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Houston Industrial Market Research & Forecast Report - 2Q 2011
 

Houston Industrial Market Research & Forecast Report - 2Q 2011

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Houston Industrial Market Research Forecast Report - 2Q 2011

Houston Industrial Market Research Forecast Report - 2Q 2011

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    Houston Industrial Market Research & Forecast Report - 2Q 2011 Houston Industrial Market Research & Forecast Report - 2Q 2011 Document Transcript

    • Q2 2011 | INDUSTRIAL MARKET HOUSTON INDUSTRIAL MARKET RESEARCH & FORECAST REPORT Houston’s Industrial Construction Activity Increases Houston’s industrial market fundamentals continue to strengthen, with 1.3M SF of positive net absorption in the second quarter pushing year-to-date absorption over 2.1M SF. Houston’s industrial vacancy decreased by 30 basis points to 5.7% from 6.0% the previous quarter. The quoted citywide rental rate for industrial space increased by 0.6% between quarters from $5.31 to $5.34 per SF NNN, and CITYWIDE MARKET INDICATORS increased by 8.6% on a year-over-year basis from $4.88 per SF NNN. Leasing 2Q-10 2Q-11 activity for the first half of 2011 reached 6.5M SF, with the majority of the leases being in the 20k to 40k SF size range; however, there were some more significant QUARTERLY NET ABSORPTION deals which are listed on the following page. 1,121,194 SF 1,264,061 SF Houston is once again making headlines as one of the stronger real estate QUOTED RENTAL RATE NNN markets in the nation. In its March 2011 issue, Site Selection awarded Texas the $4.88/SF $5.34/SF Governor’s Cup for new project activity, with 424 projects of which 152 are located in the Houston MSA. Houston ranked #2 for Tier One New and Expanded INDUSTRIAL VACANCY Facilities in 2010 of MSA’s with population over 1 million. In addition, Chief 6.5% 5.7% Executive Magazine (for the seventh straight year) named Texas as the number one state for Best Business. QUARTERLY DELIVERIES 235,050 SF 550,367 SF Houston’s strategic location and core strengths, including an expanding energy sector, strong import/export trade activity, cutting-edge medical advancements, UNDER CONSTRUCTION and technological breakthroughs across industries, uniquely position it to play a 238,518 SF 979,767 SF vital role in meeting national and global market demands in the near and far term. For several years now developers have shown restraint due to the economic downturn; however, the first half of 2011 saw increased construction activity. Houston’s industrial construction pipeline increased between quarters to 979,767 SF from 723,801 SF. Much of the increased activity was driven by build-to-suit projects for companies expanding into the Houston market. As Houston’s available industrial inventory shrinks, we believe the demand for new projects will UNEMPLOYMENT & JOB GROWTH continue to increase. (Seasonally Adjusted) UNEMPLOYMENT 5/10 5/11 ABSORPTION, NEW SUPPLY & VACANCY RATES HOUSTON 8.2% 8.2% 2,000,000 8% TEXAS 8.1% 8.0% 1,500,000 7% U.S. 9.6% 9.1% 1,000,000 6% ANNUAL 500,000 5% JOB GROWTH CHANGE 5/11 HOUSTON 1.8% 16.5k 0 4% TEXAS 2.0% 8.8k -500,000 3% ABSORPTION NEW SUPPLY VACANCY U.S. 0.7% 54k -1,000,000 2% Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 www.colliers.com/houston
    • RESEARCH & FORECAST REPORT | Q2 2011 | HOUSTON INDUSTRIAL MARKET Vacancy & Availability Absorption & Demand 2011 INDUSTRIAL LEASES Houston’s industrial vacancy continues Houston’s industrial market posted K2 Logistics to shrink averaging 5.7% vacancy in the positive net absorption of 1.3M SF in the Hardy Distribution Center I Jun-11 143,600 SF second quarter, 30 basis points (bps) second quarter, an improvement over the less than the previous quarter, and 80 positive net absorption of 907K SF American Packing & Crating* bps below the 6.5% recorded in the posted in the previous quarter. 404 N Witter St Feb-11 140,782 SF same quarter last year. Over the past seven quarters, Houston’s industrial Among Houston’s major industrial Packwell Inc.** vacancy has decreased, outperforming corridors, the Southeast and North Wallisville Road Industrial Park - 1 all other commercial real estate outperformed other submarkets in the May-11 136,928 SF property sectors citywide. second quarter posting the highest ASCO positive net quarterly absorption of 624K Greens Port Industrial Park - 2G At the end of the second quarter, SF and 541K SF, respectively. The Jan-11 120,000 SF Houston posted 28.6M SF of vacant Northeast submarket followed with 201K Max Movers** industrial space citywide. Among the SF. 1205 North Post Oak Rd. major industrial corridors, the Northwest Feb-11 103,800 SF held the largest amount of vacant space There were several major tenant move- ins contributing to net absorption gains in Sercel Inc.** with 7.4M SF (5.4% vacancy), followed Techway SW Business Park - 1 by the Southeast with 5.0M SF vacant the second quarter, including Jacobson May-11 99,000 SF (5.8% vacancy), the Southwest with Logistics (436,410 SF), Suntron GCO LP 4.9M SF vacant (7.3% vacancy), and (210,964 SF), Exel (75,000 SF), and Berlin Packaging 13788 West Rd. the North with 4.3M SF vacant (6.1% J.A.M. Distributing Company (54,820 Feb-11 80,000 SF vacancy). SF). National Oilwell** Houston’s industrial construction Leasing 5900 Brittmoore Rd. May-11 66,500 SF pipeline increased to 979,767 SF from Houston’s industrial leasing activity 723,801 SF in the previous quarter. The reached 3.1M SF in the second quarter, J.A.M. Distributing Company largest project under construction is a 2.6K SF less than the previous quarter 6100 Donoho St. May-11 54,820 SF 182,800 SF build-to-suit for Woodgrain and 3.1M SF less than what was Distribution located in the North Outer recorded in the same quarter last year. Soltex Loop Ind submarket. The project is For a select list of Houston’s top AmeriPort - Bldg. 2 Jun-11 46,800 SF being developed by Clay Development industrial leases signed to date, please and is scheduled for delivery August see the column at right. Foxconn Technology Group 2011. Clay Development has four other Round Up Park - Bldg. B projects under development. A list of Jun-11 45,600 SF properties currently under construction Coastal HVAC Supply can be found on page 4 or this report. Greenspoint Business Center - B May-11 45,450 SF Rental Rates Volume Millworks* Houston’s overall average quoted Minimax 2 industrial rental rate increased from May-11 32,163 SF $5.31 to $5.34 per SF NNN between quarters, and increased by 8.6% on a year-over-year basis from $4.88 per SF NNN. By property type on a year-over- *Colliers International transaction ** Renewal year basis, distribution space is up $0.23 per SF to $5.05 and flex space stood at $7.93 NNN/SF (down $1.17/SF). COLLIERS INTERNATIONAL | P. 2
    • RESEARCH & FORECAST REPORT | Q2 2011 | HOUSTON INDUSTRIAL MARKET HOUSTON INDUSTRIAL INVESTMENT SALES Sales Activity North American Terminals Houston’s industrial investment Management, Inc. purchased a 39- 2Q 2011 activity increased significantly property portfolio from FedEx Total Volume: $242.8M between quarters, with 55 Corporation for $84 per SF. The 39 # of Properties: 55 properties trading in the second properties are located throughout Total SF: 6.1M quarter compared to 14 in the first the United States, with Average Price/SF: $54 quarter. The most significant concentrations in Florida, Texas, Average Cap: 9.5% transaction was AEW Capital and California. The total square Managements’ 1.9M SF, 3- footage of the portfolio totals Source: Costar Comps property portfolio which sold to 924,516-SF. At the time of sale, the Industrial Income Trust, Inc. for subject properties were vacant and $57 per SF. Only one of the the buyer has hired Burr & Temkin properties in the portfolio is located to lease up the properties. in Houston’s Industrial market. 1111 Gillingham Lane, a 489,263 Purvis Industries Ltd. purchased a SF, Class A manufacturing and 60,114 SF Class A distribution 1111-1113 Gillingham Ln distribution warehouse was building from Fashion Glass and allocated a price per square foot of Mirrors. The building, located at $74. The building, situated in the 10650 W Little York in the Sugar Land Business Park in Bondesen North Business Park, southwest Houston, was 100% sold for $57 per SF. leased at the time of sale. 10650 W Little York HOUSTON INDUSTRIAL MARKET SUMMARY Direct Sublet Total Direct Sublet Total 2Q Net YTD Net 2Q YTD SF Under Market Rentable Area Vacancy Vacancy Vacancy Vacant SF Vacant SF Vacant SF Absorption Absorption Completions Completions Construction Rate Rate Rate Greater Houston Total 501,944,832 27,638,901 5.5% 971,242 0.2% 28,610,143 5.7% 1,323,986 2,231,257 550,367 782,732 979,767 NW Inner Loop 13,052,992 681,100 5.2% 37,000 0.3% 718,100 5.5% 17,000 31,707 - - - CBD 33,843,288 1,864,563 5.5% - 0.0% 1,864,563 5.5% 10,664 (13,940) - - - North Inner Loop 5,658,180 571,858 10.1% - 0.0% 571,858 10.1% (15,000) (15,000) - - - SW Inner Loop 9,848,353 246,720 2.5% - 0.0% 246,720 2.5% 22,317 (40,336) - - - Total Inner Loop 62,402,813 3,364,241 5.4% 37,000 0.1% 3,401,241 5.5% 34,981 (37,569) - - - North Fwy/Tomball Pky 14,387,692 1,096,147 7.6% 9,975 0.1% 1,106,122 7.7% 139,273 110,007 - - 130,962 North Hardy Toll Rd 24,628,524 1,397,755 5.7% 79,995 0.3% 1,477,750 6.0% 204,782 140,288 120,146 172,546 68,146 North Outer Loop 17,399,253 1,011,518 5.8% - 0.0% 1,011,518 5.8% 120,727 14,173 110,500 110,500 519,401 The Woodlands/Conroe 14,498,684 699,464 4.8% 21,197 0.1% 720,661 5.0% 76,610 39,466 19,721 19,721 - Total North Corridor 70,914,153 4,204,884 5.9% 111,167 0.2% 4,316,051 6.1% 541,392 303,934 250,367 302,767 718,509 Northeast Hwy 321 1,385,909 - 0.0% - 0.0% - 0.0% 0 0 - - - Northeast Hwy 90 16,505,042 510,664 3.1% 214,120 1.3% 724,784 4.4% 24,448 (111,342) - - 20,000 Northeast I-10 4,210,548 183,327 4.4% - 0.0% 183,327 4.4% (34,635) (88,032) - - - Northeast Inner Loop 11,300,168 873,497 7.7% - 0.0% 873,497 7.7% 215,896 142,421 - - Total Northeast Corridor 33,401,667 1,567,488 4.7% 214,120 0.6% 1,781,608 5.3% 205,709 (56,953) - - 20,000 Hwy 290/Tomball Pky 16,045,980 557,173 3.5% 22,174 0.1% 579,347 3.6% 104,944 179,462 - - 69,825 Northwest Hwy 6 5,933,690 66,792 1.1% - 0.0% 66,792 1.1% 33,054 708,854 - Northwest Inner Loop 61,634,706 3,609,377 5.9% 230,791 0.4% 3,840,168 6.2% (196,134) (13,491) - - - Northwest Near 16,865,205 1,029,929 6.1% - 0.0% 1,029,929 6.1% (46,259) (111,989) - - 24,377 Northwest Outlier 13,549,016 430,792 3.2% 5,348 0.0% 436,140 3.2% (6,067) (12,835) - - 20,969 West Outer Loop 22,018,581 1,443,246 6.6% - 0.0% 1,443,246 6.6% 136,841 302,711 300,000 334,125 - Total Northwest Corridor 136,047,178 7,137,309 5.2% 258,313 0.2% 7,395,622 5.4% 26,379 1,052,712 300,000 334,125 115,171 East I-10 Outer Loop 15,365,127 176,135 1.1% - 0.0% 176,135 1.1% - 207,960 - - - East-SE Far 49,651,143 4,160,747 8.4% 73,278 0.1% 4,234,025 8.5% 606,955 848,466 - 73,840 57,290 SE Outer Loop 21,354,861 529,586 2.5% 50,000 0.2% 579,586 2.7% 17,400 (72,012) - - - Total Southeast Corridor 86,371,131 4,866,468 5.6% 123,278 0.1% 4,989,746 5.8% 624,355 984,414 - 73,840 57,290 South Highway 35 31,965,924 1,237,239 3.9% 127,105 0.4% 1,364,344 4.3% 63,210 52,530 - - South Inner Loop 13,497,993 427,337 3.2% - 0.0% 427,337 3.2% (61,815) (67,645) - - - Total South Corridor 45,463,917 1,664,576 3.7% 127,105 0.3% 1,791,681 3.9% 1,395 (15,115) - - - Highway 59/Highway 90 23,133,638 1,362,730 5.9% 64,871 0.3% 1,427,601 6.2% (68,285) (29,885) - - - Southwest Far 10,740,607 927,181 8.6% 12,490 0.1% 939,671 8.7% (38,688) (30,107) - 20,000 38,797 Southwest Outer Loop 14,882,821 1,208,148 8.1% - 0.0% 1,208,148 8.1% (46,503) 27,827 - - - Fort Bend County/Sugar Lan 18,586,907 1,335,876 7.2% 22,898 0.1% 1,358,774 7.3% 43,251 31,999 - 52,000 30,000 Total Southwest Corridor 67,343,973 4,833,935 7.2% 100,259 0.1% 4,934,194 7.3% (110,225) (166) - 72,000 68,797 COLLIERS INTERNATIONAL | P. 3
    • RESEARCH & FORECAST REPORT | Q2 2011 | HOUSTON INDUSTRIAL MARKET Select Industrial Projects Under Construction Estimated Submarket Building Address RBA % Leased Developer Delivery 1 North Outer Loop Ind 4343 Kennedy Commerce Dr 182,800 100.00 Clay Development Aug-11 2 North Outer Loop Ind 14401 John F Kennedy Blvd 111,126 100.00 Noble Drilling Llc Sep-11 3 North Outer Loop Ind 4554 Kennedy Commerce Dr 101,250 100.00 Clay Development Nov-11 4 North Fwy/Tomball Pky Ind 10811 Vinecrest Dr 88,362 0.00 East Properties Jul-11 5 North Outer Loop Ind 14041 Vickery Dr 74,000 100.00 Clay Development Aug-11 6 North Outer Loop Ind 4551 Kennedy Commerce Dr 50,225 100.00 Clay Development Oct-11 7 North Hardy Toll Road Ind 4540 Kendrick Plaza Dr 43,536 27.75 East Properties Dec-11 8 North Fwy/Tomball Pky Ind 12311 Cutten Rd 42,600 100.00 Clay Development Sep-11 9 Hwy 290/Tomball Pky Ind 12606 N Houston Rosslyn Rd 39,700 24.14 2004 Nw Park Ltd Sep-11 10 Southwest Far Ind 425 Summer Park Dr 38,797 100.00 Red Sea Properties Aug-11 11 East-Southeast Far Ind 201 Beltway Green 30,170 0.00 Chrysler Group Realty Jun-11 12 Hwy 290/Tomball Pky Ind 10120 Houston Oaks Dr 30,125 100.00 Sareh Llc Nov-11 Select 2Q 2011 Industrial Deliveries Submarket Building Address RBA % Leased Developer Name Delivered 1 West Outer Loop Ind 13788 West Rd 300,000 73.3% Duke Realty Jun-11 2 North Outer Loop Ind 4444 Kennedy Commerce D 67,500 100.0% Clay Development Jun-11 3 North Hardy T oll Ind 19054 Kenswick Dr 52,000 100.0% Bertling Logistics Inc Jun-11 4 North Hardy T oll Ind 4550 Kendrick Plaza Dr. 43,536 27.8% East Properties Jun-11 5 North Outer Loop Ind 2105 Skinner Rd 43,000 100.0% Spt Partners Llc May-11 6 North Hardy T oll Ind 2437 Peyton Rd. 24,610 0.0% Capital Commercial Jun-11 2Q 2011 Houston Industrial Deliveries 2Q 2011 Houston Industrial Under Construction 3 7 6 4 8 4 2 2 12 1 3 9 5 6 5 1 11 10 COLLIERS INTERNATIONAL | P. 4
    • RESEARCH & FORECAST REPORT | Q2 2011 | HOUSTON INDUSTRIAL MARKET Colliers International Statistics Revenues: $1.5 Billion Countries: 61 Offices: 512 Professionals & Staff: 12,509 Brokers: 4,387 Square Feet Managed: 979 Million* Lease/Sale Transactions: 73,972 Total Transaction Value: $59.6 Billion (Based on 2010 results.) *The combination of Colliers International and FirstService results in 2.2 Billion under management (2nd largest in the world. COLLIERS INTERNATIONAL | HOUSTON 1300 Post Oak Boulevard Suite 200 Houston, Texas 77056 MAIN +1 713 222 2111 Accelerating success. COLLIERS INTERNATIONAL | P. 5