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Q1 2014 Houston Office Market Research Report
Q1 2014 Houston Office Market Research Report
Q1 2014 Houston Office Market Research Report
Q1 2014 Houston Office Market Research Report
Q1 2014 Houston Office Market Research Report
Q1 2014 Houston Office Market Research Report
Q1 2014 Houston Office Market Research Report
Q1 2014 Houston Office Market Research Report
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Q1 2014 Houston Office Market Research Report

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Q1 2014 Houston Office Market Research Report

Q1 2014 Houston Office Market Research Report

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  1. www.colliers.com/houston Q1 2014 | OFFICE MARKET HOUSTON OFFICE MARKET INDICATORS Q1 2013 Q1 2014 CITYWIDE NET ABSORPTION (SF) (548)K 2.3M CITYWIDE AVERAGE VACANCY 12.8% 12.0% CITYWIDE AVERAGE RENTAL RATE $24.59 $26.09 CITYWIDE DELIVERED INVENTORY (SF) 100K 2.1M CLASS A RENTAL RATE CBD $37.13 $38.80 SUBURBAN $29.54 $31.83 CLASS A VACANCY CBD 10.2% 10.0% SUBURBAN 10.1% 8.5% RESEARCH & FORECAST REPORT HOUSTON OFFICE MARKET HOUSTON’S OFFICE MARKET POSTS 2.3M SF OF POSITIVE NET ABSORPTION IN Q1 Houston’s office market had a phenomenal first quarter, recording 2.3M SF of positive net absorption, the highest quarterly amount since 2.5M SF was recorded in Q2 2007. More than 2.1M SF was added to Houston’s office inventory and, at the close of Q1, 15.1M SF of new office development was under construction. Energy giants such as Apache, BHP, ExxonMobil, Phillips 66, and Shell have expansion projects in the construction pipeline currently, and many others have announced plans to build new office buildings to accommodate growth. The citywide average rental rate increased 2.5% from $25.45 per SF to $26.09 per SF over the quarter and 6.1% from $24.59 per SF over the year. Citywide, average Class A rents increased 3.7% and Class B rents increased 2.0% over the quarter. The Houston metropolitan area added 91,300 jobs between January 2013 and January 2014, an annual increase of 3.4% over the prior year’s job growth. Local economists have forecasted 2014 job growth to remain strong, adding between 68,000 and 72,000 jobs. Houston’s unemployment fell to 5.6% from 6.9% one year ago. Houston area home sales increased 8.35% between February 2013 and February 2014 and the average price of a single-family home rose 12.5% over the year. Houston’s economy is expected to remain strong in 2014 due to healthy job growth and continued expansion in the energy sector. ABSORPTION, NEW SUPPLY & VACANCY RATES 5.0% 7.0% 9.0% 11.0% 13.0% 15.0% 17.0% -1,500,000 -1,000,000 -500,000 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 Net Absorption New Supply Vacancy Houston UNEMPLOYMENT 1/13 1/14 HOUSTON 6.9% 5.6% TEXAS 7.0% 5.8% U.S. 8.5% 7.0% JOB GROWTH ANNUAL CHANGE # OF JOBS ADDED HOUSTON 3.4% 91.3K TEXAS 3.0% 330.9K U.S. 1.7% 2.3M JOB GROWTH & UNEMPLOYMENT (Not Seasonally Adjusted)
  2. RESEARCH & FORECAST REPORT | Q1 2014 | HOUSTON OFFICE MARKET $26.00 $28.00 $30.00 $32.00 $34.00 $36.00 $38.00 $40.00 Class A Office Rents CBD Rents Suburban Rents 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0% CBD VS. Suburban Class A Office Vacancy CBD Vacancy Suburban Vacancy QUOTED GROSS RENTAL RATES FOR EXISTING TOP PERFORMING OFFICE BUILDINGS BUILDING NAME ADDRESS SUBMARKET RBA (SF) YEAR BUILT LEASED AVAIL. SF RENT ($/SF) OWNER 717 Texas 717 Texas CBD 696,228 2003 96.7% 81,213 $48.91 Hines Bank of America Center 700 Louisiana CBD 1,268,480 2001 93.6% 174,824 $42.31 M-M Properties BG Group Place 811 Main CBD 972,474 2011 96.5% 143,333 $48.71 NPS of Korea CityCentre Four 840 W Sam Houston Pky N Katy Freeway 120,052 2013 90.4% 11,574 $44.57 Midway T & C Land Investors Williams Tower 2800 Post Oak Blvd West Loop/Galleria 1,476,973 1983 99.1% 96,969 $48.36 Invesco Real Estate BBVA Compass Plaza 2200 Post Oak Blvd West Loop/Galleria 312,574 2013 77.5% 70,244 $46.33 RS Post Oak Perennial LP CityWestPlace 4 2103 CityWest Blvd Westchase 518,293 2001 99.5% 92,984 $47.18 Parkway Properties, Inc. One BriarLake Plaza 2000 W Sam Houston Pky Westchase 502,410 2000 97.5% 53,384 $47.56 TIER REIT, Inc. One Hughes Landing 1800 Hughes Landing Blvd The Woodlands 197,719 2013 98.6% 2,853 $45.00 The Woodlands Development Company, L.P. Two Hughes Landing 1790 Hughes Landing Blvd The Woodlands 197,719 2014 7.7% 182,537 $38.38 The Woodlands Development Company, L.P. 3 Waterway Square Place 3 Waterway Ave The Woodlands 231,589 2013 98.4% 3,693 $43.92 The Woodlands Development Company, L.P. Note: Avail. SF includes direct and sublet space. Source: CoStar Property 2COLLIERS INTERNATIONAL | P. VACANCY & AVAILABILITY Houston’s citywide vacancy rate fell 10 basis points between quarters to 12.0% from 12.1%, and dropped by 80 basis points annually from 12.8% in Q1 2013. Between quarters, the average CBD vacancy rate remained at 12.4%, while the average suburban vacancy rate decreased 250 basis points to 11.8% from 14.3%. The average CBD Class A vacancy rate increased 20 basis points between quarters from 9.8% to 10.0%, and the average CBD Class B vacancy rate fell 10 basis points from 13.5% to 13.4%. The average suburban Class A vacancy rate decreased 60 basis points from 9.1% to 8.5%, and the average suburban Class B vacancy rate remained at 14.9%. Of the 1,644 existing office buildings in our survey, only 43 have 100,000 SF of contiguous space available for lease or sublease. Further, only 16 have 200,000 SF of contiguous space available. Citywide, available sublease space totals 4.0 million SF or 1.9% of Houston’s total office inventory, but only 1.8 million SF of this sublease space is currently vacant. ABSORPTION & DEMAND Absorption increased in Q1 as new space was delivered and tenants expanded. Houston’s office market posted 2.3M SF of positive net absorption, a significant improvement over the 548,000 SF of negative net absorption posted in the same quarter one year ago. Suburban Class A space posted the largest gain, with 2.2M SF of positive net absorption, mostly due to tenants expanding into new space in The Woodlands and Katy Freeway submarkets. Class A space in the CBD posted the largest loss, with 37,190 SF of negative net absorption. Some of the larger tenants that moved into new space during Q1 include: Wood Group Mustang (186,000 SF) moved into Westgate II in the Katy Freeway submarket; C & J Energy Services (125,000 SF) moved into 3990 Rogerdale located in the Westchase submarket; Alliantgroup (125,000 SF) moved into 3009 Post Oak Blvd in the West Loop/ Galleria submarket; and JGC America, Inc. (52,000 SF) moved into Granite Briarpark Green in the Westchase submarket. RENTAL RATES The average citywide rental rate increased 2.5% from $25.45 per SF to $26.09 per SF over the quarter, and 6.1% from $24.59 per SF over the year. Average citywide Class A rents increased 3.7% and Class B rents increased 2.0% over the quarter. The Class A average rental rate in the CBD increased 1.1% from $38.38 per SF to $38.80 per SF between quarters, while the suburban Class A average rental rate increased 4.9% from $30.34 per SF to $31.83 per SF. The average Class B rental rate in the CBD rose 4.4%, while the average suburban Class B rental rate increased 1.7% between quarters.
  3. RESEARCH & FORECAST REPORT | Q1 2014 | HOUSTON OFFICE MARKET Q1 2014 SIGNIFICANT SALES TRANSACTIONS – (100,000 SF or greater) BUILDING NAME SUB- MARKET RBA (SF) YEAR BUILT BUYER SELLER SALE PRICE $/SF CAP RATE CLOSED Heritage Plaza CBD 1,359,266 1986 AEW Capital Brookfield Office Properties $427.5M 90% int. $335 5.3 2/2014 Beltway 8 Corporate Centre – Bldg 1 Northwest Far 101,039 2002 Tanglewood Property Group Stonelake Capital Partners $21.6M $214 7.3 1/2014 Woodbranch Plaza Katy Freeway 109,471 1983 CapRidge Partners Parkway Properties $15M $137 7.7 1/2014 Gulf Plaza Katy Freeway 120,651 1983/ 2012 Hartman Short Term Income Properties XX, Inc. Hartman Income REIT $13.6 $116 9.8 3/2014 7700 San Felipe St San Felipe/ Voss 100,716 1979 US Builders Velocis Partners $15.5M $154 7.5 2/2014 3COLLIERS INTERNATIONAL | P. SALES ACTIVITY Houston’s office investment sales activity included 14 sales transactions with a total sales volume of approximately $508 million, averaging $274 per SF. Listed below are a few significant transactions that closed during the first quarter. LEASING ACTIVITY Houston’s office leasing activity reached 2.8 million SF in the first quarter. Below is a list of select Q1 2014 top lease transactions, the majority of which were new. 1 Renewal 2 Expansion 3 Sublease 4 Pre-lease/proposed or under construction Building name/address Submarket SF Tenant Lease date One Greenspoint Place North Belt/Greenspoint 224,833 American Bureau of Shipping1 Mar-14 Greenway Plaza Greenway Plaza 38,006 RealEC Technologies Jan-14 Greenspoint Park III North Belt/Greenspoint 29,447 China Shipping1 Feb-14 Two Greenspoint Place North Belt/Greenspoint 27,161 American Bureau of Shipping Jan-14 Weslayan Tower Greenway Plaza 24,568 Patterson & Sheridan, LLP Jan-14 Ashford Place II Katy Freeway West 20,504 WorleyParsons Feb-14 South Tower-Penzoil Place CBD 20,429 Gensler2 Mar-14 Two Hughes Landing The Woodlands 16,249 BusinesSuites4 Jan-14 Main Link Biotechnology Park South Main/Medical Center 15,437 Companion DX Reference Lab, LLC Jan-14 333 Northbelt North Belt/Greenspoint 15,110 Norlyn Enterprises (Diligent)1 Feb-14 Blvd Place 2 Galleria/Uptown 12,520 Business Suites4 Mar-14 1001 Fannin CBD 10,420 Concho Resources Mar-14 Central Brazoria County Business Park Southwest Far 10,136 Furmanite Jan-14 Q1 2014 Top Office Leases
  4. RESEARCH & FORECAST REPORT | Q1 2014 | HOUSTON OFFICE MARKET HOUSTON OFFICE MARKET SUMMARY (CBD, SUBURBAN & OVERALL) HOUSTON SUBURBAN OFFICE MARKET SUMMARY COLLIERS INTERNATIONAL | P. 4 Vacancy Rental Rate Class # of Bldgs. Total (SF) (SF) Rate (%) (SF) Rate (%) Total (SF) Q1-2014 Q4-2013 Q1-2014 Q4-2013 AVG ($/SF) CBD A 30 30,046,293 2,414,102 8.0% 579,893 1.9% 2,993,995 10.0% 9.8% -37,190 153,945 $38.80 B 35 11,305,581 1,497,265 13.2% 19,416 0.2% 1,516,681 13.4% 13.5% 9,901 20,417 $26.32 C 23 1,646,456 817,178 49.6% 0 0.0% 817,178 49.6% 51.5% 31,248 -21,000 $19.56 Total 88 42,998,330 4,728,545 11.0% 599,309 1.4% 5,327,854 12.4% 12.4% 3,959 153,362 $34.30 Suburban A 285 73,524,938 5,641,186 7.7% 593,707 0.8% 6,234,893 8.5% 9.1% 2,187,172 1,077,899 $31.83 B 941 78,506,919 11,101,087 14.1% 606,218 0.8% 11,707,305 14.9% 14.9% 66,344 541,894 $19.49 C 330 14,972,781 1,832,889 12.2% 7,596 0.4% 1,840,485 12.3% 284.8% 42,090 20,182 $15.64 Total 1556 167,004,638 18,575,162 11.1% 1,207,521 0.7% 19,782,683 11.8% 14.3% 2,295,606 1,639,975 $24.50 Overall A 315 103,571,231 8,055,288 7.8% 1,173,600 1.1% 9,228,888 8.9% 9.3% 2,149,982 1,231,844 $33.45 B 976 89,812,500 12,598,352 14.0% 625,634 0.7% 13,223,986 14.7% 14.5% 76,245 562,311 $20.17 C 353 16,619,237 2,650,067 15.9% 7,596 0.0% 2,657,663 16.0% 16.4% 73,338 -818 $16.09 Total 1644 210,002,968 23,303,707 11.1% 1,806,830 0.9% 25,110,537 12.0% 12.1% 2,299,565 1,793,337 $26.09 Inventory Direct Vacancy Sublease Vacancy Vacancy Rate (%) Net Absorption (SF) Vacancy Rental Rate Class # of Bldgs. Total (SF) (SF) Rate (%) (SF) Rate (%) Total (SF) Q1-2014 Q4-2013 Q1-2014 Q4-2013 AVG ($/SF) Allen Parkway A 4 1,598,033 211,067 13.2% 0 0.0% 211,067 13.2% 9.6% -57,664 -69,615 $30.53 B 32 2,620,056 194,247 7.4% 8,857 0.3% 203,104 7.8% 7.8% -28 36,289 $25.67 C 15 503,182 114,558 22.8% 0 0.0% 114,558 22.8% 21.5% -6,415 652 $25.88 Total 51 4,721,271 519,872 11.0% 8,857 0.2% 528,729 11.2% 9.8% -64,107 -32,674 $28.00 Baytown B 3 186,005 0 0.0% 0 0.0% 0 0.0% 0.0% 0 3,914 $17.18 C 3 81,481 22,838 28.0% 0 0.0% 22,838 28.0% 28.0% 0 -20,526 $9.87 Total 6 267,486 22,838 8.5% 0 0.0% 22,838 8.5% 8.5% 0 -16,612 $10.98 Bellaire A 6 1,103,546 131,783 11.9% 13,003 1.2% 144,786 13.1% 13.2% 909 41,653 $25.71 B 17 2,578,430 97,377 3.8% 8,681 0.3% 106,058 4.1% 4.2% 2,214 8,824 $22.16 C 5 333,970 18,557 5.6% 0 0.0% 18,557 5.6% 6.2% 2,301 2,010 $15.30 Total 28 4,015,946 247,717 6.2% 21,684 0.5% 269,401 6.7% 6.8% 5,424 52,487 $24.14 Conroe and Outlying Montgomery Co A 2 106,832 46,832 43.8% 0 0.0% 46,832 43.8% 43.8% 0 0 $24.53 B 10 515,966 21,819 4.2% 0 0.0% 21,819 4.2% 4.2% 0 0 $22.49 C 6 261,473 9,250 3.5% 0 0.0% 9,250 3.5% 3.5% 0 0 $14.08 Total 18 884,271 77,901 8.8% 0 0.0% 77,901 8.8% 8.8% 0 0 $22.71 E. Fort Bend/Sugar Land A 17 3,357,263 340,575 10.1% 26,410 0.8% 366,985 10.9% 11.4% 15,741 243,021 $27.96 B 36 2,170,361 333,395 15.4% 100,448 4.6% 433,843 20.0% 20.3% 7,129 -24,343 $20.88 C 4 264,206 10,938 4.1% 2,347 0.9% 13,285 5.0% 4.4% -1,790 -2,064 $18.46 Total 57 5,791,830 684,908 11.8% 129,205 2.2% 814,113 14.1% 14.4% 21,080 216,614 $24.36 FM 1960 A 12 2,207,416 164,942 7.5% 0 0.0% 164,942 7.5% 7.6% 2,192 22,475 $27.88 B 91 5,056,292 985,708 19.5% 28,601 0.6% 1,014,309 20.1% 19.9% -8,756 14,448 $15.57 C 20 716,153 62,027 8.7% 0 0.0% 62,027 8.7% 10.6% 14,203 -5,249 $13.62 Total 123 7,979,861 1,212,677 15.2% 28,601 0.4% 1,241,278 15.6% 15.7% 7,639 31,674 $16.46 Inventory Direct Vacancy Sublease Vacancy Vacancy Rate (%) Net Absorption (SF)
  5. RESEARCH & FORECAST REPORT | Q1 2014 | HOUSTON OFFICE MARKET HOUSTON SUBURBAN OFFICE MARKET SUMMARY - CONTINUED 5COLLIERS INTERNATIONAL | P. Vacancy Rental Rate Class # of Bldgs. Total (SF) (SF) Rate (%) (SF) Rate (%) Total (SF) Q1-2014 Q4-2013 Q1-2014 Q4-2013 AVG ($/SF) Greenway A 16 6,224,406 440,107 7.1% 0 0.0% 440,107 7.1% 7.1% 4,021 83,782 $34.08 B 31 3,189,189 299,433 9.4% 5,356 0.2% 304,789 9.6% 9.1% -14,899 24,277 $24.10 C 22 931,291 273,686 29.4% 1500 0.2% 275,186 29.5% 31.1% 14,610 2,939 $17.74 Total 69 10,344,886 1,013,226 9.8% 6,856 0.1% 1,020,082 9.9% 9.9% 3,732 110,998 $28.34 Gulf Freeway/Pasadena A 1 22,706 7,586 33.4% 0 0.0% 7,586 33.4% 42.5% 2,057 0 $27.82 B 33 1,904,861 162,950 8.6% 0 0.0% 162,950 8.6% 8.4% -2,454 46,875 $19.56 C 29 1,141,154 134,872 11.8% 0 0.0% 134,872 11.8% 10.6% -14,401 8,901 $16.42 Total 63 3,068,721 305,408 10.0% 0 0.0% 305,408 10.0% 9.5% -14,798 55,776 $18.62 I-10 East B 7 447,680 78,644 17.6% 0 0.0% 78,644 17.6% 20.4% 12,719 0 $14.64 C 4 202,080 9,315 4.6% 0 0.0% 9,315 4.6% 0.9% -7,535 0 $15.26 Total 11 649,760 87,959 13.5% 0 0.0% 87,959 13.5% 14.3% 5,184 0 $14.77 Katy Freeway A 67 15,829,440 271,686 1.7% 103,056 0.7% 374,742 2.4% 2.3% 1,272,838 613,327 $31.87 B 102 9,531,254 920,524 9.7% 89,153 0.9% 1,009,677 10.6% 9.5% -106,241 206,550 $21.81 C 34 1,596,556 76,733 4.8% 3,749 0.2% 80,482 5.0% 5.0% 70 1,756 $17.99 Total 203 26,957,250 1,268,943 4.7% 195,958 0.7% 1,464,901 5.4% 5.1% 1,166,667 821,633 $26.77 Kingwood/Humble B 14 822,224 53,360 6.5% 11,133 1.4% 64,493 7.8% 8.7% 6,648 -1,729 $19.38 C 5 174,761 4,158 2.4% 0 0.0% 4,158 2.4% 2.2% -376 -798 $17.46 Total 19 996,985 57,518 5.8% 11,133 1.1% 68,651 6.9% 7.5% 6,272 -2,527 $19.27 NASA/Clear Lake A 12 1,782,917 122,448 6.9% 0 0.0% 122,448 6.9% 6.9% 0 31,276 $24.20 B 46 3,132,877 1,022,093 32.6% 0 0.0% 1,022,093 32.6% 32.1% -15,555 -27,465 $17.90 C 20 660,348 116,563 17.7% 0 0.0% 116,563 17.7% 17.0% -4,559 52,689 $15.29 Total 78 5,576,142 1,261,104 22.6% 0 0.0% 1,261,104 22.6% 22.3% -20,114 56,500 $18.69 North Belt/Greenspoint A 24 5,413,012 536,239 9.9% 10,436 0.2% 546,675 10.1% 10.1% 40,242 40,242 $31.78 B 58 5,852,960 1,182,836 20.2% 215,419 3.7% 1,398,255 23.9% 24.5% 9,788 9,788 $16.13 C 22 1,394,941 279,502 20.0% 0 0.0% 279,502 20.0% 19.6% 4,198 4,198 $13.08 Total 104 12,660,913 1,998,577 15.8% 225,855 1.8% 2,224,432 17.6% 17.8% 54,228 54,228 $24.76 Northeast Near and Northeast Outlier B 5 219,158 48,019 21.9% 0 0.0% 48,019 21.9% 39.3% 38,186 2,158 $20.95 C 4 105,183 20,775 19.8% 0 0.0% 20,775 19.8% 19.8% 0 1,402 $12.00 Total 9 324,341 68,794 21.2% 0 0.0% 68,794 21.2% 33.0% 38,186 3,560 $16.78 Northwest and Northwest Outlier A 22 3,973,545 490,343 12.3% 23,537 0.6% 513,880 12.9% 12.6% -12,971 24,926 $23.21 B 90 7,383,475 1,147,117 15.5% 11,353 0.2% 1,158,470 15.7% 15.7% 1,636 155,939 $19.19 C 40 1,551,484 174,350 11.2% 0 0.0% 174,350 11.2% 11.2% -443 -4,282 $15.29 Total 152 12,908,504 1,811,810 14.0% 34,890 0.3% 1,846,700 14.3% 14.2% -11,778 176,583 $20.09 Richmond/Fountainview B 14 797,015 221,357 27.8% 0 0.0% 221,357 27.8% 27.0% -6,066 -612 $16.57 C 13 562,718 96,075 17.1% 0 0.0% 96,075 17.1% 17.5% 2,397 21,819 $13.73 Total 27 1,359,733 317,432 23.3% 0 0.0% 317,432 23.3% 23.1% -3,669 21,207 $15.83 Inventory Direct Vacancy Sublease Vacancy Vacancy Rate (%) Net Absorption (SF)
  6. RESEARCH & FORECAST REPORT | Q1 2014 | HOUSTON OFFICE MARKET HOUSTON SUBURBAN OFFICE MARKET SUMMARY - CONTINUED 6COLLIERS INTERNATIONAL | P. Vacancy Rental Rate Class # of Bldgs. Total (SF) (SF) Rate (%) (SF) Rate (%) Total (SF) Q1-2014 Q4-2013 Q1-2014 Q4-2013 AVG ($/SF) San Felipe/Voss A 3 1,714,929 276,037 16.1% 0 0.0% 276,037 16.1% 15.4% -11,538 -317 $32.96 B 35 3,464,667 348,169 10.0% 44,665 1.3% 392,834 11.3% 10.1% -41,632 -11,006 $21.95 Total 38 5,179,596 624,206 12.1% 44,665 0.9% 668,871 12.9% 11.9% -53,170 -11,323 $27.29 South A 1 80,000 0 0.0% 0 0.0% 0 0.0% 0.0% 0 0 $27.19 B 13 491,508 46,186 9.4% 0 0.0% 46,186 9.4% 8.8% -3,000 -18,987 $19.95 C 5 194,042 40,450 20.8% 0 0.0% 40,450 20.8% 22.9% 4,000 1,450 $23.12 Total 19 765,550 86,636 11.3% 0 0.0% 86,636 11.3% 11.4% 1,000 -17,537 $22.60 South Main/Med Center A 1 485,000 0 0.0% 0 0.0% 0 0.0% 0.0% 0 0 - B 14 934,379 95,612 10.2% 0 0.0% 95,612 10.2% 11.3% 9,512 -2,338 $16.32 C 8 475,436 88,810 18.7% 0 0.0% 88,810 18.7% 23.9% 24,826 -31,470 $16.95 Total 23 1,894,815 184,422 9.7% 0 0.0% 184,422 9.7% 11.5% 34,338 -33,808 $16.60 Southeast/Outlier B 14 1,139,936 79,276 7.0% 0 0.0% 79,276 7.0% 7.0% 750 6,325 $20.30 C 6 236,043 13,120 5.6% 0 0.0% 13,120 5.6% 7.3% 4,163 0 $17.00 Total 20 1,375,979 92,396 6.7% 0 0.0% 92,396 6.7% 7.1% 4,913 6,325 $19.67 Southwest A 6 1,583,702 278,749 17.6% 0 0.0% 278,749 17.6% 17.1% -8,615 5,946 $15.81 B 66 5,947,871 1,675,854 28.2% 1,867 0.0% 1,677,721 28.2% 25.5% -162,474 4,965 $16.06 C 41 2,174,095 208,394 9.6% 0 0.0% 208,394 9.6% 9.6% 207 -10,424 $14.11 Total 113 9,705,668 2,162,997 22.3% 1,867 0.0% 2,164,864 22.3% 20.5% -170,882 487 $15.79 Southwest Far and Outlier A 2 93,591 12,272 13.1% 0 0.0% 12,272 13.1% 20.5% 6,871 149 $25.38 B 19 997,856 265,795 26.6% 1,594 0.2% 267,389 26.8% 27.1% 3,048 695 $20.62 C 4 130,497 1,500 1.1% 0 0.0% 1,500 1.1% 1.6% 600 0 $22.43 Total 25 1,221,944 279,567 22.9% 1,594 0.1% 281,161 23.0% 23.9% 10,519 844 $22.12 West Loop/Galleria A 39 15,687,995 1,410,485 9.0% 218,382 1.4% 1,628,867 10.4% 12.0% 248,421 62,891 $34.42 B 59 6,991,200 847,129 12.1% 25,063 0.4% 872,192 12.5% 12.2% -22,270 105,216 $26.13 C 4 216,268 1,463 0.7% 0 0.0% 1,463 0.7% 1.6% 2,096 -1,048 $18.50 Total 102 22,895,463 2,259,077 9.9% 243,445 1.1% 2,502,522 10.9% 11.9% 228,247 167,059 $31.67 Westchase A 27 7,357,882 765,626 10.4% 105,679 1.4% 871,305 11.8% 12.7% 64,410 -84,876 $36.48 B 63 7,679,277 669,433 8.7% 12,382 0.2% 681,815 8.9% 9.3% 217,093 -49,584 $19.87 C 10 686,740 53,955 7.9% 0 0.0% 53,955 7.9% 8.3% 2,938 -1,773 $16.25 Total 100 15,723,899 1,489,014 9.5% 118,061 0.8% 1,607,075 10.2% 10.9% 284,441 -136,233 $29.06 The Woodlands A 23 4,902,723 134,409 2.7% 93,204 1.9% 227,613 4.6% 6.8% 620,258 63,019 $36.28 B 69 4,452,422 304,754 6.8% 41,646 0.9% 346,400 7.8% 8.1% 140,996 51,695 $25.16 C 6 378,679 1,000 0.3% 0 0.0% 1,000 0.3% 0.5% 1,000 0 $19.80 Total 98 9,733,824 440,163 4.5% 134,850 1.4% 575,013 5.9% 7.2% 762,254 114,714 $29.59 Inventory Direct Vacancy Sublease Vacancy Vacancy Rate (%) Net Absorption (SF)
  7. RESEARCH & FORECAST REPORT | Q1 2014 | HOUSTON OFFICE MARKET OFFICE DEVELOPMENT PIPELINE Houston’s construction pipeline continues to expand with 15.1 million SF under construction at the end of Q1 2014. The table below includes buildings containing 100,000 SF or greater. COLLIERS INTERNATIONAL | P. 7 Building Name ADDRESS SUBMARKET SF PRE- LEASED DEVELOPER EST. DELIVERY ExxonMobil Campus 23125 I-45 S Woodlands 3,000,000 100.0% Gilbane Building Company Jun-14 609 Main at Texas 609 Main St CBD 1,050,000 9.7% Hines Feb-17 CyrusOne West Campus Expansion 5150 Westway Park Blvd Northwest Far 800,000 100.0% CyrusOne Sep-14 Energy Center Four 925 NEldridge Pky Katy Freeway West 600,000 100.0% Trammell Crow Company Dec-16 Four Oaks Place 1500 Post Oak Blvd Galleria/Uptown 600,000 100.0% Transwestern Oct-16 Energy Center Three 935 NEldridge Pky Katy Freeway West 546,604 100.0% Trammell Crow Company May-15 Southwestern Energy HQ Interstate 45 & Grand Pky Woodlands 515,000 100.0% Patrinely Group, L.L.C. Dec-14 Noble Energy Center II SH249 & Louetta Rd FM1960/Hwy 249 456,000 100.0% Trammell Crow Company Jun-15 Air Liquide Center- South 9811 Katy Fwy Katy Freeway East 452,370 37.8% Anslow Bryant Construction Ltd. Nov-15 Energy Tower IV 11750 Katy Fwy Katy Freeway West 428,831 6.1% Mac Haik Realty LLC Dec-14 3737 Buffalo Speedway 3737 Buffalo Speedway Ave Greenway Plaza 400,000 22.9% PMRealty Group Aug-15 Shell Woodcreek 200 NDairy Ashford Rd Katy Freeway West 375,000 100.0% Hines Apr-14 Two BriarLake Plaza 2050 W Sam Houston Pky S Westchase 337,888 6.0% Cassidy Turley Apr-14 West Memorial Place 15375 Memorial Dr Katy Freeway West 334,147 36.6% Skanska Commercial Development Jan-15 Westchase Park 3600 W Sam Houston Pky S Westchase 300,000 0.0% PMRealty Group Dec-14 Beltway Lakes Phase III 5775 NSam Houston Pky E Northwest Far 271,384 0.0% Radler Enterprises, Inc. Sep-14 Beltway Lakes Phase IV 5725 NSam Houston Pky W Northwest Far 271,384 0.0% Radler Enterprises, Inc. Mar-15 Kirby Grove 3801 Eastside Dr Greenway Plaza 260,437 39.6% Midway Companies Jun-15 Town Centre I 700 Town & Country Blvd Katy Freeway East 254,489 0.0% Moody Rambin Jan-15 Mustang Engineering 17325 Park Row Rd Katy Freeway West 225,885 100.0% Transwestern Jul-14 Legacy at Fallbrook 10720 W Sam Houston Pky N Northwest Far 208,013 0.0% Liberty Property Trust Feb-15 The Offices at Greenhouse 19219 Katy Fwy Katy Freeway West 203,149 67.1% Stream Realty Partners Jul-14 Building 5 - Repsol 2455 Technology Forest Blvd Woodlands 200,000 100.0% Warmack Investments May-14 Two Hughes Landing 1790 Hughes Landing Blvd Woodlands 197,719 7.7% The Woodlands Development Company, L.P. May-14 CityCentre Five 825 Town & Country Katy Freeway East 195,842 49.6% Midway Companies Apr-15 Woodbranch Plaza IV 12120 Wickchester Ln Katy Freeway West 168,050 100.0% PMRealty Group Apr-15 Jacobs Plaza 12140 Wickchester Ln Katy Freeway West 168,050 45.4% PMRealty Group Jun-14 2229 San Felipe 2229 San Felipe Midtown 167,230 11.7% Hines Jul-15 Texas Instruments 13905 University Blvd E Fort Bend Co/Sugar Land 160,000 100.0% Planned Community Developers Jun-14 Sierra Pines II 1575 Sawdust Rd Woodlands 153,810 0.0% Stream Realty Partners Aug-14 Katy Ranch Phase I 24275 Katy Fwy Southwest Outlier 151,187 0.0% Freeway Properties Nov-14 Park Ten Center 1 16200 Park Row Katy Freeway West 150,000 25.9% Lincoln Property Company Jul-14 Park Ten Center 2 16200 Park Row Katy Freeway West 150,000 0.0% Lincoln Property Company Sep-14 Air Liquide Center- North 9807 Katy Fwy Katy Freeway East 143,830 61.4% Anslow Bryant Construction Ltd. May-15 Beltway 8 Corporate Centre 5100 Westway Park Blvd Northwest Far 126,351 0.0% Panattoni Development Dec-14 Phase IV 23501 Cinco Ranch Blvd Southwest Outlier 125,000 0.0% Vista Companies Jun-15 Greenhouse Road at Park Row 2051 S Greenhouse Rd Katy Freeway West 114,345 19.0% D'Agostino Companies Oct-14 River Oaks District - Office 4444 Westheimer Rd Post Oak Park 101,678 2.7% Oliver McMillan Jan-15
  8. RESEARCH & FORECAST REPORT | Q1 2014 | HOUSTON OFFICE MARKET Accelerating success. COLLIERS INTERNATIONAL 1223 W. Loop South Suite 900 Houston, Texas 77027 Main +1 713 222 2111 LISA R. BRIDGES Director of Market Research | Houston Direct +1 713 830 2125 Fax +1 713 830 2118 lisa.bridges@colliers.com The Colliers Advantage Enterprising Culture Colliers International is a leader in global real estate services, defined by our spirit of enterprise. Through a culture of service excellence and a shared sense of initiative, we integrate the resources of real estate specialists worldwide to accelerate the success of our partners. When you choose to work with Colliers, you choose to work with the best. In addition to being highly skilled experts in their field, our people are passionate about what they do. And they know we are invested in their success just as much as we are in our clients’ success. This is evident throughout our platform—from Colliers University, our proprietary education and professional development platform, to our client engagement strategy that encourages cross-functional service integration, to our culture of caring. We connect through a shared set of values that shape a collaborative environment throughout our organization that is unsurpassed in the industry. That’s why we attract top recruits and have one of the highest retention rates in the industry. Colliers International has also been recognized as one of the “best places to work” by top business organizations in many of our markets across the globe. Colliers International offers a comprehensive portfolio of real estate services to occupiers, owners and investors on a local, regional, national and international basis. *Information herein has been obtained from sources deemed reliable, however its accuracy cannot be guaranteed. COLLIERS INTERNATIONAL | P. 8

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