Guide to buying Office Space in Houston by Dave Walker

According to Collier's International's first quarter 2008 office overviews report, Houston's commercial real estate closed the first quarter with optimal results. Houston's office market has continued to profit from stable job growth and a demanding need for office space. The citywide occupancy rate is up at an impressive 87.7% rate, which is an increase from 85.4% this time last year. Leading suburban office regions have continued to surpass the market's average with six sectors reporting occupancy levels at 90% or higher in the first quarter, including The Medica Center, The Woodlands, South Felipe-Voss, The Galleria/West Loop, Kingwood and The Katy Freeway/Energy Coridor. A strong tenant demand, increasing numbers in employment base and minimal available space imply that the local commercial real estate region will yet again obtain a clear-cut contradiction to the shrinking national market expected this year.

If you're thinking of buying commercial real estate office buildings, especially in the Houston area as an investment, this can create a positive cash flow, however, business owners in need of office space just to run a successful business, may want to consider leasing rather than purchasing., Potential property investment could consist of a modest single tenant domicile to the metropolitan high-rises that represents the cities sky-line. You must first decide which type of property is going to be both cost effective and profitable to your assets. For those who are new to this domain, it can be a complex exertion full of unfamiliar and innovative terms. With adequate research and diligence, however, it is possible to become articulate in office space lingo and prepared for your first deal.

It is essential to know the ABC's of office buildings which are sorted into three distinct groups, recognized as Class A, B and C. Buildings are given a Class A identification, if the construction and overall appearance is of the highest essence, they are appealing to superb occupants and professionally managed. Class A structures are located in predominant areas that require the most expensive payments in the market. Imagine an exquisite glass skyscraper in the financial district occupied by prestigious law firms, stock brokers and other distinguished tenants all longing to achieve unmeasured success- that is a Class A building. Class B buildings are merely an older version of Class A buildings. These structures, although often well preserved and custom designed, tend to offer lower rental rates than Class A buildings and may be located in less expensive business parks or districts. The third and final group is the Class C buildings, which have the tendency to be more efficient than inventive and are typically over 20 years old; however, they are steady occupied. They are often located in mixed used buildings, on an upper level above retail or service type businesses as well as industrial parks. Class C buildings are generally 20 percent lower in rent than any given market. It is important to note, that there are many requirements to be categorized within a specific building class, however, no formula is used to determine the classification and a judgment call may be made in the final analysis.

The following components if applicable to your situation, may lead you to conclude that unless you are an investor, leasing office space rather than purchasing office space in Houston would make better sense. Your current cash flow is vital, and leasing a space to operate your business successfully, may me a much more practical than purchasing from a cash flow outlook. This is because upfront expenses associated with an office space lease are usually much less than those required with a property purchase. With leasing the commercial property, your main outlay should only be a security deposit and the first month rent, however, with a purchase, you have to pay the negotiated purchase price or at least a down payment on a mortgage. You will also be responsible for all maintenance duties that provide prolong durability to your structure as well as any renovations to improve the overall appearance of your facility.

The most important thing to do in buying or leasing any office space in Houston, is to hire a reputable and professional commercial real estate agent that will work diligently to provide you with the proper information and resources needed based on your specific needs.