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HOUSTON-The national economy might be on a roller coaster, but the Houston office market is “a stable and conservative environment,” says Sanford Criner, principal with Trione & Gordon ONCOR International.

“For the moment, developers are being cautious,” Criner tells a recent media gathering. “Construction is starting to fall off.” According to the firm’s latest report, new construction and absorption are just a bit apart, 1.2 million sf and 1.27 million sf, respectively.

Class A lease rates were generally flat while class B experienced only a modest increase. Criner predicts class B rents may increase a bit more since class A absorption is high. CBD rents were flat for the first time in five years. Criner believes Downtown property owners are cautious due to the new supply soon coming to market.

While there are some signs of the softness in the Houston market, the report confirms that Westchase and the Energy Corridor are still very hot. Westchase absorbed 661,048 sf in the last quarter while the Energy Corridor racked up 284,325 sf. Westchase scooped up one the highest leases in the BMC Software pact for its 708,304-sf corporate campus. Thus, says Criner, the Westchase submarket’s absorption may be a bit overstated. The report pegs BMC’s lease as one of the top lease transactions of the quarter. In the Energy Corridor, Conoco Inc. took 122,932 sf at Three Westlake Park and Transocean Sedco Forex, 77,000 sf at Park Ten Centre. Criner forewarns suburban markets will be the benefactors if CBD parking and rental rates aren’t dealt with as CBD tenants move to more hospitable locations.

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