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HOUSTON-While the “jobless recovery ” continues to take its toll on the city’s office market, a few bright spots in the suburban submarkets are helping to mitigate the pain while waiting for the rebound.

Grubb & Ellis Co.’s third quarter results point to positive absorption in seven of 19 submarkets: far southwest submarket, 192,321 sf; NASA/Clearlake, 62,517 sf; Westchase, 58,800 sf; Greenway, 43,834 sf; Northwest Freeway, 18,445 sf; FM 1960, 12,808 sf; and Kingwood Northeast, 4,240 sf.

Robert Kramp, Grubb & Ellis’ regional services manager, tells GlobeSt.com that the city’s overall 1.7 million sf of negative absorption this year fell within prognosticators’ parameters, but he adds that the numbers are the “worst case scenario.” Still, he counters, “office leasing in Houston has tripped, but it hasn’t fallen.” At the Q3 close, absorption was trailing by 552,880 sf.

Kramp explains Texas is uncharacteristically trailing the rest of the nation on the road out of the recession. He predicts the city’s recovery will begin in mid-2004. In the meantime, small successes will have to do, citing a Q3 showing that had 11 of 19 submarkets with vacancies below the citywide average of 19.31%.

Rents in the third quarter dropped across all classes. Class A, full-service rent declined by 59 cents per sf to $21.82 per sf with the class B, full-service rate slipping 15 cents per sf to $16.76 per sf. Kramp says the most significant decline occurred within the CBD as the class A average fell by $1.27 per sf to $22.82 per sf and class B backslid $1.33 per sf to $18.17 per sf.

On a positive note, Kramp says the sublease inventory fell for the second consecutive quarter, ending the reporting period at 4.88 million sf. In the first quarter, sublease space peaked at 5.46 million sf. Kramp says he expects “this figure to subside further as terms begin to expire barring any large space dumping by area employers.

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