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Non-Space Issues Drive Strong Office Absorption

CLEAR LAKE, TX-Office market fundamentals are improving, driven by expanding and relocating companies rather than space-oriented tenants. During the first quarter 2005, 192,115 sf of space is absorbed, helping occupancy and raising rents.

By Jennifer D. Duell | Updated on April 22, 2005

CLEAR LAKE, TX-The office market in this small submarket improved significantly during the first quarter 2005, posting 192,115 sf of absorption, according to Colliers International’s Bay Area Houston Office Market Review. For comparison, only 14,511 sf of office space was absorbed during all of 2004. “There’s more activity in the market now than there has been for several years,” says Coy Davidson, vice president of Colliers International’s Houston office and author of the Bay Area Houston Office Market review. “But, the activity isn’t driven by the space program. I think the expanding population is driving the need for services and a lot of companies are expanding or moving into the market,” he tells GlobeSt.comAccording to Davidson, most of the absorption was in the class B market. “It’s really filled up, and landlords are raising the rents,” he says. During the first quarter, 148,632-sf of class B space was absorbed, compared to 24,210 sf of class A absorption and 19.273-sf of class C absorption. For example, University of Phoenix leased more than 30,000 sf at 16055 Space Center Blvd., and GMAC Mortgage leased 6,555 sf at 17225 El Camino Real. Davidson represented the building owner, Onyx One Partnership, in the GMAC lease. GMAC was represented by Randy Mason of Colliers. The marketwide occupancy rate continues to rise. At the end of the first quarter, the occupancy rate was 86%. “The NASA/Clear Lake submarket is one of the healthiest in the Houston area,” Davidson says. Average rental rates at the end of the first quarter were relatively flat at $15.97/ sf. Class B rental rates, however, increases more than 6% compared to the of 2004 to $16.40 per sf. “I expect that we’ll continue to see more B space fill up,” Davidson predicts.

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