By John Zivley, Partner, Office Tenant Representation, Houston

Time to read: 5 minutes

For years, office decisions were largely driven by cost.

How much space do we need? What can we afford? How do we reduce occupancy expenses?

Those questions still matter, but they’re only part of the equation.

Most companies still start the conversation with rent. What they’re realizing is that the office affects much more than the real estate budget. It influences everything from recruiting and retention to how teams work together and perform.

Smaller Footprints, Higher Standards

One of the biggest misconceptions in today’s office market is that companies are either shrinking or upgrading. In many cases, they’re doing both.

Employers are taking a fresh look at how their teams work and what they need from the office. Many don’t need the same amount of space they leased five or ten years ago, but they are looking more carefully at how that space functions and the experience it creates for employees.

The result has been a continued flight to quality. Newer Class A buildings continue to outperform much of the broader market. In Houston’s CBD, the gap is striking as tenants prioritize location, amenities, and environments that help support in-person collaboration.

Office Tier AA vs. Class A

I recently worked with a CPA firm that was bringing together multiple offices following a merger. While cost was certainly part of the conversation, so was creating a workplace employees would actually want to come to. The company ultimately chose a CityCentre location that offered walkability, shared amenities, and access to conference facilities — features that helped support both operational efficiency and the employee experience.

Value and Cost Aren’t Always the Same Thing

When companies begin evaluating their options, it’s natural to focus on rental rates.

But the lowest rent doesn’t always create the best outcome.

The answer isn’t necessarily finding cheaper space. It’s figuring out whether you’re using your current space efficiently. Yet many are still occupying space designed for a different version of the business.

Most businesses discover they can operate just as effectively with less space than they thought. That can create opportunities to improve the employee experience while keeping occupancy costs under control.

Construction costs also continue to influence office economics in ways many tenants underestimate.

I’ve seen situations where a lower-cost building ultimately required a much larger out-of-pocket investment because the landlord couldn’t provide the same level of tenant improvement allowance as a newer Class A property. What looked like the cheaper option on paper ended up being the more expensive decision.

That’s why evaluating office space requires looking beyond the advertised rental rate and understanding the full economics of a deal.

Tenants Have More Leverage Than They Realize

The other thing companies miss is how much leverage they still have in Houston’s office market.

Most tenants negotiate only a handful of major leases over the course of their careers. Landlords negotiate them every day.

As a result, companies often focus on the most visible aspects of a transaction while overlooking details that can create meaningful value over time.

Lease commencement language, tenant improvement packages, parking arrangements, expansion rights, signage opportunities, and rent abatements can all affect the economics of a deal.

In some cases, relatively small changes to a lease structure can create substantial savings over the life of an agreement.

Finding space is the easy part. Understanding how to create leverage is where the real advantage comes from.

I recently worked with a Houston-based professional services firm that was approaching a renewal. On the surface, it looked like they had little room to negotiate — their building was well-occupied and the landlord knew it. By starting the process 18 months early and quietly touring competing properties, we created enough uncertainty to move the needle. The landlord ultimately increased the tenant improvement allowance, added months of free rent, and granted building signage rights the tenant had been requesting for years. The total improvement to the economics of the deal exceeded seven figures over the lease term.

The Best Outcomes Start Early

If there’s one piece of advice I consistently share with clients, it’s to start earlier than you think you need to.

Companies often begin evaluating options only a few months before a lease expires. By that point, they’ve already limited several of their choices.

Starting 12 to 18 months in advance creates flexibility. It provides time to evaluate alternatives, compare locations, test workplace strategies, and create competition among landlords.

More importantly, it preserves leverage.

There is also a talent dimension that companies often overlook. The workplace a company offers has become part of the value proposition it presents to candidates and existing employees. Research consistently shows that workplace quality is among the top factors employees and job seekers consider when evaluating employers. Organizations that plan ahead have time to involve their teams in the process — to understand what employees actually need from the office and to design a space that supports both day-to-day performance and long-term retention. Companies that wait until the last minute make decisions based on expiration dates rather than on where the business and its people need to go.

When companies have time, they have options. And when they have options, they’re in a much stronger position to negotiate favorable terms and make decisions based on strategy rather than deadlines.

Looking Beyond the Lease

The companies getting the most out of today’s market aren’t necessarily the ones spending the least.

They’re the ones taking the time to understand their options, create leverage, and make decisions that support where the business is headed.

Office space will always be a real estate decision. The best companies recognize it’s also a talent decision — and they treat it that way from the start.