According to Cannon and the quarterly report she helps author at Grubb & Ellis Co., tech company expansions gone awry account for some of the vacancy while owner-occupied buildings, a popular new trend also has contributed to the vacancy. Cannon also believes the tech company fallout, move towards owner-occupied buildings and congested traffic patterns in the area might have contributed the lag in the Uptown Galleria submarket.
Jacobs Engineering is one of the biggest move-outs. The firm has vacated more than 200,000 sf of class-B office space in Loop Central, Grubb & Ellis reports. Jacobs has moved to an owner-occupied building in Westchase.
Comsys Inc. also has left more than 60,000 sf of class-A office space in the 5 Post Oak Park building, also in the Uptown Galleria submarket. Comsys, which shared much of the 60,000 sf with spin-off tech solutions firm Metamor Worldwide, has laid off many of its Houston staff and relocated into a smaller spot. The downsizing results from its acquisition by PSINet Consulting Solutions.
According to the Grubb & Ellis report the Uptown Galleria submarket currently has 28 million sf of office space, of which more than 4.4 million sf is vacant. The current vacancy rate is riding at 15.5%. The CBD has 32.9 million sf of office space with 2.8 million sf now vacant and an 8.5% vacancy rate.
There is no new construction in the Uptown Galleria submarket although the CBD has 1.4 million sf in the works. Rental rates in Uptown Galleria are $23.45 per sf for class-A buildings and $18.53 per sf for class B. The CBD office market's class-A rental rates run $25.96 per sf and $20.07 for class B.
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