Q2 2014 Office Market Research Report
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  • 1. RESEARCH & FORECAST REPORT HOUSTON OFFICE MARKET www.colliers.com/texas Houston’s office market construction pipeline increases to 17.8M SF Houston’s strong economy continues to spur office development with over 17.8M SF currently under construction. Over 1.7M SF of new inventory delivered during Q2, bringing 2014 year-to-date delivered inventory to 3.7M SF. Our forecast projects another 4.5M SF of new inventory will be completed by year-end 2014. Much of the construction activity is tied to the energy industry and includes office buildings that Shell Oil, ExxonMobil, BHP, Phillips 66, and Southwestern Energy will occupy once completed. Houston’s office market posted 1.6M SF of positive net absorption in Q2 2014, pushing year-to-date 2014 net absorption to a positive 2.2M SF. The citywide average rental rate increased 1.0% from $26.25 per SF to $26.52 per SF over the quarter and 6.4% from $24.93 per SF to $26.52 per SF over the year. The average CBD rental rate increased 8.5%, while the average suburban rental rate increased 6.4% over the year. The Houston metropolitan area added 93,300 jobs between May 2013 and May 2014, an annual increase of 3.3% over the prior year’s job growth. Local economists have forecasted 2014 job growth to remain strong, expecting between 68,000 and 72,000 new jobs. Houston’s unemployment fell to 5.0% from 6.1% one year ago. Houston area home sales were down by 7.3% between May 2013 and May 2014, the first decline in the past 34 months. The reduction was due to a lack of inventory. Houston’s economy is expected to remain strong in 2014 due to healthy job growth and continued expansion in the energy sector. Q2 2014 | OFFICE MARKET Q2 2013 Q2 2014 NET ABSORBTION (SF) 485K 1.6M AVERAGE VACANCY 12.7% 11.8% AVERAGE RENTAL RATE $24.93 $26.52 DELIVERED INVENTORY (SF) 608K 1.7M CLASS A RENTAL RATE CBD SUBURBAN $36.86 $29.87 $40.54 $32.17 CLASS A VACANCY CBD SUBURBAN 10.9% 9.9% 9.8% 9.3% UNEMPLOYMENT 5/13 5/14 HOUSTON 6.1% 5.0% TEXAS 6.3% 5.1% U.S. 7.3% 6.1% JOB GROWTH & UNEMPLOYMENT (Not Seasonally Adjusted) JOB GROWTH ANNUAL CHANGE # OF JOBS ADDED HOUSTON 3.3% 93.3K TEXAS 3.4% 375.3K U.S. 1.8% 2.4M OFFICE MARKET INDICATORS New Supply Net Absorption Vacancy NEW SUPPLY, ABSORPTION AND VACANCY RATES
  • 2. VACANCY & AVAILABILITY Houston’s citywide vacancy rate fell 10 basis points between quarters to 11.8% from 11.9%, and dropped by 90 basis points annually from 12.7% in Q2 2013. Between quarters, the average suburban vacancy rate remained at 11.9%, while the average CBD vacancy rate decreased 70 basis points from 12.0% to 11.3%. The average CBD Class A vacancy rate decreased 80 basis points between quarters from 10.6% to 9.8%, and the average CBD Class B vacancy rate fell 60 basis points from 12.2% to 11.6%. The average suburban Class A vacancy rate increased 90 basis points from 8.4% to 9.3%, and the average suburban Class B vacancy rate fell 30 basis points from 14.7% to 14.4% between quarters. Of the 1,646 existing office buildings in our survey, only 43 have 100,000 SF of contiguous space available for lease or sublease. Further, only 17 have 200,000 SF of contiguous space available. Citywide, available sublease space totals 3.9 million SF or 1.9% of Houston’s total office inventory, but only 1.7 million SF of this sublease space is currently vacant. ABSORPTION & DEMAND Houston’s office market posted 1.6M SF of positive net absorption, a significant improvement over the 485,000 SF of positive net absorption posted in the same quarter one year ago. Suburban Class A space posted the largest gain, with 949,000 SF of positive net absorption, the majority of which occurred in Westchase, E. Fort Bend/Sugar Land, The Woodlands and Katy Freeway submarkets. Some of the larger tenants that moved into new space during Q2 include: Energy XXI Services (171,000 SF) moved into One City Centre in the CBD submarket; Texas Instruments (159,999 SF) moved into 13905 University Blvd located in the E Ft Bend/Sugar Land submarket; Noble (Gulf of Mexico) Inc. (88,510 SF) moved into Granite Briarpark Green in the Westchase submarket; and Jacobs Engineering (81,818 SF) moved into Jacobs Plaza in the Katy Freeway submarket. RENTAL RATES The citywide average rental rate increased 1.0% from $26.25 per SF to $26.52 per SF over the quarter and 6.4% from $24.93 per SF to $26.52 per SF over the year. Average citywide Class A rents increased 1.8% and Class B rents increased 1.0% over the quarter. The Class A average rental rate in the CBD increased 4.9% from $38.66 per SF to $40.54 per SF between quarters, while the suburban Class A average rental rate increased 0.7% from $31.95 per SF to $32.17 per SF. The average Class B rental rate in the CBD rose 1.9%, while the average suburban Class B rental rate increased 1.1% between quarters. QUOTED GROSS RENTAL RATES FOR EXISTING TOP PERFORMING OFFICE BUILDINGS BUILDING NAME ADDRESS SUBMARKET RBA (SF) YEAR BUILT % LEASED AVAIL. SF RENT ($/SF) OWNER 600 Travis 600 Travis CBD 1,656,529 1982/ 2012 94.30% 155,299 $46.80 Hines Heritage Plaza 1111 Bagby CBD 1,359,266 1986 98.90% 32,950 $50.71 AEW Capital Management and Brookfield Office Properties, Inc. BG Group Place 811 Main CBD 972,474 2011 96.50% 143,333 $48.71 NPS of Korea CityCentre Three 842 W Sam Houston Pky N Katy Freeway 120,211 2012 94.70% 6,349 $45.96 Midway T & C Land Investors Williams Tower 2800 Post Oak Blvd West Loop/Galleria 1,476,973 1983 99.10% 81,987 $48.36 Invesco Real Estate BBVA Compass Plaza 2200 Post Oak Blvd West Loop/Galleria 312,574 2013 77.50% 70,244 $46.50 RS Post Oak Perennial LP CityWestPlace 4 2103 CityWest Blvd Westchase 518,293 2001 99.50% 92,984 $47.43 Parkway Properties, Inc. One BriarLake Plaza 2000 W Sam Houston Pky Westchase 502,410 2000 97.50% 53,384 $47.56 TIER REIT, Inc. One Hughes Landing 1800 Hughes Landing Blvd The Woodlands 197,719 2013 99.20% 1,589 $46.38 The Woodlands Development Company, L.P. Two Hughes Landing 1790 Hughes Landing Blvd The Woodlands 197,719 2014 20.60% 156,967 $46.38 The Woodlands Development Company, L.P. CBD VS. SUBURBAN CLASS A OFFICE RENTS CLASS A OFFICE VACANCY CBD Vacancy Suburban Vacancy CBD Rents Suburban Rents Note: Available SF includes direct and sublet space as well as any future available space listed. Source: CoStar Property P. 2 | COLLIERS INTERNATIONAL RESEARCH & FORECAST REPORT | Q2 2014 | HOUSTON OFFICE MARKET
  • 3. LEASING ACTIVITY Houston’s office leasing activity reached 3.0 million SF in Q2 2014 with transactions including renewals, expansions, subleases, and pre-leases in buildings currently under construction. TOP TRANSACTIONS LEASES BUILDING NAME/ADDRESS SUBMARKET SF TENANT LEASE DATE One City Centre CBD 171,016 Energy XXI Services1,2 Apr-14 One Allen Center CBD 109,373 Motiva Enterprises3 May-14 Fulbright Tower CBD 89,011 Key Energy Services Apr-14 3831 Technology Forest Dr The Woodlands 70,561 Kiewit Energy Group Apr-14 12000 Aerospace Ave NASA/Clear Lake 30,236 Inspectorate American General2 May-14 West Loop I Bellaire 29,704 Synergy Healthcare1 Apr-14 600 Travis CBD 21,791 IHS Global2 May-14 Lakes on Post Oak Galleria/Uptown 19,799 Sinpoec USA1,2 Apr-14 Lakes on Post Oak Galleria/Uptown 19,625 Zimmerman, Axelrad, Myer, Stern & Wise Apr-14 American General Center Midtown 12,352 Ebanks Horne Rota Moos Apr-14 SALES ACTIVITY Houston’s office investment sales activity included 45 sales transactions with a total sales volume of approximately $157 million, averaging $153 per SF. Listed below are a few significant transactions that closed in Q2 2014. SIGNIFICANT TRANSACTIONS SALES 100,000 SF OR GREATER BUILDING NAME SUBMARKET RBA (SF) YEAR BUYER SELELR SALE PRICE $/SF CLOSED Sugar Creek I & II E Fort Bend/ Sugar Land 409,168 2000 & 2009 Stockdale Capital Partners & Brener International Group, LLC Granite Properties, Inc. $82.7M $202 Apr-14 Oak Park Office Center III Westchase 151,000 2008 The Mallick Group & Keating Investments Grubb & Ellis Realty Investors, LLC $27.40 $182 May-14 Eight Greenspoint Plaza North Belt/ Greenspoint 198,257 1994 Stream Realty Partners ExxonMobil Corporation $16.1M $81 May-14 1800 Bering West Loop/ Galleria 170,881 1982/ 2005 KBS Realty Advisors Harbert Management Corp JV Fuller Realty Partners $27.8M $162 Jun-14 1 Renewal 2 Expansion/Extension 3 Sublease 4 Pre-lease/proposed or under construction CITY TO WATCH The Urban Land Institute ranked Houston the number two city to watch in 2014 in its “Emerging Trends in Real Estate 2014”, due to increased interest from foreign investors. RESEARCH & FORECAST REPORT | Q2 2014 | HOUSTON OFFICE MARKET COLLIERS INTERNATIONAL | P. 3
  • 4. INVENTORY DIRECT VACANCY SUBLEASE VACANCY VACANCY VACANCY RATE (%) NET ABSORPTION (SF) RENTAL RATE CLASS # OF BLDGS. TOTAL (SF) (SF) RATE (%) (SF) RATE (%) TOTAL (SF) Q2- 2014 Q1- 2014 Q2-2014 Q1-2014 AVG ($/SF) CBD A 31 30,778,455 2,453,645 8.0% 567,424 1.8% 3,021,069 9.8% 10.6% 227,672 -30,481 $40.54 B 31 10,517,518 1,199,039 11.4% 21,720 0.2% 1,220,759 11.6% 12.2% 59,895 11,485 $27.51 C 20 1,374,651 594,363 43.2% 0 0.0% 594,363 43.2% 44.4% 16,340 31,248 $19.70 Total 82 42,670,624 4,247,047 10.0% 589,144 1.4% 4,836,191 11.3% 12.0% 303,907 12,252 $36.35 SUBURBAN A 294 75,225,262 6,318,174 8.4% 692,962 0.9% 7,011,136 9.3% 8.4% 948,944 2,194,677 $31.95 B 938 78,395,002 10,814,085 13.8% 463,321 0.6% 11,277,406 14.4% 14.7% 324,097 61,661 $19.71 C 332 15,112,305 1,855,584 12.3% 5,287 0.3% 1,860,871 12.3% 12.5% 66,091 -32,033 $15.68 Total 1,564 168,732,569 18,987,843 11.3% 1,161,570 0.7% 20,149,413 11.9% 11.9% 1,339,132 2,224,305 $24.58 OVERALL A 325 106,003,717 8,771,819 8.3% 1,260,386 1.2% 10,032,205 9.5% 9.2% 1,176,616 2,164,196 $34.09 B 969 88,912,520 12,013,124 13.5% 485,041 0.5% 12,498,165 14.1% 14.5% 383,992 73,146 $20.39 C 352 16,486,956 2,449,947 14.9% 5,287 0.0% 2,455,234 14.9% 15.4% 82,431 -785 $16.14 Total 1,646 211,403,193 23,234,890 11.0% 1,750,714 0.8% 24,985,604 11.8% 11.9% 1,643,039 2,236,557 $26.52 SUMMARY (CBD, SUBURBAN & OVERALL) INVENTORY DIRECT VACANCY SUBLEASE VACANCY VACANCY VACANCY RATE (%) NET ABSORPTION (SF) RENTAL RATE CLASS # OF BLDGS. TOTAL (SF) (SF) RATE (%) (SF) RATE (%) TOTAL (SF) Q2- 2014 Q1- 2014 Q2-2014 Q1-2014 AVG ($/SF) ALLEN PARKWAY A 4 1,598,033 243,422 15.2% 0 0.0% 243,422 15.2% 13.2% -32,355 -57,664 $32.11 B 32 2,620,056 152,307 5.8% 4,048 0.2% 156,355 6.0% 7.8% 46,749 -28 $26.22 C 15 503,182 114,664 22.8% 0 0.0% 114,664 22.8% 22.8% -106 -6,415 $25.85 Total 51 4,721,271 510,393 10.8% 4,048 0.1% 514,441 10.9% 11.2% 14,288 -64,107 $29.00 BAYTOWN B 3 186,005 697 0.4% 0 0.0% 697 0.4% 0.0% -697 0 $17.18 C 3 81,481 1,812 2.2% 0 0.0% 1,812 2.2% 28.0% 21,026 0 $9.87 Total 6 267,486 2,509 0.9% 0 0.0% 2,509 0.9% 8.5% 20,329 0 $10.98 BELLAIRE A 6 1,103,546 95,439 8.6% 8,737 0.8% 104,176 9.4% 12.2% 30,312 11,207 $25.52 B 18 2,609,813 104,499 4.0% 6,034 0.2% 110,533 4.2% 4.1% -4,475 2,214 $22.46 C 5 333,970 17,052 5.1% 0 0.0% 17,052 5.1% 5.6% 1,505 2,301 $15.91 Total 29 4,047,329 216,990 5.4% 14,771 0.4% 231,761 5.7% 6.4% 27,342 15,722 $24.29 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 10 511,805 21,819 4.3% 0 0.0% 21,819 4.3% 4.3% 0 0 $22.32 C 7 291,499 7,294 2.5% 0 0.0% 7,294 2.5% 4.3% 5,380 1,200 $15.93 Total 19 910,136 75,945 8.3% 0 0.0% 75,945 8.3% 8.9% 5,380 1,200 $22.47 E. FORT BEND/SUGAR LAND A 18 3,517,453 324,021 9.2% 46,494 1.3% 370,515 10.5% 11.7% 182,709 -9,943 $28.11 B 36 2,170,361 289,281 13.3% 100,207 4.6% 389,488 17.9% 20.0% 44,355 7,129 $21.03 C 4 264,206 10,938 4.1% 2,347 0.9% 13,285 5.0% 5.0% 0 -1,790 $18.46 Total 58 5,952,020 624,240 10.5% 149,048 2.5% 773,288 13.0% 14.5% 227,064 -4,604 $24.60 SUBURBAN SUMMARY P. 4 | COLLIERS INTERNATIONAL RESEARCH & FORECAST REPORT | Q2 2014 | HOUSTON OFFICE MARKET
  • 5. INVENTORY DIRECT VACANCY SUBLEASE VACANCY VACANCY VACANCY RATE (%) NET ABSORPTION (SF) RENTAL RATE CLASS # OF BLDGS. TOTAL (SF) (SF) RATE (%) (SF) RATE (%) TOTAL (SF) Q2- 2014 Q1- 2014 Q2-2014 Q1-2014 AVG ($/SF) FM 1960 A 13 2,262,736 157,892 7.0% 0 0.0% 157,892 7.0% 7.5% 62,550 2,192 $27.46 B 91 5,039,672 975,516 19.4% 33,070 0.7% 1,008,586 20.0% 20.1% 5,723 -8,756 $15.44 C 20 716,153 56,804 7.9% 0 0.0% 56,804 7.9% 8.7% 5,223 14,203 $15.46 Total 124 8,018,561 1,190,212 14.8% 33,070 0.4% 1,223,282 15.3% 15.6% 73,496 7,639 $16.44 GREENWAY A 16 6,224,406 402,707 6.5% 6,270 0.1% 408,977 6.6% 7.6% 61,082 26,615 $35.56 B 30 3,223,032 255,383 7.9% 4,157 0.1% 259,540 8.1% 9.5% 45,249 -14,899 $24.05 C 22 931,291 269,089 28.9% 1,500 0.2% 270,589 29.1% 29.5% 4,597 14,610 $17.72 Total 68 10,378,729 927,179 8.9% 11,927 0.1% 939,106 9.0% 10.1% 110,928 26,326 $29.95 GULF FREEWAY/PASADENA A 1 22,706 1,363 6.0% 0 0.0% 1,363 6.0% 33.4% 6,223 2,057 $27.59 B 34 1,952,561 207,088 10.6% 0 0.0% 207,088 10.6% 10.8% 3,562 -2,454 $19.39 C 31 1,197,858 123,437 10.3% 0 0.0% 123,437 10.3% 11.3% 11,435 -14,401 $16.40 TOTAL 66 3,173,125 331,888 10.5% 0 0.0% 331,888 10.5% 11.1% 21,220 -14,798 $18.50 I-10 EAST B 7 447,680 66,342 14.8% 0 0.0% 66,342 14.8% 17.6% 12,302 12,719 $14.65 C 5 267,080 75,834 28.4% 0 0.0% 75,834 28.4% 27.8% -1,519 -72,535 $15.26 TOTAL 12 714,760 142,176 19.9% 0 0.0% 142,176 19.9% 21.4% 10,783 -59,816 $14.80 KATY FREEWAY A 70 16,546,929 477,968 2.9% 113,006 0.7% 590,974 3.6% 2.4% 420,877 1,272,838 $33.74 B 102 9,535,097 921,096 9.7% 139,002 1.5% 1,060,098 11.1% 10.8% -33,060 -123,602 $22.56 C 34 1,596,556 77,301 4.8% 1,440 0.1% 78,741 4.9% 5.0% 1,741 70 $18.22 TOTAL 206 27,678,582 1,476,365 5.3% 253,448 0.9% 1,729,813 6.2% 5.5% 389,558 1,149,306 $26.81 KINGWOOD/HUMBLE B 14 822,224 55,298 6.7% 0 0.0% 55,298 6.7% 7.8% 9,195 6,648 $19.88 C 5 172,796 4,158 2.4% 0 0.0% 4,158 2.4% 2.4% 0 -376 $17.36 TOTAL 19 995,020 59,456 6.0% 0 0.0% 59,456 6.0% 6.9% 9,195 6,272 $19.71 NASA/CLEAR LAKE A 12 1,767,866 122,448 6.9% 1,311 0.1% 123,759 7.0% 6.9% -1,311 0 $24.02 B 46 3,101,782 965,143 31.1% 0 0.0% 965,143 31.1% 31.4% 7,950 -15,555 $18.05 C 20 660,348 127,167 19.3% 0 0.0% 127,167 19.3% 17.7% -10,604 -4,559 $15.74 TOTAL 78 5,529,996 1,214,758 22.0% 1,311 0.0% 1,216,069 22.0% 21.9% -3,965 -20,114 $18.98 NORTH BELT/GREENSPOINT A 24 5,437,586 530,916 9.8% 32,417 0.6% 563,333 10.4% 10.1% -16,658 1,923 $30.34 B 58 5,825,191 1,065,968 18.3% 60,965 1.0% 1,126,933 19.3% 23.0% 165,933 33,747 $15.93 C 22 1,394,941 291,510 20.9% 0 0.0% 291,510 20.9% 20.0% -12,008 -6,425 $12.91 Total 104 12,657,718 1,888,394 14.9% 93,382 0.7% 1,981,776 15.7% 17.1% 137,267 29,245 $23.83 NORTHEAST NEAR AND NORTHEAST OUTLIER B 4 181,618 48,019 26.4% 0 0.0% 48,019 26.4% 26.4% 0 5,340 $21.95 C 2 56,562 20,775 36.7% 0 0.0% 20,775 36.7% 36.7% 0 0 $12.00 Total 6 238,180 68,794 28.9% 0 0.0% 68,794 28.9% 20.7% 0 5,340 $16.59 NORTHWEST AND NORTHWEST OUTLIER A 22 3,973,406 439,012 11.0% 47,711 1.2% 486,723 12.2% 13.6% 27,157 -12,971 $23.22 B 92 7,552,757 1,228,892 16.3% 11,353 0.2% 1,240,245 16.4% 15.3% -81,775 108,501 $20.00 C 41 1,644,059 158,858 9.7% 0 0.0% 158,858 9.7% 11.6% 31,845 -443 $15.09 Total 155 13,170,222 1,826,762 13.9% 59,064 0.4% 1,885,826 14.3% 14.3% -22,773 95,087 $20.67 SUBURBAN SUMMARY - CONTINUED RESEARCH & FORECAST REPORT | Q2 2014 | HOUSTON OFFICE MARKET COLLIERS INTERNATIONAL | P. 5
  • 6. INVENTORY DIRECT VACANCY SUBLEASE VACANCY VACANCY VACANCY RATE (%) NET ABSORPTION (SF) RENTAL RATE CLASS # OF BLDGS. TOTAL (SF) (SF) RATE (%) (SF) RATE (%) TOTAL (SF) Q2- 2014 Q1- 2014 Q2-2014 Q1-2014 AVG ($/SF) RICHMOND/FOUNTAINVIEW B 14 795,804 217,599 27.3% 0 0.0% 217,599 27.3% 27.8% 3,758 -6,066 $16.96 C 13 563,723 91,579 16.2% 0 0.0% 91,579 16.2% 17.0% 4,496 2,397 $14.06 Total 27 1,359,527 309,178 22.7% 0 0.0% 309,178 22.7% 23.3% 8,254 -3,669 $16.12 SAN FELIPE/VOSS A 3 1,714,929 256,930 15.0% 0 0.0% 256,930 15.0% 16.1% 19,107 -11,538 $32.97 B 35 3,465,082 301,772 8.7% 27,945 0.8% 329,717 9.5% 11.5% 70,325 -48,840 $21.70 C Total 38 5,180,011 558,702 10.8% 27,945 0.5% 586,647 11.3% 13.1% 89,432 -60,378 $27.14 SOUTH A 1 80,000 0 0.0% 7,783 9.7% 7,783 9.7% 0.0% -7,783 0 $27.19 B 12 465,159 47,322 10.2% 0 0.0% 47,322 10.2% 9.9% -1,136 -3,000 $19.74 C 5 194,042 40,450 20.8% 0 0.0% 40,450 20.8% 20.8% 0 4,000 $23.12 Total 18 739,201 87,772 11.9% 7,783 1.1% 95,555 12.9% 11.7% -8,919 1,000 $22.58 SOUTH MAIN/MED CENTER A 1 485,000 0 0.0% 0 0.0% 0 0.0% 0.0% 0 0 - B 12 735,379 87,357 11.9% 0 0.0% 87,357 11.9% 13.0% 8,255 9,512 $16.54 C 8 475,436 74,800 15.7% 0 0.0% 74,800 15.7% 18.7% 14,010 24,826 $16.34 TOTAL 21 1,695,815 162,157 9.6% 0 0.0% 162,157 9.6% 10.9% 22,265 34,338 $16.46 SOUTHEAST/OUTLIER B 15 1,172,226 80,231 6.8% 0 0.0% 80,231 6.8% 6.8% -955 750 $20.11 C 6 236,043 0 0.0% 0 0.0% 0 0.0% 5.6% 13,120 4,163 $17.00 TOTAL 21 1,408,269 80,231 5.7% 0 0.0% 80,231 5.7% 6.6% 12,165 4,913 $19.54 SOUTHWEST A 6 1,583,702 287,404 18.1% 0 0.0% 287,404 18.1% 17.6% -8,655 -8,615 $16.98 B 65 5,890,713 1,624,497 27.6% 0 0.0% 1,624,497 27.6% 27.6% -1,193 -162,474 $15.94 C 42 2,197,996 224,160 10.2% 0 0.0% 224,160 10.2% 9.6% -14,066 507 $14.27 TOTAL 113 9,672,411 2,136,061 22.1% 0 0.0% 2,136,061 22.1% 21.8% -23,914 -170,582 $15.88 SOUTHWEST FAR AND OUTLIER A 2 93,591 10,880 11.6% 0 0.0% 10,880 11.6% 13.1% 1,392 6,871 $25.26 B 16 846,593 240,471 28.4% 0 0.0% 240,471 28.4% 31.3% 24,118 3,048 $21.05 C 2 51,396 0 0.0% 0 0.0% 0 0.0% 2.9% 1,500 600 $18.00 TOTAL 20 991,580 251,351 25.3% 0 0.0% 251,351 25.3% 28.1% 27,010 10,519 $22.16 WEST LOOP/GALLERIA A 40 15,769,497 1,507,490 9.6% 253,795 1.6% 1,761,285 11.2% 10.2% -74,326 271,831 $35.20 B 59 6,991,200 861,286 12.3% 29,793 0.4% 891,079 12.7% 12.8% 2,272 -22,270 $26.26 C 4 216,268 1,502 0.7% 0 0.0% 1,502 0.7% 0.7% -39 2,096 $19.20 TOTAL 103 22,976,965 2,370,278 10.3% 283,588 1.2% 2,653,866 11.6% 10.9% -72,093 251,657 $32.26 WESTCHASE A 28 7,697,646 907,063 11.8% 98,279 1.3% 1,005,342 13.1% 11.6% 185,245 78,224 $37.53 B 63 7,679,696 711,881 9.3% 7,555 0.1% 719,436 9.4% 8.9% -37,621 140,393 $20.30 C 10 686,740 65,400 9.5% 0 0.0% 65,400 9.5% 7.9% -11,445 2,938 $16.39 Total 101 16,064,082 1,684,344 10.5% 105,834 0.7% 1,790,178 11.1% 10.1% 136,179 221,555 $30.39 THE WOODLANDS A 25 5,239,398 506,387 9.7% 77,159 1.5% 583,546 11.1% 4.5% 93,378 621,650 $36.09 B 70 4,573,496 284,321 6.2% 39,192 0.9% 323,513 7.1% 7.8% 35,263 139,604 $25.15 C 6 378,679 1,000 0.3% 0 0.0% 1,000 0.3% 0.3% 0 1,000 $19.80 Total 101 10,191,573 791,708 7.8% 116,351 1.1% 908,059 8.9% 5.9% 128,641 762,254 $30.57 SUBURBAN SUMMARY - CONTINUED P. 6 | COLLIERS INTERNATIONAL RESEARCH & FORECAST REPORT | Q2 2014 | HOUSTON OFFICE MARKET
  • 7. DEVELOPMENT PIPELINE Houston’s construction pipeline continues to expand with 17.8 million SF under construction at the end of Q2 2014. Build-to-suit projects make up 59.1% of the 17.8M SF, and the remaining 7.3M SF of spec office space under construction is approximately 17.4% pre-leased. The table below includes office buildings under construction with an RBA of 50,000 SF or greater. 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 Jul-14 Phillips 66 2101 Citywest Blvd Westchase 1,100,000 100.0% W.S. Bellows Construction Company Jun-16 609 Main at Texas 609 Main St CBD 1,057,668 0.0% Hines Feb-17 CyrusOne West Campus Expansion 5150 Westway Park Blvd Northwest Far 640,000 100.0% CyrusOne Mar-15 Energy Center Four - ConocoPhillips 925 N Eldridge Pky Katy Freeway West 600,000 100.0% Trammell Crow Company Dec-16 BHP Biliton Petroleum 1500 Post Oak Blvd Galleria/Uptown 600,000 100.0% Transwestern Oct-16 Energy Center Three - ConocoPhillips 935 N Eldridge 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 SH 249 & Louetta Rd FM 1960/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 12.1% Mac Haik Realty LLC Dec-14 Millennium Tower II 10353 Richmond Ave Westchase 417,000 100.0% BMS Management, Inc. Sep-15 Hilcorp Energy Tower 1110 Main St CBD 406,600 100.0% Hines Jul-15 3737 Buffalo Speedway 3737 Buffalo Speedway Ave Greenway Plaza 400,000 22.9% PM Realty Group Jan-15 Shell Woodcreek Phase 3 - B1 201 N Dairy Ashford Rd Katy Freeway West 336,000 100.0% Hines Mar-15 Shell Woodcreek Phase 3 - B2 201 N Dairy Ashford Rd Katy Freeway West 336,000 100.0% Hines Mar-15 Shell Woodcreek Phase 4 201 N Dairy Ashford Rd Katy Freeway West 336,000 100.0% Hines Mar-15 West Memorial Place 15375 Memorial Dr Katy Freeway West 334,147 40.8% Skanska Commercial Development Jan-15 Hughes Landing on Lake Woodlands - Bldg 1 1735 Hughes Landing Blvd Woodlands 331,840 100.0% The Woodlands Development Company Mar-15 Hughes Landing on Lake Woodlands - Bldg 2 1725 Hughes Landing Blvd Woodlands 317,052 100.0% The Woodlands Development Company Mar-15 Beltway @ Clay 4425 W Sam Houston Pky N FM 1960/Hwy 249 314,000 48.4% Transwestern Apr-15 Enclave Place 1414 Enclave Parkway Katy Freeway West 300,907 0.0% PM Realty Group Aug-15 Westchase Park II 3600 W Sam Houston Pky S Westchase 300,000 0.0% PM Realty Group Dec-14 Beltway Lakes Phase III 5775 N Sam Houston Pky E Northwest Far 271,384 0.0% Radler Enterprises, Inc. Sep-14 Beltway Lakes Phase IV 5725 N Sam 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 Aug-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 206,754 0.0% Liberty Property Trust Jan-15 CityCentre Five 825 Town & Country Katy Freeway East 195,842 49.6% Midway Companies Apr-15 Jacobs Plaza 12140 Wickchester Ln Katy Freeway West 173,608 54.9% PM Realty Group Aug-14 Woodbranch Plaza IV 12120 Wickchester Ln Katy Freeway West 171,475 100.0% PM Realty Group Apr-15 San Felipe Place 2229 San Felipe Midtown 170,038 11.7% Hines Jul-15 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 Mar-15 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 5060 Westway Park Blvd Northwest Far 130,451 0.0% Panattoni Development Dec-14 Mason Creek Office Center II 21700 Merchants Way Katy Freeway West 127,955 0.0% Myers Crow & Saviers, LTD. Mar-15 Phase IV 2707 Commerce Center 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 CGG Corporate Campus Phase 6 10300 Town Park Dr Westchase 106,992 100.0% Hines Sep-14 River Oaks District - Office 4444 Westheimer Rd Post Oak Park 99,826 0.9% Oliver McMillan Jan-15 Bldg 1 Grand Pky & Franz Rd @ Katy Fort Bend Rd Katy Freeway West 86,800 0.0% The Urban Companies Nov-14 Blvd Place 1 1 Blvd Pl Galleria/Uptown 83,073 95.6% Wulfe & Co. Jul-14 Black Forest Technology Park 2829 Technology Forest Blvd Woodlands 81,865 1.3% Black Forest Ventures Nov-14 Vision Park 128 Vision Park Blvd Woodlands 75,000 0.0% D'Agostino Companies Jul-14 Phase III 2717 Commerce Center Blvd Southwest Outlier 73,796 66.7% Vista Equities Group Inc. Oct-14 South Building 460 Wildwood Forest Dr Woodlands 64,535 22.6% Archway Properties Jul-14 1801 Binz Street 1801 Binz St South Main/Medical Center 52,362 65.1% Balcor Commercial LLC Jul-14 Sea Scout Base Galveston 7509 Broadway St Southeast Outlier 50,000 100.0% Jacob White Nov-14 Timber Ridge Office Condos-Bld 1 32731 Egypt Ln Outlying Montgomery Cnty 20,000 82.0% SHB Development LLC Jul-14 RESEARCH & FORECAST REPORT | Q2 2014 | HOUSTON OFFICE MARKET COLLIERS INTERNATIONAL | P. 7
  • 8. www.colliers.com/marketname Real estate advisors in more than 485 offices in 63 countries. Colliers International OUR SERVICES The foundation of our service is the strength and depth of our specialists. Our clients depend on our ability to draw on years of direct experience in the local market. Our professionals know their communities and the industry inside and out. Whether you are a local firm or a global organization, we provide creative solutions for all your real estate needs. Colliers International offers a comprehensive portfolio of real estate services to occupiers, owners and investors on a local, regional, national and international basis.  In addition to these sectors, we provide our clients with a deep level of knowledge in specialized industries and product types, such as law, technical facilities, and healthcare. COLLIERS INTERNATIONAL 1233 W. Loop South, Suite 900 Houston, TX 77027 TEL +1 713 222 2111 www.colliers.com/texas HOUSTON RESEARCHER: Lisa R. Bridges Director of Market Research TEL +1 713 830 2125 FAX +1 713 830 2118 *Information herein has been obtained from sources deemed reliable, however its accuracy cannot be guaranteed. Accelerating success. Founding member of the World Green Building Council Member of World Economic Forum Named Top 100 service provider more times than any other real estate firm The second-most- recognized commercial real-estate brand RESEARCH & FORECAST REPORT | Q2 2014 | HOUSTON OFFICE MARKET