GeneG posted on April 20, 2009 15:36
(Houston) - The local office market experienced the highest quarterly negative net absorption rate in the last five years in first quarter 2009, according to the Office Market Trends Houston report by Grubb & Ellis Co. Houston had nearly 919,000 sf of negative net absorption for the quarter. Of the total, about 6,600 sf was Class A, 768,000 sf was Class B and 143,500 sf was Class C space.
The Grubb & Ellis report shows the Houston office market reached a 14.7 percent vacancy level during 1Q 2009, the highest level since the end of 2006. Vacancy rates are expected to continue rising since 5.3 million sf of office space is under construction in the Houston area.
Sublease space rose by about 845,300 sf to nearly 3.5 million sf during 1Q 2009. The amount is still significantly lower than the 5.5 million sf of sublease space that hit the market during the last economic downturn that began in 2001.
Asking rents for Class A space, declined by 7 cents to $30 per sf for the quarter. However, asking rents in downtown Houston actually rose by 5 cents during the quarter to $38.43 per sf. Asking rents for Class B space decreased the most during the quarter, dropping by 36 cents to $20.68 per sf. Asking rents for Class C space also fell - by 23 cents to $15.65 per sf.
[Houston Business Journal]