10\/29\/houstons-office-woes-are-getting-too-expensive-to-fix\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Houston&#039;s Office Woes Are Getting Too Expensive To Fix\" \/>\n<meta property=\"og:description\" content=\"Houston office investors should plan to spend double a building\u2019s purchase price. Older office buildings need upgrades and renovations that will cost just as much as the building itself to compete for tenants, brokers said at Lee &amp; Associates Houston&#8217;s third-quarter market briefing on Tuesday. And increasingly, they said, landlords getting work done are not able to pay for it. Brokers check for a mechanic&#8217;s lien, a legal document filed by contractors who haven\u2019t been...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.lee-associates.com\/houston\/2026\/10\/29\/houstons-office-woes-are-getting-too-expensive-to-fix\/\" \/>\n<meta property=\"og:site_name\" content=\"Lee &amp; Associates | Houston\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/LeeAssociatesHouston\/\" \/>\n<meta property=\"article:published_time\" content=\"2026-10-29T21:23:55+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.lee-associates.com\/houston\/wp-content\/uploads\/sites\/80\/2026\/10\/Bisnow-article-Office-woes.png\" \/>\n\t<meta property=\"og:image:width\" content=\"1143\" \/>\n\t<meta property=\"og:image:height\" content=\"1075\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"houstonweb5\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@LeeAssociateHOU\" \/>\n<meta name=\"twitter:site\" content=\"@LeeAssociateHOU\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"houstonweb5\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.lee-associates.com\\\/houston\\\/2026\\\/10\\\/29\\\/houstons-office-woes-are-getting-too-expensive-to-fix\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.lee-associates.com\\\/houston\\\/2026\\\/10\\\/29\\\/houstons-office-woes-are-getting-too-expensive-to-fix\\\/\"},\"author\":{\"name\":\"houstonweb5\",\"@id\":\"https:\\\/\\\/www.lee-associates.com\\\/houston\\\/#\\\/schema\\\/person\\\/0f1e841a79d647627de3db2651aca65c\"},\"headline\":\"Houston&#8217;s Office Woes Are Getting Too Expensive To Fix\",\"datePublished\":\"2026-10-29T21:23:55+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.lee-associates.com\\\/houston\\\/2026\\\/10\\\/29\\\/houstons-office-woes-are-getting-too-expensive-to-fix\\\/\"},\"wordCount\":589,\"publisher\":{\"@id\":\"https:\\\/\\\/www.lee-associates.com\\\/houston\\\/#organization\"},\"image\":{\"@id\":\"https:\\\/\\\/www.lee-associates.com\\\/houston\\\/2026\\\/10\\\/29\\\/houstons-office-woes-are-getting-too-expensive-to-fix\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.lee-associates.com\\\/houston\\\/wp-content\\\/uploads\\\/sites\\\/80\\\/2026\\\/10\\\/Bisnow-article-Office-woes.png\",\"articleSection\":[\"Blog\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.lee-associates.com\\\/houston\\\/2026\\\/10\\\/29\\\/houstons-office-woes-are-getting-too-expensive-to-fix\\\/\",\"url\":\"https:\\\/\\\/www.lee-associates.com\\\/houston\\\/2026\\\/10\\\/29\\\/houstons-office-woes-are-getting-too-expensive-to-fix\\\/\",\"name\":\"Houston's Office Woes Are Getting Too Expensive To Fix - Lee &amp; 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