Bucking the Trend

by CoyDavidson on April 1, 2011

The Suburban Office Market in Houston is Leading the Slow Recovery

In many major office markets around the country, particularly the so called “gateway cities” the Central Business Districts have outperformed their suburban counterparts and most industry observers expect this trend to continue. However, in Houston this plain and simple just has not been the case, as the Class-A suburban office market has outperformed the Central Business District coming out of the recession.

Houston Office Market

Source: The Tenant Advisor

I am bullish on the long-term office market fundamentals of Houston’s Central Business District despite some near term concerns that include delivery of new space, suspected consolidation among various major energy tenants and a question mark as to how much space United-Continental Holdings will dump back into the marketplace.

However, in Houston the suburban office market is not taking a back seat and in fact to this point has been the strength of the Houston office market as the recovery takes hold. Over the last two quarters, the Class-A Houston suburban office market has recorded 1.4 million square feet of positive absorption as compared to 157,000 of negative absorption for Class-A buildings in the CBD.

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