Is Class B the new A for offices in Houston?Is Class B the new A for offices in Houston?https://www.recenter.tamu.edu/news/newstalk-texas/?Item=50692014-02-03T10:36:00Z2014-02-03T08:00:00Z

HOUSTON - Rising rental rates and a lack of availability in Class A buildings are expected to push more owners and tenants to invest in Class B properties in 2014.

While the average rental rate for Class A space is $32 per sf, office buildings in high-demand areas, such as the Galleria, the Woodlands and Westchase, are charging as high as $40 per sf, said Alex Kakhnovets of Boxer Property Management Corp. Meanwhile, average rental rates for Houston Class B space is $21.84 per sf.

“Many businesses that have offices in these areas for years are beginning to get priced out. These tenants are now looking at nearby Class B building as viable options,” said Kakhnovets. “It’s common sense to look at Class B,” he said.

In fourth quarter 2013, 5.4 million sf of new office construction broke ground, according to CBRE, but many of those buildings will not be complete until 2015. The current vacancy rate for Class A buildings is 7.3 percent. Class B vacancy is at 14.9 percent.

With this in mind, tenants may look at splitting their operations, putting personnel that interacts with the public in Class A space, and other employees in lower-rent properties to save money.

Houston Business Journal
Houston-The Woodlands-Sugar Land
http://www.bizjournals.com/houston/blog/breaking-ground/2014/01/with-a-shortage-of-inventory-and-skyrocketing-rent.htmlRead more at {Source}

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