"When we took over leasing of the building almost a year ago,the rates were at $18 per sf net," says Brad Fricks, vice presidentof Dallas-based Stream Realty Partners LP's Houston office. "Mostof the leases we've made in the past year are $24 per sf andhigher." Underwriting the uptick is the 99% occupancy in the 1400McKinney St. high rise.

According to Jim Arket senior vice president with Grubb &Ellis Co.'s Houston office, rising demand and a scarcity of largeblocks of space are spiking rents into record-breaking territory.In a second-quarter report, Grubb & Ellis researchers foundclass A space's vacancy is just 8.7%. The average gross rate is$30.60 per sf, up 37.2% from the same time a year ago.

Transwestern's midyear report puts the CBD inventory of 29.2million sf at 5.9%, which factors out to 1.7 million sf of openspace. Its researchers say the class A rate is averaging $26.69 persf.