HOUSTON—Office occupancy stands at an all-time high across the country in downtown markets, including in Houston where absorption has not been this strong since 1997, according to a report from CBRE Research.

The city saw 5.5 million square feet of positive net absorption last year, ranking just behind Manhattan (7.3 million square feet) and ahead of San Jose, Calif. (3.9 million square feet).

"As a result of strong leasing activity and an overall healthy market in recent years, Houston closed 2014 with 5.5 million square feet of positive absorption,” Angie Hamilton, CBRE research analyst, told GlobeSt.com. "The market has not seen absorption this strong since 1997 when it absorbed 7 million square feet. Interestingly, the market has only seen absorption over 5 million square feet once since then, and that was in 2006.”

The report finds that annual tenant demand, as measured by net absorption, totaled 52.7 million square feet in 2014, the highest annual amount since 2007. This demand has pushed the number of U.S. downtown and suburban markets on CBRE's quarterly “Occupiers vs. Owners Market Meter” to 19 owner-favorable markets, compared to just eight occupier-favorable markets.

Other downtown markets that saw the strongest annual total since 2006 include followed by Dallas-Fort Worth, Atlanta and Orange County, with 2.5 million square feet each.

Demand continues to be fueled primarily by the high-tech sector, which accounted for 19 percent of 2014's largest lease transactions by square footage across the country and represents a significant jump over the year prior, where high tech accounted for 13.6 percent of the largest lease transactions. Financial services, business services, healthcare/life sciences and creative services rounded out the top five sectors for leasing activity in major markets in 2014.

“The short term outlook is for high tech, financial services and government to be the most active industries leasing office space,” says Colin Yasukochi, director of research and analysis for CBRE. “As supply is slow to respond to this growing demand, tenants can expect to see rising occupancy costs, which will compel many to consider ways to achieve more efficient footprints through workplace strategy, or to explore lower cost submarkets.”