HOUSTON (Houston Business Journal) – The recession has prompted a slowdown in new tenants and construction starts for the Energy Corridor, but experts say the submarket is faring better than others in the city and expect it to perform well in the long term.

In 2007, the overall vacancy rate stood at 6.4 percent. In 2008, that dropped to 5.7 percent, but by midyear 2009 it had risen to 8.8 percent. Net absorption was at 1.2 million sf in 2008, although by June 2009 it reached only 48,000 sf.

In the short term, the more than 1.25 million sf of space coming online — 33 percent of which is preleased — combined with low natural gas prices, will result in downward pressure on lease rates, mainly on these new buildings.

Class-A vacancy is expected to rise 50 percent this year, the highest increase in five years.

On the upside, recent expansion of I-10 along the corridor will provide increased access to future and existing buildings and promote growth.