The Houston research team's quarterly analysis shows three of 19 submarkets--the CBD, Greenway Plaza and the Uptown/Galleria submarket--posted losses greater than 50,000 sf. In contrast, the Far Southwest, Katy Freeway/Energy Corridor and Northwest Freeway/North Loop submarkets made significant gains, which helped to balance the numbers citywide.

Researchers said 315,021 sf of negative absorption was recorded citywide, with the quarter ending at an overall vacancy of 18.2% in the 153-million-sf inventory. The CBD's vacancy was 17.8% in its 36-million-sf inventory while the suburban count was 18.3% out of 117 million sf of office product. Both backslid on absorption: the CBD to the tune of 157,608 sf and the suburbs, 157,413 sf.

Robert Kramp, client services' manager for Grubb & Ellis' Southern US Region, tells GlobeSt.com that more than 37% of the CBD office space belongs to energy firms. The Enron Corp. debacle returned 575,000 sf at Three Allen Center at 333 Clay St.; 27,759 sf at Two Allen Center at 1200 Smith St.; 59,448 sf at 500 Jefferson St.; and 42,558 sf at 600 Jefferson St. Owned by Chicago-based Trizec Properties Inc., at least half of Enron's office space has been backfilled.

Meanwhile, rumors persist that JPMorgan Chase has plans to sell Enron's 1.3-million-sf headquarters at 1400 Smith St. once the foreclosure is done. Enron's first real estate to go was the 1.2-million-sf office building at 1500 Louisiana St., which sold last year to New York City's Intell Management & Investment Co.

Other energy firms, as well, are kicking in large blocks of office space to the market. Dynegy Inc., which laid off half the workforce, pushed 300,000 sf out for sublease at Wells Fargo Plaza at 1000 Louisiana St. CenterPoint Energy is looking to get out from under 537,299 sf of class A space at 1111 Louisiana St. "with the intention to turn the lights out completely" in June, according to the report. CenterPoint leases 75% of the 1.1-million-sf building. And, Calpine Corp. is searching for a subtenant for 109,400 sf out of its pre-leased 300,000 sf in the 689,028-sf Calpine Center at 717 Texas Ave., which delivers in November.

Looking ahead, Kramp says professional services firms in legal, financial and insurance industries will continue to backfill the CBD space until the economy rebounds.

Kramp attributes the difference between the suburbs and the CBD to cost and the city's hottest issue, mobility. Employers are saying it's become more expensive to attract employees to urban employment centers, i.e. the CBD or Uptown/Galleria, than the suburbs because workers are willing to earn less for the privilege of a shorter commute and less down time in traffic. Besides, rent is cheaper and so is the parking.

According to Grubb & Ellis, the average suburban rent for class A space is $21.50 per sf while class B brings in $16.69 per sf. In the CBD, class A space averages $23.84 per sf whereas class B goes for $19.83 per sf. Houston's effective rates, Kramp points out, are running 10% to 15% below the quoted price.