Sanford Criner, executive vice president, yesterday told a group of reporters and researchers that the city registered 1.7 million sf to the negative in the first quarter. "It looks awful," he said at the first-quarter press conference, "but the numbers don't tell the whole story."
Criner said the largest losses were in a few submarkets. Downtown bled 960,357 sf while the Galleria took a 590,309-sf hit due to downsized renewals by Williams and Nextira. And, Allen Parkway gave up another 101,981 sf, he says. Still, most of the contractions were anticipated by office brokers and building owners.
Criner says the market is such that rental rates have hit rock bottom with the after-expenses gain either a wash or as little as $5 per sf. In the CBD, the average rent was $19.79 per sf at the first quarter close. The suburban rate averaged $17.13 per sf.
As for vacancy, the downtown's 42 million sf is resting at a vacancy of nearly 22% and the West Loop Galleria submarket at 18.5% for 32 million sf of office stock. The suburbs as a whole, including West Loop, is 15% empty for a combined 136 million sf.
Criner said the facts don't support street talk that conditions are improving. But, he added, "my gut tells me we will see some change this year sometime."
Criner said the adage "best in the west" still holds true for Houston's western suburbs, where areas like Westchase absorbed 35,191 sf and the Katy Freeway rang up 42,886 sf to the positive. The two submarkets are the only ones in the metroplex to repeatedly posted positive since 1999, he reported.
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