According to Grubb & Ellis Co.'s latest market report, the final months of 2005 resulted in 845,609 sf of positive net absorption. For the entire year, the region absorbed 2.3 million sf of all class space in its 154.7-million-sf office inventory. In the class A category, 1.1 million sf was absorbed while class B and C deals ended up taking down 313,188 sf and 164,775 sf, respectively. "We're seeing companies taking up a lot more space, a lot of shadow space being re-absorbed and a lot of internal expansion of companies," says Ariel Guerrero, client services manager in Houston for Grubb & Ellis.

Guerrero says the strongest absorption growth was to the west, with Katy Freeway/Energy Corridor absorbing 725,732 sf in its inventory of 15.7 million sf and Westchase submarket filling close to 400,000 sf in its 10.8-million-sf stock. Guerrero attributes the popularity of city's west side to the high number of executives that live in its bounds. As a result, he says office tenancy is coming out to meet them. Plus, he adds, "it's easily accessible to any part of town. You can hop on the Beltway (8) or I-10 and you're there."

Guerrero cautions vacancies might be continuing to drift downward, but it doesn't mean concessions are going away. The CBD still continues fairly high in terms of vacancies and low on the absorption end. "Landlords are still aggressive Downtown," Guerrero says. "They're still offering some concessions, mainly because there's still a lot of space in those areas." But it won't last forever, he predicts, citing a upcoming expansion by ChevronTexaco. "The CBD will get a lot better. It'll take some time, though."

The Greenway and Galleria submarkets also have plenty of available space on their rosters. Still, Guerrero concludes, "fundamentals in markets continue to do very well."