Zigler attributes the positive outlook to a still strong and growing employment base along with two major sporting venues and the arts scene. All, he says, are "tremendous draws" for the downtown, even though they couldn't save a fourth quarter backslide. The CBD's class A occupancy was down 4.67 points to 92.43% between the Q3 close and Q4 end. Occupancy plunged 15.84 points to 81.26% if class A properties sill in initial lease-up are factored into the calculation. The upshot is the year ended with CBD occupancy down 12.32 points or 85.08%.

Suburban submarkets saved the day to keep occupancy citywide at 93.26% or down just 0.24 of a point between the quarters. In considering the quarter-to-quarter analyses, it's good to remember that Q3 posted the highest occupancy in more than eight years, say the researchers. Overall, Houston ended the year up 0.71 points over 2000 and recorded the second-highest level for the last eight years.

On the absorption side, only 926 units were removed from the market, the smallest amount in about four years. In comparison, 4,314 units were absorbed in the third quarter whereas the yearend total was 11,388 units or down 2,825 units from 2000.

Meanwhile, rent rose just a penny or 74 cents per sf in the fourth quarter. In the past year, rent has gone up just three cents per sf or 4.23%, according to O'Connor & Associates.