Houston’s healthcare sector serves as a critical engine of economic growth, anchoring the city’s broader diversification efforts beyond its traditional energy base. The Texas Medical Center (TMC), the world’s largest medical complex, employs over 100,000 people and draws patients globally, and with the TMC3 life sciences campus under construction, Houston is positioning itself as a major healthcare hub. Combined with the metro’s relatively affordable cost of living, high median household income, and strong talent pipeline from local universities, Houston’s healthcare ecosystem is expected to remain a cornerstone.

 

Highlights

• Medical office buildings remain attractive, but looming loan maturities and higher refinancing costs motivate some owners to sell rather than refinance.
• Rising vacancy rates and slower lease-up periods are beginning to weigh on property performance and valuations.
• While construction is currently limited, Houston’s history of heavy development cycles raises long-term risks of oversupply compared to peer markets like Austin and San Antonio.

 

Houston Demographics

Source: CoStar Group, Inc.

• Unemployment Rate: 4.4%
• Current Population: 7,883,927
• Median Age: 34.3 years
• Household Income: $81,844

 

Population, Labor Force, & Income Growth

Source: CoStar Group, Inc.

 

Rents

Average asking rents rose from $26.96/SF in Q1 2022 to $28.68/SF in Q3 2025, marking a gain of roughly 6.4%. While these increases appear modest on a quarterly basis, the trend highlights consistent upward momentum, even as traditional office continues to face record-high vacancy rates and steep concessions. This measured, incremental rent growth reflects the strong underlying fundamentals of healthcare real estate in Houston, supported by the city’s rapidly expanding medical ecosystem anchored by TMC and demand from providers who require long-term, strategically located facilities.

 

Vacancy

MOBs have held up better than traditional office, though vacancy has inched up from 21.0% in Q1 2022 to 28.1% in Q3 2025 as new supply and repositioned space entered the market. This rise masks stronger underlying fundamentals: job growth in ambulatory healthcare rose about 4% over the past year, outpacing overall office-using employment and ensuring sustained demand from providers tied to Houston’s expanding healthcare ecosystem and the Texas Medical Center.

 

Construction

With the TMC3 life sciences campus under construction, Houston is positioning itself as a national leader in biotechnology and commercial research, aiming to rival innovation hubs like Cambridge and San Francisco. The project is projected to generate more than 26,000 jobs and billions in economic benefits, while also catalyzing additional private investment in research facilities, labs, and mixed-use developments. Beyond TMC3, multiple large-scale life sciences and healthcare-oriented developments are underway, further entrenching Houston’s role as a hub for medical advancements.

 

Houston Healthcare Sales

Houston’s medical office investment market has remained a relative bright spot, drawing steady interest from private buyers and specialized funds. Sales volume has been resilient, with activity accelerating in 2025 after a slower 2024. Transactions totaled $55.4M in Q3 2025, the highest quarterly tally in more than two years, while pricing has held firm near $195/SF. MOBs continue to trade with compressed cap rates in the 7%–8% range, and premier properties can achieve sub-7% yields due to long-term leases and stable tenancy from healthcare providers. Recent examples, such as the Grand Parkway Professional Building trading at a 7.1% cap rate, highlight investor appetite for reliable income streams tied to Houston’s expanding healthcare base.

 

By the Numbers

Q3 2025 | Source: CoStar Group, Inc.

• Sales Volume: $55.4M
• Cap Rate: 7.25%
• Price Per SF: $195
• Vacancy Rate: 28%
• Rent Growth: –
• Asking Rent Per SF: $28.67
• SF Under Construction: 97,552
• SF Delivered: 75,135
• SF Absorbed: (113,114)