Q4 2013 Houston Office Market Research Report
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Q4 2013 Houston Office Market Research Report

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    Q4 2013 Houston Office Market Research Report Q4 2013 Houston Office Market Research Report Document Transcript

    • www.colliers.com/houston Q4 2013 | OFFICE MARKET HOUSTON OFFICE MARKET INDICATORS Q4 2012 Q4 2013 CITYWIDE NET ABSORPTION (SF) 656K 1.9M CITYWIDE AVERAGE VACANCY 14.5% 14.0% CITYWIDE AVERAGE RENTAL RATE $24.25 $25.16 CITYWIDE DELIVERED INVENTORY (SF) 0 1.4M CLASS A RENTAL RATE CBD $37.02 $38.16 SUBURBAN $28.20 $30.18 CLASS A VACANCY CBD 9.8% 10.2% SUBURBAN 11.4% 10.8% RESEARCH & FORECAST REPORT HOUSTON OFFICE MARKET STRONG Q4 HELPS PUSH YE-2013 HOUSTON OFFICE ABSORPTION TO 2.9M SF Houston’s office market saw a remarkable year, spurred primarily by growth in the energy sector. The Q4 net absorption of 1.9M SF, (totals not seen since 2007), pushed year-end office absorption to 2.9M SF. More than 1.4M SF was added to Houston’s office inventory and, at the close of Q4, 10.7M SF of new office development was under construction. Energy giants such as Apache, BHP, ExxonMobil, Phillips 66, and Shell, currently have expansion projects in the construction pipeline, and many others have announced plans to build new office buildings to accommodate growth. The citywide average rental rate increased 3.8% from $24.25 per SF to $25.16 per SF over the year and 1.5% from $24.80 per SF between quarters. Citywide average Class A rents increased 3.0% and Class B rents increased 5.4% over the quarter. The Houston metropolitan area added 86,200 jobs between November 2012 and November 2013, an annual increase of 3.1% over the prior year’s job growth. Local economists have forecasted 2014 job growth to remain steady, adding between 68,000 and 72,000 jobs. Further, Houston’s unemployment fell to 5.6% from 5.8% one year ago. Houston area home sales increased 19.4% between November 2012 and November 2013. Houston’s economy is expected to remain strong in 2014 due to steady 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 11/12 11/13 HOUSTON 5.8% 5.6% TEXAS 6.0% 5.8% U.S. 7.4% 6.6% JOB GROWTH ANNUAL CHANGE # OF JOBS ADDED HOUSTON 3.1% 86.2K TEXAS 2.5% 275.7K U.S. 1.7% 2.3M JOB GROWTH & UNEMPLOYMENT (Not Seasonally Adjusted)
    • RESEARCH & FORECAST REPORT | Q4 2013 | 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 98.7% 81,213 $49.77 Hines Bank of America Center 700 Louisiana CBD 1,268,480 2001 94.6% 184,354 $45.44 M-M Properties Heritage Plaza 1111 Bagby CBD 1,149,635 1986 99.5% 19,575 $50.14 Brookfield Office Properties BG Group Place 811 Main CBD 972,474 2011 96.1% 147,642 $48.71 NPS of Korea CityCentre Three 842 W Sam Houston Pky N Katy Freeway 120,211 2012 94.7% 6,349 $45.00 Midway T & C Land Investors Williams Tower 2800 Post Oak Blvd West Loop/Galleria 1,476,973 1983 99.1% 54,457 $48.72 Invesco Real Estate BBVA Compass Plaza 2200 Post Oak Blvd West Loop/Galleria 312,574 2013 77.5% 70,244 $46.50 RS Post Oak Perennial LP CityWestPlace 4 2103 CityWest Blvd Westchase 518,293 2001 98.8% 71,223 $46.43 Parkway Properties , Inc. One BriarLake Plaza 2000 W Sam Houston Pky Westchase 502,410 2000 97.5% 53,384 $46.50 TIER REIT, Inc. One Hughes Landing 1800 Hughes Landing Blvd The Woodlands 197,719 2013 97.8% 4,442 $46.00 The Woodlands Development Company, L.P. 3 Waterway Square Place 3 Waterway Ave The Woodlands 231,589 2013 98.4% 3,693 $42.35 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 100 basis points between quarters to 14.0% from 15.0%, and fell 50 basis points annually from 14.5% in Q4 2012. Between quarters, the average CBD vacancy rate decreased 30 basis points to 12.8% from 13.1% while the average suburban vacancy rate decreased 40 basis points to 14.4% from 14.8%. The average CBD Class A vacancy rate decreased 50 basis points to 10.2% from 10.7%, and the average CBD Class B vacancy rate fell 20 basis points to14.9% from 15.1%. The average suburban Class A vacancy rate decreased 60 basis points to 10.8% from 11.4%, and the average suburban Class B vacancy rate fell 70 basis points to 17.4% from 18.1%. Of the 1,301 existing office buildings in our survey, only 44 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 4.5 million SF or 2.5% of Houston’s total office inventory, but only 1.8 million SF of this sublease space is currently vacant. ABSORPTION & DEMAND Absorption increased in Q4 as new space was delivered and tenants expanded. Houston’s office market posted 1.9M SF of positive net absorption, significantly more than the 656,000 SF posted in the same quarter one year ago. Suburban Class C space posted the largest loss, with 37,349 SF of negative net absorption. Suburban Class A space posted the largest gain, with 1.3M SF of positive net absorption, mostly due to tenants expanding into new space in the Katy Freeway and The Woodlands submarkets. Some of the larger tenants that moved into new space or expanded into additional space during Q4 include Modec International (127,000 SF) and Atwood Oceanics (82,000 SF) - both companies moved into Energy Crossing II in the Katy Freeway submarket; Geico (136,000 SF) moved into Mason Creek Office Center located in the Katy Freeway submarket; Subsea (96,300 SF) and Houston Offshore (62,147 SF) moved into Westgate I in the Katy Freeway submarket; and Anadarko Petroleum Corp. (550,000 SF), began expansion into its newly-constructed Tower 2 in The Woodlands submarket. RENTAL RATES The citywide average rental rate increased 3.8% from $24.25 per SF to $25.16 per SF over the year and 1.5% from $24.80 per SF between quarters. Citywide average Class A rents increased 3.0% and Class B rents increased 5.4% over the quarter. The CBD Class A average rental rate increased 2.6% from $37.19 per SF to $38.16 per SF between quarters, while the suburban Class A average rental rate increased 1.3% from $29.79 per SF to $30.18 per SF. The average CBD Class B rental rate rose 1.0%, while the average suburban Class B rental rate increased 5.3% between quarters.
    • RESEARCH & FORECAST REPORT | Q4 2013 | HOUSTON OFFICE MARKET Q4 2013 SIGNIFICANT SALES TRANSACTIONS – (100,000 SF or greater) BUILDING NAME SUB- MARKET RBA (SF) YEAR BUILT BUYER SELLER SALE PRICE $/SF CAP RATE CLOSED 712 Main St CBD 794,186 1929/ 1989 The Lionstone Group Brookfield Asset Management $94M $118 6.2 10/2013 10451 Clay Rd Katy Freeway 97,295 2013 Cole Corporate Income Trust, Inc Crimson Real Estate Fund, LP $30M $307 N/A 11/2013 Beltway 8 Corporate Center Bldgs 3 & 4 Northwest 261,413 2007 Agellan Commercial REIT Buchanan Street Properties $45M $172 8.2 10/2013 Marathon Oil Tower West Loop/ Galleria 1,168,805 1983 CBRE Global Investors Hanover Real Estate Partners $245M $210 5.25 10/2013 3COLLIERS INTERNATIONAL | P. SALES ACTIVITY Houston’s office investment sales activity included 21 sales transactions with a total sales volume of approximately $1.0 billion, averaging $224 per SF. Listed below are a few significant transactions that closed during the fourth quarter. LEASING ACTIVITY Houston’s office leasing activity reached 2.6 million SF in the fourth quarter, bringing the year-end leasing activity to 11.9 million SF. Below is a list of select Q4 2013 top lease transactions, the majority of which were new. 1 Renewal 2 Expansion 3 Sublease 4 Pre-lease/proposed or under construction Building Name/Address Submarket SF Tenant Lease date Mason Creek Office Center Katy Freew ay 135,716 Geico Oct-13 CGG Corporate Campus Phase 6 Westchase 106,992 CGG Veritas4 Nov-13 Granite Briarpark Green Westchase 88,510 Noble (Gulf of Mexico) Inc. Dec-13 Wells Fargo Plaza CBD 64,938 Susman Godfrey LLP1 Oct-13 Tw o Allen Center CBD 55,535 Chevron Nov-14 One Allen Center CBD 55,607 Marsh USA Inc. Oct-13 1 Blvd Place West Loop/Galleria 54,676 Frost Bank Oct-13 Wells Fargo Plaza CBD 49,724 TD Warehouse Oct-13 1401 Enclave Parkw ay Katy Freew ay 46,568 IHS Global2 Dec-13 1200 Smith CBD 28,350 Houston Energy, L.P.3 Nov-13 Energy Tow er IV Katy Freew ay 26,006 Spectrum Geo4 Oct-13 801 Louisiana CBD 12,250 Goodrich Petroleum Nov-13 Q4 2013 Top Office Leases
    • RESEARCH & FORECAST REPORT | Q4 2013 | HOUSTON OFFICE MARKET HOUSTON OFFICE MARKET SUMMARY (CBD, SUBURBAN & OVERALL) HOUSTON SUBURBAN OFFICE MARKET SUMMARY COLLIERS INTERNATIONAL | P. 4 Vacancy Rental Rate Class # of Bldgs. Total (SF) (SF) Rate (%) (SF) Rate (%) Total (SF) Q4-2013 Q3-2013 Q4-2013 YE-2013 AVG ($/SF) Allen Parkway A 4 1,704,677 83,788 4.9% 0 0.0% 83,788 4.9% 6.5% 26,915 56,320 $28.13 B 28 2,339,234 232,069 9.9% 6,745 0.3% 238,814 10.2% 11.2% 23,402 83,446 $25.38 C 17 569,557 70,795 12.4% 0 0.0% 70,795 12.4% 12.5% 460 -7,523 $24.21 Total 49 4,613,468 386,652 8.4% 6,745 0.1% 393,397 8.5% 9.6% 50,777 132,243 $26.47 Baytown B 4 281,332 3,914 1.4% 0 0.0% 3,914 1.4% 1.4% 0 0 $17.18 C 2 42,582 1,812 4.3% 0 0.0% 1,812 4.3% 0.0% -1,812 -1,812 $7.95 Total 6 323,914 5,726 1.8% 0 0.0% 5,726 1.8% 1.2% -1,812 -1,812 $15.47 Bellaire A 5 901,614 189,136 21.0% 14,185 1.6% 203,321 22.6% 22.9% 3,421 33,263 $24.84 B 15 2,250,357 127,373 5.7% 2,647 0.1% 130,020 5.8% 5.8% -22 3,902 $22.16 C 8 348,315 23,612 6.8% 0 0.0% 23,612 6.8% 5.4% -4,841 -442 $14.92 Total 28 3,500,286 340,121 9.7% 16,832 0.5% 356,953 10.2% 10.2% -1,442 36,723 $23.67 Conroe  A 1 46,832 46,832 100.0% 0 0.0% 46,832 100.0% 100.0% 0 0 $27.53 B 4 334,266 21,819 6.5% 0 0.0% 21,819 6.5% 11.3% 15,968 15,968 $22.49 C 4 157,925 9,250 5.9% 0 0.0% 9,250 5.9% 1.4% -7,000 -7,000 $17.46 Total 9 539,023 77,901 14.5% 0 0.0% 77,901 14.5% 16.1% 8,968 8,968 $24.92 E. Fort Bend/Sugar Land A 11 1,985,075 606,793 30.6% 18,954 1.0% 625,747 31.5% 35.0% 69,967 336,198 $28.06 B 29 1,687,253 299,727 17.8% 100,490 6.0% 400,217 23.7% 24.6% 15,168 -19,671 $21.36 C 2 183,972 5,447 3.0% 3,984 2.2% 9,431 5.1% 2.9% -4,011 -5,691 $18.41 Total 42 3,856,300 911,967 23.6% 123,428 3.2% 1,035,395 26.8% 29.0% 81,124 310,836 $24.92 Inventory Direct Vacancy Sublease Vacancy Vacancy Rate (%) Net Absorption (SF) Vacancy Rental Rate Class # of Bldgs. Total (SF) (SF) Rate (%) (SF) Rate (%) Total (SF) Q3-2013 Q2-2013 Q3-2013 YTD-2013 AVG($/SF) A 31 30,648,169 2,583,130 8.4% 547,966 1.8% 3,131,096 10.2% 10.7% 158,066 -314,386 $38.16 B 31 10,230,361 1,492,484 14.6% 29,324 0.3% 1,521,808 14.9% 15.1% 20,417 221,318 $25.30 C 23 2,107,430 830,676 39.4% 0 0.0% 830,676 39.4% 38.4% -21,000 -41,919 $20.06 Total 85 42,985,960 4,906,290 11.4% 577,290 1.3% 5,483,580 12.8% 13.1% 157,483 -134,987 $33.92 A 228 60,763,786 5,969,627 9.8% 606,336 1.0% 6,575,963 10.8% 11.4% 1,478,443 3,508,387 $30.18 B 729 64,135,601 10,519,238 16.4% 620,860 1.0% 11,140,098 17.4% 18.1% 326,155 -249,259 $19.97 C 260 11,911,293 1,894,486 15.9% 9,333 0.1% 1,903,819 16.0% 16.9% -37,349 -269,822 $16.66 Total 1217 136,810,680 18,383,351 13.4% 1,236,529 0.9% 19,619,880 14.3% 14.8% 1,767,249 2,989,306 $22.98 A 259 91,411,955 8,552,757 9.4% 1,154,302 1.3% 9,707,059 10.6% 11.7% 1,636,509 3,194,001 $32.75 B 760 74,365,962 12,011,722 16.2% 650,184 0.9% 12,661,906 17.0% 18.2% 346,572 -27,941 $20.64 C 283 14,018,723 2,725,162 19.4% 9,333 0.1% 2,734,495 19.5% 20.2% -58,349 -311,741 $17.77 Total 1302 179,796,640 23,289,641 13.0% 1,813,819 1.0% 25,103,460 14.0% 15.0% 1,924,732 2,854,319 $25.16 Net Absorption (SF)Inventory Direct Vacancy Sublease Vacancy Vacancy Rate (%) CBD Suburban Overall
    • RESEARCH & FORECAST REPORT | Q4 2013 | HOUSTON OFFICE MARKET HOUSTON SUBURBAN OFFICE MARKET SUMMARY - CONTINUED 5COLLIERS INTERNATIONAL | P. Vacancy Rental Rate Class # of Bldgs. Total (SF) (SF) Rate (%) (SF) Rate (%) Total (SF) Q4-2013 Q3-2013 Q4-2013 YE-2013 AVG ($/SF) FM 1960 A 14 2,752,095 559,727 20.3% 0 0.0% 559,727 20.3% 21.2% 22,475 63,674 $25.67 B 74 4,232,591 994,119 23.5% 28,601 0.7% 1,022,720 24.2% 24.6% 6,233 -108,207 $16.02 C 16 597,349 63,250 10.6% 0 0.0% 63,250 10.6% 10.0% -3,362 2,330 $13.50 Total 104 7,582,035 1,617,096 21.3% 28,601 0.4% 1,645,697 21.7% 22.2% 25,346 -42,203 $18.77 Greenway A 12 4,866,788 433,402 8.9% 58,374 1.2% 491,776 10.1% 10.8% 33,937 46,028 $31.97 B 26 3,228,000 280,464 8.7% 0 0.0% 280,464 8.7% 8.8% 2,084 -14,400 $23.40 C 18 786,606 289,796 36.8% 0 0.0% 289,796 36.8% 37.2% 2,939 -16,772 $17.49 Total 56 8,881,394 1,003,662 11.3% 58,374 0.7% 1,062,036 12.0% 12.4% 38,960 14,856 $27.06 Gulf Freeway/Pasadena A 2 75,068 17,922 23.9% 0 0.0% 17,922 23.9% 23.9% 0 7,110 $29.37 B 27 1,539,877 208,854 13.6% 0 0.0% 208,854 13.6% 15.3% 27,275 35,884 $18.78 C 23 777,585 120,471 15.5% 0 0.0% 120,471 15.5% 16.6% 8,901 -5,816 $15.01 Total 52 2,392,530 347,247 14.5% 0 0.0% 347,247 14.5% 16.0% 36,176 37,178 $17.81 I-10 East B 5 373,248 91,363 24.5% 0 0.0% 91,363 24.5% 24.5% 0 -4,101 $14.38 C 2 82,603 1,780 2.2% 0 0.0% 1,780 2.2% 2.2% 0 2,440 $0.00 Total 7 455,851 93,143 20.4% 0 0.0% 93,143 20.4% 20.4% 0 -1,661 $14.38 Katy Freeway A 48 11,382,711 302,566 2.7% 13,127 0.1% 315,693 2.8% 4.3% 503,327 1,342,330 $31.26 B 86 7,450,179 735,783 9.9% 7,878 0.1% 743,661 10.0% 12.2% 165,786 395,373 $20.22 C 30 1,451,667 76,803 5.3% 3,749 0.3% 80,552 5.5% 5.7% 1,756 25,298 $17.85 Total 164 20,284,557 1,115,152 5.5% 24,754 0.1% 1,139,906 5.6% 7.3% 670,869 1,763,001 $25.21 Kingwood/Humble B 11 707,192 64,428 9.1% 11,133 1.6% 75,561 10.7% 10.4% -1,729 -16,212 $19.79 C 5 174,761 3,782 2.2% 0 0.0% 3,782 2.2% 1.7% -798 2,635 $18.04 Total 16 881,953 68,210 7.7% 11,133 1.3% 79,343 9.0% 8.7% -2,527 -13,577 $19.72 NASA/Clear Lake A 12 1,782,917 122,448 6.9% 0 0.0% 122,448 6.9% 8.6% 31,276 67,120 $23.30 B 35 2,551,745 1,016,738 39.8% 6,748 0.3% 1,023,486 40.1% 39.0% -27,465 -521,454 $17.82 C 15 598,835 157,521 26.3% 0 0.0% 157,521 26.3% 26.5% 985 2,789 $14.43 Total 62 4,933,497 1,296,707 26.3% 6,748 0.1% 1,303,455 26.4% 26.5% 4,796 -451,545 $18.66 North Belt/Greenspoint A 17 3,816,967 352,473 9.2% 44,529 1.2% 397,002 10.4% 11.5% 40,242 -44,368 $28.47 B 47 5,437,316 1,138,817 20.9% 203,242 3.7% 1,342,059 24.7% 24.9% 9,788 -287,196 $18.22 C 20 1,159,424 261,857 22.6% 0 0.0% 261,857 22.6% 22.9% 4,198 -45,174 $12.90 Total 84 10,413,707 1,753,147 16.8% 247,771 2.4% 2,000,918 19.2% 19.7% 54,228 -376,738 $22.72 Northeast Near and Northeast Outlier B 5 204,177 50,038 24.5% 3,321 1.6% 53,359 26.1% 27.2% 2,158 -9,322 $20.90 C 5 129,823 20,775 16.0% 0 0.0% 20,775 16.0% 17.1% 1,402 -6,784 $12.00 Total 10 334,000 70,813 21.2% 3,321 1.0% 74,134 22.2% 23.3% 3,560 -16,106 $17.35 Inventory Direct Vacancy Sublease Vacancy Vacancy Rate (%) Net Absorption (SF)
    • RESEARCH & FORECAST REPORT | Q4 2013 | HOUSTON OFFICE MARKET HOUSTON SUBURBAN OFFICE MARKET SUMMARY - CONTINUED 6COLLIERS INTERNATIONAL | P. Vacancy Rental Rate Class # of Bldgs. Total (SF) (SF) Rate (%) (SF) Rate (%) Total (SF) Q4-2013 Q3-2013 Q4-2013 YE-2013 AVG ($/SF) Northwest and Northwest Outlier A 14 2,630,137 472,796 18.0% 28,113 1.1% 500,909 19.0% 19.6% 14,929 83,077 $21.99 B 66 6,008,819 1,083,298 18.0% 120,519 2.0% 1,203,817 20.0% 22.5% 146,078 47,450 $17.45 C 21 865,721 201,852 23.3% 0 0.0% 201,852 23.3% 22.8% -4,282 -73,346 $15.14 Total 101 9,504,677 1,757,946 18.5% 148,632 1.6% 1,906,578 20.1% 21.7% 156,725 57,181 $18.67 Richmond/Fountainview B 12 695,665 215,291 30.9% 0 0.0% 215,291 30.9% 30.9% -612 38,261 $16.42 C 13 565,718 140,472 24.8% 0 0.0% 140,472 24.8% 22.0% -16,181 -63,651 $12.40 Total 25 1,261,383 355,763 28.2% 0 0.0% 355,763 28.2% 26.9% -16,793 -25,390 $14.94 San Felipe/Voss A 3 1,714,929 264,499 15.4% 0 0.0% 264,499 15.4% 15.4% -317 53,430 $32.58 B 29 3,090,668 299,385 9.7% 44,242 1.4% 343,627 11.1% 10.6% -14,891 -54,594 $21.88 C 2 126,362 42,428 33.6% 0 0.0% 42,428 33.6% 33.6% 0 -3,862 $13.00 Total 34 4,931,959 606,312 12.3% 44,242 0.9% 650,554 13.2% 12.9% -15,208 -5,026 $25.72 South A 1 80,000 0 0.0% 0 0.0% 0 0.0% 0.0% 0 0 $26.83 B 14 528,721 59,561 11.3% 0 0.0% 59,561 11.3% 7.4% -20,432 9,882 $19.80 C 6 204,042 44,450 21.8% 0 0.0% 44,450 21.8% 22.5% 1,450 2,700 $12.90 Total 21 812,763 104,011 12.8% 0 0.0% 104,011 12.8% 10.7% -18,982 12,582 $18.57 South Main/Med Center A 1 485,000 0 0.0% 0 0.0% 0 0.0% 0.0% 0 0 - B 9 568,214 82,330 14.5% 0 0.0% 82,330 14.5% 14.1% -2,338 2,716 $16.85 C 5 321,794 66,318 20.6% 0 0.0% 66,318 20.6% 10.8% -31,470 -20,838 $17.28 Total 15 1,375,008 148,648 10.8% 0 0.0% 148,648 10.8% 8.4% -33,808 -18,122 $17.01 Southeast/Outlier B 8 872,699 78,411 9.0% 0 0.0% 78,411 9.0% 9.0% 0 15,043 $20.30 C 2 48,054 17,283 36.0% 0 0.0% 17,283 36.0% 36.0% 0 -17,283 $17.00 Total 10 920,753 95,694 10.4% 0 0.0% 95,694 10.4% 10.4% 0 -2,240 $19.66 Southwest A 4 1,051,351 197,893 18.8% 0 0.0% 197,893 18.8% 19.3% 5,406 -17,488 $17.12 B 49 5,346,079 1,700,719 31.8% 3,205 0.1% 1,703,924 31.9% 31.9% 1,966 33,715 $16.39 C 27 1,551,023 220,569 14.2% 1,600 0.1% 222,169 14.3% 13.7% -10,424 -28,713 $13.95 Total 80 7,948,453 2,119,181 26.7% 4,805 0.1% 2,123,986 26.7% 26.7% -3,052 -12,486 $16.13 Southwest Far and Outlier A 2 93,591 19,143 20.5% 0 0.0% 19,143 20.5% 20.6% 149 25,787 $25.49 B 16 598,823 13,016 2.2% 1,594 0.3% 14,610 2.4% 2.6% 695 6,446 $22.57 C 2 51,396 2,100 4.1% 0 0.0% 2,100 4.1% 4.1% 0 -50 $18.00 Total 20 743,810 34,259 4.6% 1,594 0.2% 35,853 4.8% 4.9% 844 32,183 $23.52 Inventory Direct Vacancy Sublease Vacancy VacancyRate (%) Net Absorption (SF)
    • RESEARCH & FORECAST REPORT | Q4 2013 | HOUSTON OFFICE MARKET OFFICE DEVELOPMENT PIPELINE Houston’s construction pipeline continues to expand with 10.7 million SF under construction at the end of Q4 2013. The table below includes buildings containing 150,000 SF or greater. HOUSTON SUBURBAN OFFICE MARKET SUMMARY - CONTINUED COLLIERS INTERNATIONAL | P. 7 Building Name Address Submarket SF Pre- Leased Developer Est. Delivery ExxonMobil North Campus I-45 & Springwoods Village Pkwy The Woodlands 3,000,000 100.0% ExxonMobil (Gilbane Building Co) Jun-14 Energy Center Three 935 N Eldridge Pky Katy Freeway 546,604 100.0% Trammell Crow Company May-15 Southwestern Energy HQ I-45 & Grand Parkway The Woodlands 515,000 100.0% Patrinely Group, LLC Dec-14 Noble Energy Center II SH 249 & Louetta Rd FM 1960/Hwy 249 456,000 100.0% Trammell Crow Company Jun-15 Energy Tower III 11740 Katy Fwy Katy Freeway 428,831 100.0% Mac Haik Realty LLC Jan-14 Energy Tower IV 11750 Katy Fwy Katy Freeway 428,831 6.1% Mac Haik Realty LLC Dec-14 Shell Woodcreek 200 N Dairy Ashford Rd Katy Freeway 375,000 100.0% Hines Feb-14 Shell Woodcreek 11910 Katy Fwy Katy Freeway 375,000 100.0% Hines Two BriarLake Plaza 2050 W Sam Houston Pky S Westchase 337,888 51.9% Cassidy Turley Apr-14 Energy Crossing II 15011 Katy Fwy Katy Freeway 321,508 87.5% Opus Corporation Jan-14 Westchase Park 3600 W Sam Houston Pky S Westchase 300,000 0.0% PM Realty Group Dec-14 Town Centre I 700 Town & Country Blvd Katy Freeway 254,489 0.0% Moody Rambin Jan-15 Mustang Engineering 17325 Park Row Katy Freeway 225,885 100.0% Transwestern Jul-14 The Offices at Greenhouse 19219 Katy Fwy Katy Freeway 203,149 67.1% Stream Realty Partners Jul-14 Building 5 - Repsol 2455 Technology Forest Blvd The Woodlands 200,000 100.0% Warmack Investments May-14 Two Hughes Landing 1790 Hughes Landing Blvd The Woodlands 197,719 8.7% The Woodlands Development Company, L.P. May-14 Westgate II 17320 Katy Fwy Katy Freeway 186,375 100.0% Transwestern Jan-14 Jacobs Plaza 12140 Wickchester Ln Katy Freeway 168,050 45.4% PM Realty Group Jun-14 Texas Instruments 13905 University Blvd E Fort Bend Co/Sugar Land 160,000 100.0% Planned Community Developers Apr-14 Sierra Pines II 1575 Sawdust Rd The Woodlands 153,810 0.0% Stream Realty Partners Aug-14 Park Ten Center 1 16200 Park Row Katy Freeway 150,000 25.9% Lincoln Property Company Jul-14 Park Ten Center 2 16200 Park Row Katy Freeway 150,000 25.9% Lincoln Property Company Sep-14 Vacancy Rental Rate Class # of Bldgs. Total (SF) (SF) Rate (%) (SF) Rate (%) Total (SF) Q4-2013 Q3-2013 Q4-2013 YE-2013 AVG ($/SF) West Loop/Galleria A 36 14,668,434 1,612,125 11.0% 261,793 1.8% 1,873,918 12.8% 13.2% 57,495 446,484 $33.57 B 46 6,136,622 835,511 13.6% 9,975 0.2% 845,486 13.8% 15.4% 101,025 115,732 $26.03 C 6 369,268 5,512 1.5% 0 0.0% 5,512 1.5% 1.2% -1,048 -3,950 $19.11 Total 88 21,174,324 2,453,148 11.6% 271,768 1.3% 2,724,916 12.9% 13.6% 157,472 558,266 $31.06 Westchase A 22 6,162,306 782,311 12.7% 87,160 1.4% 869,471 14.1% 8.7% -58,554 -56,309 $33.23 B 47 5,440,001 686,019 12.6% 11,189 0.2% 697,208 12.8% 11.8% -53,561 -11,216 $19.29 C 10 686,419 56,893 8.3% 0 0.0% 56,893 8.3% 8.0% -1,773 -807 $15.26 Total 79 12,288,726 1,525,223 12.4% 98,349 0.8% 1,623,572 13.2% 10.1% -113,888 -68,332 $26.47 The Woodlands A 18 4,348,194 172,396 4.0% 69,787 1.6% 242,183 5.6% 8.0% 613,019 1,065,731 $38.20 B 43 2,972,902 220,952 7.4% 55,839 1.9% 276,791 9.3% 8.4% -28,503 -6,704 $22.55 C 1 24,080 2,000 8.3% 0 0.0% 2,000 8.3% 8.3% 0 1,500 $19.20 Total 62 7,345,176 395,348 5.4% 125,626 1.7% 520,974 7.1% 8.8% 584,516 1,060,527 $27.56 Inventory Direct Vacancy Sublease Vacancy Vacancy Rate (%) Net Absorption (SF)
    • RESEARCH & FORECAST REPORT | Q4 2013 | 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. COLLIERS INTERNATIONAL | P. 8