Houston’s office market recorded stronger leasing and sales activity in the second quarter of 2009 compared to the first quarter, even as year-over-year vacancy increases and negative net absorption prevailed citywide. In sharp contrast to the previous office market downturn of 2001-2002 when the local Class A office sector was severely battered by the implosion of key energy and financial firms, Houston is currently experiencing a widening gap between Class A and B office properties at midyear 2009, with the latter bearing the brunt of the slowing economic conditions. This is particularly apparent in the Central Business District where Class A office vacancy remains in the single-digits, while downtown Class B vacancy has reached over 20%. Also indicative of the property class dichotomy is the year-to-date 1.1 million sq. ft. of negative net absorption for suburban Class B properties, compared to 482,881 sq. ft. of positive net absorption for suburban Class A properties.
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