Houston Commercial Property Values Inch Up Despite A Year Of Storms And Distress
Most Houston commercial properties and asset classes managed to modestly increase in value despite a year that brought a historic windstorm, a hurricane and plenty of distress, according to the Harris Central Appraisal District.
Commercial property values rose about 2% from the proposed values in 2024, with 60% of properties increasing in value and 12% decreasing, HCAD said in a news release this week. Property owners have until May 15, or 30 days after their appraised value notice was mailed, whichever is later, to protest their new valuations.
The total proposed appraised value of $265B is about $5B higher than 2024’s proposed value but about $25B higher than 2024’s certified value — the value after protests and adjustments.
Half of the county’s commercial value comes from multifamily and retail properties, while warehouses, office space, vacant land, medical office and hotels make up the other half, HCAD reported.
Almost a year ago, Houston was blasted by an unexpected derecho that felled numerous trees and shattered thousands of windows in downtown skyscrapers. Early estimates said the May 16 windstorm could have caused $5B to $8B in damage. Less than two months later, Category 1 Hurricane Beryl lashed the city, causing prolonged power outages and another $28B to $32B in damages.
Multiple commercial properties have suffered financial distress directly tied to the extreme weather, including an 881-unit apartment complex that lost 56% of its value. But HCAD did not mention the storms in its release.
Apartment values overall increased 0.8% in 2024, which HCAD attributed to strong demand and the slowdown in new construction. Multifamily occupancy and rental rates are reportedly 1% higher than the previous year.
The office market continues to struggle, though. Office values decreased by 7.7% from 2024 notice values “due to residual effects of the pandemic” as well as high vacancy rates and relatively flat rental rates, HCAD reported.
New commercial construction makes up $4.7B of the $265B of newly appraised property. Retail had the most construction permits issued, accounting for 47.5%, HCAD data shows. Hotels and motels accounted for only 1.5% of new construction permits and also saw the biggest property value increase at about 11%.
