CRE Permanent in Houston

Retail and stabilized multifamily are permanent conversations today. Most Class B office is not. Cushman and Wakefield read Houston retail vacancy at 5.8% in Q2 2026, up 10 basis points year over year and inside the same 5.0% to 5.8% band it has held for four years. The same house put overall office vacancy at 24.7% that quarter, with Class B at 28.7% against Class A at 23.9%. CBRE had industrial at 6.7%. Vacancy numbers differ by research house because each defines the Houston inventory differently, so we quote one house and name it. Our read: a tight retail center or a leased-up apartment property is a permanent-debt file, while an office asset carrying real vacancy is usually a bridge and a business plan first, then permanent debt once it performs.

Conservatively, because the supply is still landing. Greater Houston Partnership and Northmarq figures for Q2 2026 show metro apartment occupancy at 88.1%, down from 88.6% a year earlier, and average asking rent at $1,368 against $1,380. The market absorbed 7,492 units over the trailing 12 months while 4,719 units delivered in the quarter alone and 13,066 remained under construction. That is a lot of competing lease-up sitting in front of your renewals. Bring trailing 12 collections and the current concession schedule to the first call rather than a rent roll built on asking rents. A permanent loan sized on collections holds up; one sized on hoped-for rent growth gets resized late in the process.

Because occupancy and rent are moving in different directions. CBRE recorded roughly 7.0 million square feet of net absorption in Q2 2026 and about 11 million year to date, with vacancy at 6.7%, so demand is genuinely there. At the same time 17.7 million square feet was under construction and only 42% of it pre-leased, and Matthews and Avison Young summaries put Houston industrial asking rent growth at roughly -0.8% annually, described as the first negative print in more than a decade. Those two brokerages also reported higher vacancy than CBRE, 7.3% and 7.6%, on different inventory definitions. For a bridge-to-perm exit, that argues for a conservative stabilized-rent assumption on the takeout, not the top of the range in your pro forma.

Roughly 2.1% of taxable value inside the city, more in the newer suburbs, and no assumption that the state cap survives. On 2025 rates, the combined bill inside Houston city limits runs about 2.1%, with the school district around 43% of it, the City about 26% and Harris County about 19%. Across much of Katy, Cypress, Fort Bend and Montgomery County, a Municipal Utility District levies its own tax on top, which can push a total rate toward the 3% range before those bonds amortize down. Pull the actual rate from the district or the Texas Comptroller special-district data before you underwrite a specific address; the MUD figures we have come from secondary sources. The live 2026 issue is the Texas circuit breaker under Tax Code section 23.231, which caps annual appraised-value increases on non-homestead property at 20% and is scheduled to expire on December 31, 2026 unless the Legislature extends it. A 10-year hold underwritten with that cap in place should be stress tested without it. Price the parcel with your CPA or tax attorney.

It can change whether you must carry flood insurance, which is a different question from what the premium costs. MAAPnext, the new FEMA maps for Harris County, would more than double the properties sitting in the 100-year floodplain, from roughly 158,500 to roughly 330,000, and the maps still face months of review before final approval. Under Risk Rating 2.0, FEMA prices each property on 30-plus property-specific factors rather than on its mapped zone, so a new map line does not by itself reprice an existing policy. What the map line does is trigger the mandatory-purchase requirement on federally backed debt, which the Kinder Institute estimates could reach more than 100,000 properties likely facing $1,000 or more a year. Properties in the 500-year floodplain carry no mandatory purchase requirement. For scale, Harris County holds about 262,391 NFIP policies averaging $931 a year, and only about 1 in 7 households carries flood coverage at all, so a seller with no policy tells you nothing about the risk. Carry a flood premium in the expense stack on any Houston asset being remapped, because it lands in the same NOI a permanent lender sizes off.

Title rates are set by the state and a title company runs the closing, not an attorney. The Texas Department of Insurance promulgates title insurance premiums, so every licensed title company charges the same basic premium; the current rates took effect March 1, 2026, and the basic premium rate was adjusted down by 6.2% in that filing. Because price is fixed, you pick a title company on execution and on whether it can handle your structure. Texas also closes through a title or escrow company rather than a closing attorney, which is a real difference if you have done deals in an attorney state. There is no zoning map here either, so what governs the site is the recorded deed restrictions plus Chapter 42 of the city code, including any Special Minimum Lot Size or Building Line on that block. Read the title commitment and the restrictions before you go hard, and have your attorney read them too.