Downtown Houston’s New Calculus: Q&A with CBRE’s Sanford Criner
Sanford Criner
HOUSTON – (Realty News Report) – Understanding downtown Houston’s office market today requires a new perspective. Vacancy rates remain elevated, yet developers are moving forward with major projects: Hines has begun construction on a 47-story tower, and Skanska is building the 750,000-square-foot Capital Tower. To explain current conditions in the Central Business District (CBD), Realty News Report spoke with Sanford W. Criner, CBRE Vice Chairman and native Houstonian. Criner brings more than forty years of experience in brokerage, development and consulting across global markets including Moscow, Rio de Janeiro and Oslo. A Rice University alumnus active in civic life, he helped found Scenic Houston and Scenic Texas and formerly chaired the Hermann Park Conservancy.
Realty News Report: Is downtown Houston still an attractive location for companies?
Sanford W. Criner: Yes—and that’s demonstrated by current construction activity. Between Skanska’s Capital Tower and the new Hines building on the former Houston Chronicle site, roughly 1.8 million square feet of new office space is underway, despite about 20 percent availability in Class A space. At first glance that vacancy rate suggests weakness, but the new construction and the leases that support it tell a different story. The market is being reshaped by tenant demand for higher-quality workplaces and a willingness to pay for them. Since the 1980s many firms moved downtown primarily for lower rents. Now the city is undergoing a re-sorting of tenants into a more rational arrangement focused on quality rather than just price.
Realty News Report: Energy companies don’t seem to be leasing much downtown. Is that affecting demand?
Sanford W. Criner: The tenant mix has shifted. Law firms, professional services and financial institutions are increasingly willing to pay premium rents for prime downtown buildings because they value the “quality of place” downtown provides. Downtown amenities and activity have improved over many years and continue to do so, making the area more attractive to these kinds of tenants even as energy-sector leasing has slowed.
Realty News Report: How does current vacancy compare to last year? Is occupancy improving?
Sanford W. Criner: There was positive Class A absorption in the second quarter of 2018—just over 100,000 square feet—the first gain in three years, so the trend is improving. But with roughly 20 percent availability, recovery will be gradual and uneven. Importantly, downtown is no longer a single market; it’s becoming highly segmented. Class A buildings are being reclassified by market reality into three practical tiers: AAA for exceptionally high-quality, often new buildings; AA for well-located buildings with strong architecture whose owners are willing to reinvest; and A (or even maintained B) for properties that won’t receive major upgrades. Rental rates and occupancy levels already reflect this sorting. Many 1980s-era buildings will struggle to compete unless owners invest in significant renovations. Some landlords, like Brookfield with Allen Center, are making those investments, and others may follow. The skyline is changing with a new generation of buildings tailored to modern tenant expectations.
Realty News Report: Is leasing in the CBD stabilizing? What has been the largest lease recently?
Sanford W. Criner: Yes, leasing is stabilizing. Some prominent departures, such as ExxonMobil, were less impactful on the competitive landscape because those buildings were already less likely to compete for new tenants without significant upgrades. Shell’s departure had a larger effect because it vacated good-quality space, contributing to available inventory. But much of the major flight to the suburbs has already played out; downtown has reached a stabilization phase and is slowly recovering. The largest recent lease in the CBD is Vinson & Elkins LLP’s 212,000-square-foot commitment to the new Hines tower on the Chronicle site, signed last month.
Realty News Report: How do companies leaving for the suburbs change downtown dynamics?
Sanford W. Criner: Those moves haven’t fundamentally undermined downtown’s appeal for non-energy firms. Large corporate departures have created vacancy, but they haven’t deterred law firms, financial institutions and other professional services that value high-quality downtown buildings and the amenities they provide. The demand profile has shifted from energy-related tenants toward firms willing to pay for best-in-class space in the CBD’s top properties.
Realty News Report: What role are new developments—like 609 Main @ Texas and Aris Market Square—playing? Does growing downtown residential help the office market?
Sanford W. Criner: Absolutely. There’s clear demand for modern, high-end office space, and developers are responding. Unlike earlier eras when offices stood alone, today downtown success depends on a mix of uses. Across cities nationwide, downtowns are being revitalized into walkable live-work-play environments that attract both residents and employers. Cultural and entertainment assets—Minute Maid Park, the performing arts theaters, Discovery Green, and Toyota Center—have transformed downtown into a place people want to be, which in turn makes it appealing to corporations. The surge in downtown residential development has strengthened the overall environment, adding vitality, street life and a customer base for retail and restaurants.
Realty News Report: Repositioning projects like The Jones on Main have refreshed old office stock. Will more repositioning occur?
Sanford W. Criner: Yes. Repositioning and adaptive reuse will continue across building types. Investors and developers will look for opportunities to enhance high-quality assets—updating lobbies, adding food halls, improving public spaces and restoring notable architecture. These improvements make properties more competitive and help create a better downtown experience overall.
Realty News Report: Is the tunnel system still relevant?
Sanford W. Criner: The tunnel system isn’t going away; it will remain a component of downtown’s fabric. That said, street-level retail is returning, and more vibrant retail at ground level will complement the tunnel offerings. Historically, downtown drew people for movies, dining and shopping—activity that diminished for decades but is now making a comeback. A renewed street presence will support office users and add to the sense of place that attracts tenants.
Realty News Report: Which past lease(s) had the biggest impact on the CBD?
Sanford W. Criner: One of the most transformative moves was Chevron’s consolidation into the former Enron buildings, acquiring one and leasing then purchasing the other. That decision was pivotal, instilling confidence in the CBD at a time when recovery was uncertain. Chevron’s commitment helped signal a broader renaissance for downtown offices.
Realty News Report: What do you expect downtown to look like in 10 years?
Sanford W. Criner: I see continued improvement. Downtown will become an even more vital, dynamic part of Houston—a place with lively street life, cultural programming, and a mix of residential, retail and office uses. The long-term health of the downtown office market will be tied to downtown’s success as a place to live, work and play. As the area becomes more walkable, entertaining and connected, demand for quality office space will follow, ensuring a successful future for the CBD.
