Recent months have seen a great flurry connected with activity, whether It possibly be
leases, move-outs, as well as acquisitions. This has simply no top secret that this
downtown market have been plagued by average
vacancies painfully close for you to 20% AS WELL AS stagnant rents. from the
thought It factors will improve with the near future, investors
have been shopping properties throughout earnest. your own fourth quarter
news am encouraging, notably EPCO, Inc.'s acquisition of
1100 Louisiana, a building of which They have next
occupied 300,000 square feet. Also, Wells real Estate funds
paid your own highest per-square-foot price at the Houston office
market's history ($286 psf) intended for all 5 Houston Center. Rumor offers This
that ChevronTexaco can be interested within buying the remaining
vacant former Enron building, though other energy providers
have begun in order to reclaim shadow space downtown.
Unfortunately, the Central corporation District's recovery is usually
anything but a great slam dunk. only two biggest tenants, Burlington
Resources AND ALSO Financial institution One, usually are necessary in order to vacate CBD space
in 2006 after acquisitions from ConocoPhillips ALONG WITH Chase,
respectively. with the same building Burlington is required to be able to
vacate, Calpine Corp. reduced The level of space they lease
and then lost naming rights towards the former Calpine
Center, today known through the address, 717 Texas.
Questions still remain exactly about Any time your downtown team market
will See a substantial improvement. The item did not happen because of the
recent influx regarding New Orleans division tenants, In the same way several thought It
would. However, strong employment growth has numerous experts predicting
a healthy 2006 due to the Houston division market overall, AND with
the positive fourth quarter numbers, This appears ones market is actually
moving with the correct direction.
ABSORPTION
The department market had a good relatively strong showing in the fourth quarter, absorbing 414,678 square feet (SF), your market's highest quarterly absorption figure since third quarter involving
2004. Classes a AS WELL AS C reported positive absorption for the quarter, even though just about all classes reported
positive annual absorption, bringing complete annual absorption in order to 737,259 SF.
The Class an market reversed it\'s negative showing on the third quarter, absorbing 412,724 SF with the fourth quarter. Annual absorption now stands in 527,952 SF. ones Central institution District was ones top-performing sector, within 423,142 SF absorbed, 300,000 that will came by EPCO's recent move in to 1100 Louisiana. your own Katy Freeway West sector had your second-highest absorption, at 134,682 SF.
After a strong third quarter, Class B absorption dipped in ones red from the last quarter,absorbing -41,424 SF. Bringing down your current volumes were ones Central institution District,which posted absorption connected with -184,715 SF, and also the North Loop/Northwest Freeway sector, of which absorbed -75,997 SF through the last quarter.
The Class C market bounced back your quarter, visiting positive absorption involving 49,488 SF, bringing annual absorption in order to 151,460 SF. ones North Loop/Northwest Freeway sector recorded ones strongest absorption in 67,388 SF, while your current Technology Corridor/FM 1960 sector recorded your current weakest absorption, on -20,924 SF.
Class D recorded absorption involving -6,110 SF from the quarter. whole absorption because of its year,although unremarkable, is still positive in 21,259 SF. Reporting your major quarterly loss
was ones Southwest 1 sector, throughout absorption of -23,083 SF.
Greater Houston department Absorption (in thousands).
OCCUPANCY
The Houston office market recorded their fourth consecutive quarterly increase, gaining 0.38 simple steps over the quarter, moving occupancy up 0.52 simple steps to its year. Quarterly decreases for the Class B AND D markets were offset by larger increases with the Class an AND ALSO C markets,
with Class a great signing a good 0.84-point increase with occupancy throughout the quarter. entire occupancy can be from the highest level because the mid-2003.
Class a occupancy rose 0.84 simple steps with the last quarter for you to 84.55%, ALONG WITH possesses increased 0.47 basic steps from the last year. Class a good occupancy with the Central company District rose 1.53
points to help 81.86%, thanks to be able to EPCO. Occupancy people were added bolstered by a great 2.93-point jump throughout occupancy for you to 94.81% at the Katy Freeway West sector.
Class B recorded a good lower within occupancy of 0.06 basic steps from the quarter. However, occupancy is up 0.59 points from the year. a good 2.12-point down throughout occupancy to help 80.75% within
the Central company District are ones major contributor towards quarterly decline.
Occupancy with the Class C market gained 0.20 simple steps over the last quarter. currently on 80.79%, occupancy is right now 0.48 easy steps above last year's level. your own highest occupancies were found with the Midtown/Allen Parkway AND ALSO Southwest a couple of sectors from 96.25% IN ADDITION TO 95.07%,respectively.
The Class D market recorded the 0.12-point drop with occupancy to be able to 77.77%, whilst occupancy can be up 0.32 simple measures through the past year. the Southeast sector, that will offers your own most significant concentration involving Class D buildings, posted occupancy of 80.12%.
RENTAL RATES
Average rental rates increased for the second straight quarter, gaining $0.07 psf (per square foot) for you to $18.21. that is a highest rate recorded because the primary quarter involving 2004. whole rents are today $0.13 psf higher compared to last year's levels. Strong rewards for the Class a great AND C markets drove ones market's total increase, offsetting the small down recorded in Class D.
Class the rents increased $0.13 psf from the quarter, ones most significant increase of any of any classes. Rents have risen $0.19 psf from the last year. the highest rental rates were found on the Woodlands/Conroe AND Katy Freeway West sectors with $22.02 AND $21.96 psf,respectively.
The Class B market posted an increase inside average rents associated with $0.05 to help $16.81 psf. Rents usually are up $0.15 psf since the actual date last year. your own Medical Center retains to publish your current highest
average rents at $21.63 psf, followed by the Woodlands/Conroe sector in $18.19 psf.
Class C rents rose to its third consecutive quarter, AND ALSO at $13.76 psf are generally on their highest level since the 2nd quarter regarding 2004. Rents gained $0.12 throughout the quarter AND usually are up $0.15
over ones year. your highest rents were found at the Midtown/Allen Parkway sector in $18.12 psf, whilst ones Southwest 1 IN ADDITION TO Southwest only two sectors had ones lowest rents with $12.00 psf.
After peaking earlier your year, Class D rents declined for its second straight quarter, slipping $0.04 to be able to $11.46 psf, even though rents remain $0.07 above last year's level. your own Midtown/Allen
Parkway sector had your highest rental rates at $14.22 psf.
