Houston commercial real estate activity is measured by including outright purchase of a property; owner to buyer, property leasing and property subleasing. Sublease space figures are generally not included in statistics that evaluate commercial space vacancy rates, but nevertheless can substantially impact the commercial real estate marketplace.

Houston’s commercial real estate includes office space, warehouse, manufacturing, distribution, research and development space. Although some five million square feet of additional industrial space has been added to Houston’s commercial real estate sector this past year (2009,) and an additional one million square feet is under construction or scheduled for construction so far this year, vacancy rates continue to rise, and many new projects are on hold.

This year could be a perfect time for companies now in a position to purchase or lease commercial space to take advantage of the many concessions sellers and landlords are willing to offer, particularly before demand eventually begins to equal supply. Tenants looking to sublease space are another source of supply that expanding companies can look to for discount rental agreements.

With nearly 1,000 office buildings in Houston offering concessions for leasing or subleasing office space, many young companies with limited budgets now have the opportunity to establish an office presence in prime locations they might ordinarily have been priced out of. Now is a particularly opportune time to negotiate a lease, since projections appear to be favorable for a strong revitalization of the Houston commercial marketplace towards year end. And don’t overlook the fact that in many cases landlords are competing with their own tenants who could be subleasing their space at substantially lower rates

We all think of office space as the standard four walls with rows and rows of those unattractive cubicles. However, today’s offices are anything but ordinary and, in fact, they can often go a long way to create a comfortable, dare I even say inspiring, work space.

There are many entrepreneurs and business owners who are looking for Houston office space for rent. However, what differs from today’s renters is that these people are looking for an office space that will inspire them. And the four walls and rows of cubicles just aren’t cutting it anymore.

From Home Offices to Less Traditional Office Space

Although we have seen a fair amount of entrepreneurs and small business owners making the shift to home offices, there are still a number of them who are looking for Houston office space for rent. However, what remains constant is that they are looking for a comfortable environment that doesn’t scream corporate environment and instead speaks of their appreciation of calming, quiet spaces where they can be the most efficient.

As a result, many landlords are tailoring spaces to suit their tenants. They realize that, instead of being concerned about how many cubicles can fit into one office space, they are looking for a creative community where businesses can thrive and work together.

No Cookie Cutter Offices Found Here

Some of the unique space that are being created look nothing like the corporate headquarters with the fake plants in the lobby; instead, they often reflect open bay environments, where the ceilings are soaring and the interiors are as far from cookie cutter as you can get.

With the office space market in Houston still quite stagnant, landlords are doing more to accommodate these new office concepts, while business owners and entrepreneurs are searching through the large inventory of Houston office space for rent for their perfect office environment.

It is not uncommon to see quite extraordinary office environments in Houston; from light art installations to meditation gardens and waterfalls, nothing seems to be out of the question when it comes to striving for that Zen office space.

In general, the Houston commercial real estate update for 2010 still looks quite dismal. And it’s no wonder. Last year was one of the most challenging years for the Houston commercial real estate market since the mid 1980s.

A Negative Net Absorption Nightmare

In fact, according to statistics from CB Richard Ellis Inc. Houston’s office market saw a negative net absorption of nearly 2.74 million – the largest loss since 1986.

In laymen’s terms, there was almost three million square feet less office space rented out in 2009 than 2008. That means loads of empty buildings and a lot of empty pockets.

New Construction at a Minimum

New construction has all but come to a halt, although there is another 2.4 million square feet of office space due to hit the market this year. After that, however, there are no new developments expected in the upcoming year.

The Houston commercial real estate update showed the biggest loss of the fourth quarter of 2009, when the office market loss one million square feet of rentable space.  Nearly 805,000 square feet of this space occurred in the suburbs.

CB Richard Ellis Inc. studies 17 submarkets, and the only areas that saw a positive net absorption for the last quarter of 2009 were: Katy Freeway, Greater Pearland,  East, Energy Corridor, and Clear Lake.

Overall, the Houston office market has a vacancy rate of about 16 percent at the end of 2009.

As a result of the high vacancy rates in Houston, lease rates tumbled in hopes of luring in renters. The last time lease rates decline in Houston was the second quarter of 2005, according to CB Richard Ellis.