Office vacancy rates are at their lowest point in years. Over the last year, office vacancy has dropped from 12 percent to 6 percent in the prime Class A buildings in the Energy Corridor of west Houston. The office market also is very strong in downtown and in The Woodlands.

Office building developers can’t resist this opportunity. New buildings are underway in the Energy Corridor, The Woodlands, Westchase and in the Galleria area, and maybe something will be built in downtown, too. In recent days, announcements of new construction projects included: Granite Properties’ 12-story new building on Briarpark Drive in Westchase; Wile Interests and Stream Realty project on the Katy Freeway at Greenhouse Road and the upcoming behemoth building project by Phillips 66.

A large new campus will be built in the Energy Corridor to accommodate Phillips 66, which is breaking off to be solo again from ConocoPhillips. Representatives of Phillips 66 are focused on the Katy Freeway, within a few miles of Beltway 8, scouting for appropriate acreage for construction.

Blame it on the oil boom

Houston office market experts attribute growth in the energy industry as the root cause for this turnaround in the office market. Energy companies, engineering companies that design oil rigs, oilfield service companies that sell drilling supplies and law firms that handle legal issues for exploration firms – they all are hiring.

Now, office space is exceptionally tight in the hot areas, such as the Energy Corridor, and companies are scrambling to find space and lock-in deals for the future as they plans to hire more people, says office leasing specialist Ryan Hartsell of Oxford Partners.

“It’s definitely turned around,” Hartsell says. “We’re working on a lot more expansions. Companies are willing to take on longer obligations.”

Exxon’s wake

Exxon Mobil’s massive corporate campus, being built on 400 acres in north Houston, will be a game changer for the office market. Thousands of Exxon Mobil employees will be transferred into the new campus in a few years, leaving behind a huge amount of vacant space – over 3 million square feet in other parts of Houston.

The Greenspoint area near Bush airport will be particularly hit hard, with Exxon Mobil vacating some two million square feet of space there. And then there’s the 44-story Exxon Mobil building downtown at 800 Bell. The 1.1 million-square-foot building, which opened in 1963, is long-in-the-tooth and hasn't been considered a top-tier property in years, but it still represents a big vacancy cloud over the future of the downtown office market.

The absence of Exxon Mobil will be a black mark on the image of downtown Houston. As Energy Capital of the World it seems plain wrong not to have Exxon there. Having the Exxon building remain vacant for very long would cause some negative ripple effects, such as erosion on sales at downtown restaurants and hotels. The Petroleum Club, where many a business deal has closed during a three-martini lunch, has been a fixture on the top floors of the Exxon building for almost 50 years.

Exxon Mobil has not announced what will happen to its downtown building. One of the most interesting rumors we’ve heard about it is that Exxon Mobil will donate the building to the City of Houston for municipal offices. You know, we can’t sell it, so let’s just give it to Annise Parker instead.

Job growth continues to provide fuel for Houston’s real estate markets, both commercial and residential. After adding some 80,000 last year and similar growth projected for 2012, the Houston office market appears to be in excellent condition for the near future. The market shrugged off the impact of the cutbacks at NASA and the departure of Continental Airlines without losing momentum.

So expect to see more new office projects starting in the months ahead. Developers just can’t resist it.

Ralph Bivins, former president of the National Association of Real Estate Editors, is founding editor of RealtyNewsReport.com.