Houston’s Most Active Office Submarkets  Robust Economy
HOUSTON OFFICE MARKET STATISTICS FOR ALL CLASS 198M SF 3.2M SF YTD Net Absorption 14.2% Vacancy Rate $23.61/SF Average Ren...
Central Business District   Opportunity or Concern
CBD OFFICE SUBMARKET - 8M SF                                                      ALLEN CENTER COMPLEX                    ...
Company Expansions                     Galleria
GALLERIA OFFICE SUBMARKET38M SFClass A Submarket Statistics                    Class B Submarket Statistics              M...
Energy & Construction   West Houston
Major TenantsKATY FREEWAY OFFICE SUBMARKET - 20M SF                                                                       ...
WESTCHASE OFFICE SUBMARKET                                                                                          Major ...
Woodlands/Greenspoint   A Tale of Two Cities
WOODLANDS OFFICE SUBMARKET                                                         Woodlands Major Tenants7M SF           ...
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Houston Office Submarket Update 12-2012

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Houston Office Submarket Update 12-2012

  1. 1. Houston’s Most Active Office Submarkets Robust Economy
  2. 2. HOUSTON OFFICE MARKET STATISTICS FOR ALL CLASS 198M SF 3.2M SF YTD Net Absorption 14.2% Vacancy Rate $23.61/SF Average Rental Rate 4.1M SF Under Construction 8.6 M SF ProposedClass A Submarket Statistics Economic Indicators • 93M SF of Inventory Job Growth & Unemployment (Not Seasonally Adjusted) • 2.8M SF YTD Net Absorption • 11.6% Vacancy Rate UNEMPLOYMENT 10/11 10/12 • $29.96/SF Average Rental Rate Houston 7.7% 6.2% • 4.1M SF Under Construction Texas 7.6% 6.3% • 4.1M SF Proposed U.S. 8.5% 7.5% ANNUAL # OF JOBSClass B Submarket Statistics JOB GROWTH CHANGE ADDED Houston led • 85M SF of Inventory Houston 3.6% 96K the state in annual • 363,000 SF YTD Net Absorption Texas 2.6% 276K job growth adding 96,000 jobs between • 16.7% Vacancy Rate U.S. 1.4% 1.9M October 2011 and • $19.29/SF Average Rental Rate October 2012!
  3. 3. Central Business District Opportunity or Concern
  4. 4. CBD OFFICE SUBMARKET - 8M SF ALLEN CENTER COMPLEX • Hess relocated to Discovery GreenClass A Submarket Statistics Class B Submarket Statistics • Kinder Morgan acquired El Paso • 26M SF of Inventory • 9.8M SF of Inventory • Continental merger with United • 617,000 SF YTD Net Absorption • 85,800 SF YTD Net Absorption • 10.9% Vacancy Rate • 18.0% Vacancy Rate • Devon moving to OKC • $36.85/SF Average Rental Rate • $24.00/SF Average Rental Rate Over 1M SF available for lease • 0 SF Under Construction • 0 SF Under Construction • 0 SF Proposed • 0 SF Proposed Opportunity or Concern?HIGHLIGHTS• DEVON ENERGY CORPORATION - 880k sf originally in 1999; 550k sf now. Some subleased to ENI and Copano, but 425k sf will be vacated in 1Q2013, the majority of which is in 2 Allen Center (1200 Smith).• HESS CORPORATION - Hess Corp leased all of the 845k sf newly constructed (2011) office tower at 1501 McKinney St.• KBR/HALLIBURTON - Occupies 900,000 SF in the 1M SF KBR Tower which was just purchased for $174.6M (or $167/ SF) by a non traded REIT affiliate of New York based W.P. Carey Inc. The seller was a joint venture between KBR and Brookfield. KBR’s lease doesn’t expire until 2030.• UNITED AIRLINES - Merged/Acquired Continental Airlines 4Q2011. 141,990 SF of vacant space currently available in 1600 Smith• BG GROUP - Leased floors 22-34 in the newest CBD tower (972k sf) built by Hines in 2011. Eight full floors (216k sf) of the 46-story tower are still available for lease. Major Tenants • BG Group • El Paso Corporation • PricewaterhouseCoopers • Calpine Corporation • Enterprise Products Partners • Reliant Energy, NRG • CenterPoint Energy • Ernst & Young • Shell Oil Company • Chase Bank • ExxonMobil Corporation • United Airlines • Chevron Corporation • Hess Corporation • Waste Management, Inc. • Deloitte • KBR • Wells Fargo • Devon Energy Corporation • KPMG • Dynegy • LyondellBasell Industries
  5. 5. Company Expansions Galleria
  6. 6. GALLERIA OFFICE SUBMARKET38M SFClass A Submarket Statistics Class B Submarket Statistics Major Tenants • 15M SF of Inventory • 7.3M SF of Inventory • Air Liquide • 146,000 SF YTD Net Absorption • 88,000 SF YTD Net Absorption • Aon International Energy • 10.7% Vacancy Rate • 16.9% Vacancy Rate • Apache Corporation • $30.13/SF Average Rental Rate • $23.47/SF Average Rental Rate • BBVA Compass • 609,000 SF Under Construction • 0 SF Under Construction • Bechtel Corporation • 420,900 to (?, Apache) SF Proposed • 0 SF Proposed • BHPHighlights • Blue Cross Blue Shield of Texas • Apache Corporation - Purchased 6.4 acres of the 20-acre mixed-use Blvd Place • Cameron International Corporation development for a 33-story office tower, approx. 497,000 SF, with enough dirt • Christus Health left over for an addition office building for future growth. Currently in planning • Clear Channel Communications stage. • Colliers International • BBVA Compass - 306,000 SF under construction delivering 4/2013 and 59% • GE Energy pre-leased to BBVA Compass. A development or Redstone and Stream Realty. • GDF SUEZ Energy North America • Landry’s Restaurants, Inc. • Blvd Place - Under construction - Largest new mixed-use project in the area with over 1.8M SF. 205,000 SF of Retail; 1.4M SF of office; 275 luxury hotel • Marathon Oil Corporation room; 1,000 high-rise residential units. • NetIQ Corporation • Panhandle Energy • Spectra Energy Corporation • Stewart Title Company • Symantec Corporation • Weatherford International Ltd. • Williams
  7. 7. Energy & Construction West Houston
  8. 8. Major TenantsKATY FREEWAY OFFICE SUBMARKET - 20M SF • Alliance Engineering • Northern Offshore Ltd. • BP North America • ParadigmClass A Submarket Statistics Class B Submarket Statistics • Cobalt International Energy, Inc. • Pegasus International • ConocoPhillips Company • 10.2M SF of Inventory • 7.8M SF of Inventory • Det Norske Veritas • Petroleum Geo-Services • Phillips 66 Company • 595,000 SF YTD Net Absorption • 114,000 SF YTD Net Absorption • Diamond Offshore • Schlumberger • Expro Americas • 4.2% Vacancy Rate • 17.3% Vacancy Rate • Shell Exploration • ExxonMobil Chemical • $28.14/SF Average Rental Rate • $19.53/SF Average Rental Rate • Foster Wheeler • Sysco Corporation • The Shaw Group • 1.5M SF Under Construction • 0 SF Under Construction • Gulf Interstate Engineering • Transocean Ltd. • J. Ray McDermott, Inc. • 1.7M SF Proposed • 0 SF Proposed • KBR • Union Carbide Corporation • Mustang Engineering/Wood Group • WorleyParsons • Nexen, Inc.HIGHLIGHTS • MASON CREEK - Myers Crow & Saviers, Ltd. and Moody Rambin Interests are currently developing a two-story, 136,000 SF office building. The building is currently 0% pre-leased and will deliver 5/2013. • GREENHOUSE - Stream Realty Partners has proposed building a 200,000 SF office building. • WESTGATE - Transwestern has the first of three planned buildings under construction. 182,000 SF under construction, 70% pre- leased to Subsea 7 and Wood Group Mustang. Delivery is scheduled for 12/2013. The two proposed buildings are 242,000 SF each. • ENERGY CROSSING - Lincoln Property company has Energy Crossing II under construction. The 322,000 SF building is 63% pre- leased to Modec International and Atwood Oceanics. The building is scheduled for completion 8/2013. • ENERGY CENTER THREE - CBRE plans to break ground 12/2012 on a 551,000 SF Class A, 20-story office tower. The building is 0% pre-leased. • WOODBRANCH - PM Realty Group plans to break ground 1/2013 on a 168,000 SF Class A, 7-story office tower. The building is 0% pre-leased. • ENERGY TOWER - Mac Haik Realty LLC currently has the third Energy Tower building under construction. The 429,000 SF Class A, 17-story office tower is 0% pre-leased and scheduled to deliver 1/2014. • 8 WEST CENTRE - CBRE has a 228,000 SF 4-story office building under construction. The building is 53% pre-leased by Helix Energy Solutions and is scheduled to deliver 7/2013. • MURPHY OIL - Metro National’s 332,000 SF Class A office tower is currently under construction. Murphy Exploration has pre- leased 120,000 SF and plan to move in when completed in Q3 2013. • NEXEN - Metro National completed this 332,000 SF Class A, 14-story office tower 10/2012. The building is 79% pre-leased by Nexen Inc. • CITYCENTRE - The fourth building in the Midway Companies new complex is currently under construction and is 53% pre-leased. The 120,000 SF building delivers 6/2013.
  9. 9. WESTCHASE OFFICE SUBMARKET Major Tenants13.2M SF • ABBClass A Submarket Statistics • Affiliated Computer Services • 6.8M SF of Inventory • Aker Solutions • 383,000 SF YTD Net Absorption • Apache Oil Corporation • 7.8% Vacancy Rate • BMC Software • $29.98/SF Average Rental Rate • Brown & Gay • 300,000 SF Under Construction • Cal Dive International • 2.6 SF Proposed • Cameron International • Chevron • Dresser-RandHighlights • Halliburton • Honeywell • Two BriarLake - 332,000 rentable square feet in 12 stories of office space, • Jacobs Engineering with half recently pre-leased to Samsung Engineering as North American • Landmark Graphics headquarters. Construction to begin 4Q 2012 and delivering 1Q 2014. • National Oilwell Varco • Phillips 66 - Purchased a 14.2 acre tract on the west side of Beltway 8, just • Phillips 66 north of Westheimer to build future global headquarters after split with Conoco. • United Recovery Systems • Samsung Engineering America, Inc. • Granite Briarpark Green - 300,000 SF spec office building under construction • Schlumberger delivering 7/2013. • United Recovery Systems • Western Geco • Two Oak Park - 300,000 SF Oak Park complex features 2 6-story Class A • Wood Group Pressure Control buildings. One Oak Park is completed and the entire building is available. Two Oak Park is proposed. • CityWestPlace - 30 acre site with four existing buildings and an additional 1.5 million square feet of first-class office space will be developed at CityWestPlace, including a 640,000 square foot, 22-level office tower; a 465,000 square foot, 16-level office tower; a 387,000 square foot, 16-level office tower; and a 307,000 square foot, 12-level office tower. Each building will have its own structured parking and will offer CityWestPlace-Class amenities and services. • Westchase Park - Two (2) “Class A” office buildings totaling approximately 540,000 rentable square feet. Bldg 1 is existing and Bldg 2 is proposed.
  10. 10. Woodlands/Greenspoint A Tale of Two Cities
  11. 11. WOODLANDS OFFICE SUBMARKET Woodlands Major Tenants7M SF • Anadarko Petroleum • Aon HewittClass A Submarket Statistics • Baker Hughes • 3.2M SF of Inventory • Chevron Phillips Chemical Co., LLP • 62,000 SF YTD Net Absorption • CB&I • 2.1% Vacancy Rate • Energy Alloys, LLC • $34.82/SF Average Rental Rate • Entergy Services • Fox Networks Group • 1.1M SF Under Construction • Halliburton • 3.4M SF Proposed • Huntsman International • Lexicon Genetics • Maersk SealandWoodlands Highlights • Newfield Exploration Company • Nexeo Solutions • 3 Waterway Square Place - 234,000 SF under construction, 90% pre-leased • Praxair Technology, Inc. delivering 6/2013 • Repsol Service Company • Anadarko Tower 2 - 550,000 SF under construction delivering 4/2014 • Rigaku Corp. • Talisman Energy USA Inc. • Research Forest Lakeside - Planned, ten-building development on 77-acres. • TETRA Technologies, Inc. 1 bldg completed (Talisman); 1 under construction (Talisman pre-leased 150K • US Oncology SF). • Waste Connections • One Hughes Landing - 8-story, 197,000 SF spec office building under construction.Greenspoint/North Belt Highlights • ExxonMobil Campus - 385-acre campus, 10k employees moving by 2015 • Southwest Energy - Developing 10-story office building in Springwoods Village near ExxonMobil campus. • Halliburton North Belt Campus - 100,000 SF office building on Milner Rd delivering 4Q2012 • Greenspoint Plaza - ExxonMobil will move out of 1.6M SF between 2014 and 2015
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