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DALLAS-The 2000 space race isn’t going to be repeated this year, but second quarter numbers are showing that leasing activity has picked up. Rounding the corner into the third quarter, it appears all will remain copasetic, say two Texas brokers.

“I don’t see anything on the horizon that would change it a whole lot,” Randolph Strait, Crescent Real Estate Equities’ vice president of leasing in Houston, tells GlobeSt.com. Houston has been a driving force for Texas this year, thanks to the energy industry. Strait says 500,000 sf in the city’s 77 million sf of class A office inventory had been absorbed in the first quarter and it’s looking like the same could be realized in the final count for the second quarter. That’s not the case in Dallas, where Q1 absorption had been negative for the first time in a decade. Calvin Hull, senior director of Cushman & Wakefield of Texas Inc.’s Dallas office, pegs the Dallas vacancy at 18% or 6-1/2 million sf, of which 5-1/2 million sf is sublease space. At the end of 2000, Dallas sublease space had totaled 2-1/2 million sf.

Houston’s vibrant market, Strait says, is a direct result of the energy industry’s good times. Take away the windfall, he says, and Houston looks much like the rest of the country. “I would expect a reasonably good third quarter,” he predicts. “It’s not going to be a spectacular year, but it will be a good solid year.”

Dallas is starting to follow suit with Austin, as concessions creep into the leasing marketplace. Hull says furniture, telecommunications equipment and even free rent are being dangled as carrots to get tenants to sign on the dotted line. Most of the concessions are coming from building owners who have taken space back from the belly-up high-tech companies or those that have downsized in the downturn.

Hull tells GlobeSt.com that giveaways aren’t part of the everyday leasing world in all submarkets, just a few and more so in those that are being affected by the “High Five in Five,” a five-level freeway mixmaster. The Central Expressway and Park Central building owners, says Hull, are becoming particularly generous in their bids to keep tenants and attract more as the region gears up for the road rage that is sure to come with the construction.

According to Hull, the first quarter slump had eased with second-quarter signings, but “May and June have been pretty ugly again.” He’s not optimistic that July will be any better. The tide will change in Dallas, says Hull, when “corporate America is better. It could be any city in America right now. It just so happens that it’s happening in Dallas right now.

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