In the meantime, the Houston office market is showing signs of improvement, Clarke says. Although it experienced weakness through the winter, leasing activity is picking up. "There is an underlying sense of optimism in the market," he tells GlobeSt. "We're starting to see people making decisions."

In fact, Clarke notes a marked shift in tenant attitudes. "Last year it seemed like people were just looking around--they wanted to wait as long they could to see how things would shake out with the national and local economy," he says. "They now have more clarity and are committing to leases." The report notes that many tenants are renegotiating and extending their leases in an effort to lock in favorable terms, while others are considering relocations to either upgrade location or space.

That recent activity has yet to show up in absorption or occupancy rates. However, asking rents have held relatively stable, according to the report. During the first quarter, for example, net absorption of office space in the Houston metro totaled negative 353,000 square feet. Out of the four main submarkets, two submarkets--Katy Freeway/Energy Corridor and West Loop--posted positive absorption at 102,000 square feet and 222,000 square feet, respectively.

Available sublease space totaled 2.3 million square feet in the Houston metro area at first quarter 2010--unchanged from year-end 2009. Sublease space represents 0.9% of standing inventory. The overall office vacancy rate (including sublet space) in the Houston metro rose to 13.8% at the end of the first quarter from 13.5% at year-end 2009 and 12.7% a year ago.

Class A office asking rents declined by 2.9% in the 1st quarter of 2010, while class B asking rents were down 0.6%. Average asking rents were $24.70 per square foot, full service, for class A buildings and $18.24 per square foot, full service, for class B buildings, according to the report.

At the end of the first quarter, 2.8 million square feet of office space was under construction or renovation, down from 3.1 million square feet at year-end 2009 and eight million square feet a year ago. Most of the space under construction is in downtown or the Sugarland submarket, according to the report. Office deliveries (excluding renovations) totaled 409,000 square feet in market, compared to 1.8 million square feet during the 1st quarter of 2009.

The report predicts that the overall office vacancy rate (including sublet space) in the Houston Metro will likely rise to the 14% mark by mid-year. However, vacancies are expected to drop quickly to the mid-13% range over as the economy strengthens and demand for space increases.

"From my perspective, things are stabilizing, and we're seeing things move in the right direction again," Clarke says. "It's not unbridled activity, but I am encouraged."