Your SlideShare is downloading. ×
Q4 2011 Houston Industrial Market Report
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×

Introducing the official SlideShare app

Stunning, full-screen experience for iPhone and Android

Text the download link to your phone

Standard text messaging rates apply

Q4 2011 Houston Industrial Market Report

1,089
views

Published on

Published in: Real Estate, Business

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
1,089
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
6
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. Q4 2011 | INDUSTRIAL MARKET HOUSTON INDUSTRIAL MARKET RESEARCH & FORECAST REPORT 2.9M SF in Houston’s Industrial Construction Pipeline - 1.8M SF is Spec Development Houston’s industrial market fundamentals continue to strengthen with over 1.5M CITYWIDE MARKET INDICATORS SF of positive net absorption in the fourth quarter, pushing year-end absorption to 4.4M SF. Houston’s industrial vacancy continues to decrease, averaging 5.2% in 4Q-10 4Q-11 the fourth quarter, 40 basis points (bps) less than the previous quarter, and 100 bps below the 6.2% recorded in the same quarter last year. Houston’s overall QUARTERLY NET ABSORPTION average quoted industrial rental rate increased from $5.41 to $5.45 per SF NNN 354,079 SF 1,541,538 SF between quarters increasing by 2.3% on a year-over-year basis from $5.33 per SF YEAR-END NET ABSORPTION NNN. 2011 leasing activity reached 13.1M SF with the help of large lease transactions, many of which are listed on the following page. 4,760,762 SF 4,379,039 SF QUOTED RENTAL RATE NNN For several years, developers have shown restraint due to the economic downturn; however, construction activity increased in 2011. Houston’s industrial $5.33/SF $5.45/SF market currently has 2.9M SF in the construction pipeline and delivered 1.7M SF in 2011. Much of the increased activity in the first half of the year was driven by INDUSTRIAL VACANCY build-to-suit projects for companies expanding in and relocating to the Houston 6.2% 5.2% market, however, the fourth quarter saw a significant increase in spec development representing 1.8M SF of the 2.9M under construction. As Houston’s QUARTERLY DELIVERIES available industrial inventory shrinks, we believe the demand for new projects will 204,793 176,950 continue to increase, both build-to-suit and spec development. YEAR-END DELIVERIES With solid expansion in the energy sector and a strong housing market (up 4.1% 2,239,377 SF 1,670,619 SF year-to-date through November), Houston’s economy is expected to continue UNDER CONSTRUCTION outperforming the national economy over the next twelve to eighteen months. 206,671 SF 2,942,666 SF ABSORPTION, NEW SUPPLY & VACANCY RATES JOB GROWTH & UNEMPLOYMENT (Seasonally Adjusted) 2,000,000 8% UNEMPLOYMENT 11/10 11/11 1,500,000 7% HOUSTON 8.7% 7.8% TEXAS 8.3% 8.1% 1,000,000 6% U.S. 9.8% 8.6% 500,000 5% 0 4% ANNUAL JOB GROWTH CHANGE 11/11 -500,000 3% HOUSTON 3.4% 20.2k -1,000,000 2% TEXAS 2.2% 46.4k U.S. 1.0% 120.0k Absorption New Supply Vacancy www.colliers.com/houston
  • 2. RESEARCH & FORECAST REPORT | Q4 2011 | HOUSTON INDUSTRIAL MARKET Vacancy & Availability $4.19 per SF for bulk warehouse space; 2011 TOP INDUSTRIAL LEASES $6.36 per SF for Flex/Service space; Houston’s industrial vacancy continues Forum Energy with Tech/R&D space averaging $7.13 Guhn Road Distribution Center to shrink averaging 5.2% in the fourth per SF. Aug-11 253,838 SF quarter. Over the past three years, Houston’s industrial vacancy has Ferguson Enterprises, Inc.* decreased each quarter, outperforming Absorption & Demand Port Crossing Commerce Center Sep-11 206,296 SF all other commercial real estate Houston’s industrial market posted property sectors citywide. 1.5M SF of positive net absorption in Exel Inc. 8705 Citypark Loop the fourth quarter, bringing the year-to- Jun-11 191,537 SF At the end of the fourth quarter, date total to 4.4M SF. Houston had 26.3M SF of vacant UnitedTrans** Eastport 5 industrial space citywide, 1M SF less Among Houston’s major industrial Aug-11 165,035 SF than the previous quarter. Among the corridors, the Northeast and Northwest major industrial corridors, the Northwest submarkets outperformed all others in K2 Logistics Hardy Distribution Center I submarket held the largest amount of the fourth quarter posting the highest Jun-11 143,600 SF vacant space with 6.1M SF (5.1% positive net quarterly absorption of American Packing & Crating* vacancy), followed by the Southeast 515K SF and 295K SF respectively. 404 N Witter St submarket with 4.9M SF vacant (5.7% The North submarket followed with Feb-11 140,782 SF vacancy), the North submarket with 227K SF of positive net absorption. Packwell Inc.** 4.3M SF vacant (6.0% vacancy), and Wallisville Road Industrial Park - 1 the Southwest submarket with 4.2M SF There were several major tenant move- May-11 136,928 SF vacant (6.1% vacancy). ins contributing to net absorption gains Mahindra USA Inc. in the fourth quarter, including Excel Satsuma Distribution Center I Houston’s industrial construction Inc. (191,537 SF); Chemplast Inc. Sep-11 132,913 SF pipeline significantly increased between (175,000 SF); Del Papa Distributing Polytex Fibers Corporation** quarters from 1.0M SF to 2.9M SF, with (98,599 SF); Velocity Express(60,000 Fairbanks Distribution Center II 1.8M SF of this being spec SF); and Consolidated Container Sep-11 102,001 SF development. The largest project under Company of Texas, LLC (93,170SF). Pollock Paper Distributors** construction is a 475,000 SF state-of- 6001 West by Northwest Blvd. the-art foodservice distribution facility Leasing Oct-11 99,965 SF that will be the new Gulf Coast regional Houston’s industrial leasing activity Eaton Corporation distribution hub for the Ben E. Keith reached 3.4M SF in the fourth quarter, Sago Plaza Company. The facility is being 200K SF less than the previous quarter Aug-11 99,125 SF constructed on an 82 acre tract located and 900K SF more than the same Sercel Inc.** in Missouri City in the Beltway Crossing quarter last year. For a select list of Techway SW Business Park - 1 Business Park. A list of additional Houston’s top industrial leases signed May-11 99,000 SF buildings currently under construction to date, please see the column at right. Consolidated Container Company of can be found on page 4 of this report. Texas, LLC Eastport 7 Sep-11 93,170 SF Rental Rates Palmer Logistics Houston’s overall average quoted Portwall Distribution Center I industrial rental rate increased from Sep-11 65,000 SF $5.41 to $5.45 per SF NNN between Concept Reinforced LLC** quarters, and increased by 2.3% on a 12300 Amelia Dr. year-over-year basis from $5.33 per SF Dec-11 63,000 SF NNN. By property type, the average Penske quoted NNN rental rates are as follows: Westland Business Park Bldg. 1, Ph. 2 $5.17 per SF for distribution space; Dec-11 56,340SF *Colliers International transaction ** Renewal COLLIERS INTERNATIONAL | P. 2
  • 3. RESEARCH & FORECAST REPORT | Q4 2011 | HOUSTON INDUSTRIAL MARKET HOUSTON INDUSTRIAL INVESTMENT SALES Sales Activity Patrick Henry Properties purchased the 7401 Railhead Lane, a Class B 4Q 2011 Houston’s industrial investment activity industrial warehouse from West Rail decreased between quarters, with 23 Total Volume: $28.6M Ind Park Owners for $63 per SF. The properties trading in the fourth quarter # of Properties: 23 12,000 SF single-tenant warehouse, compared to 50 in the third quarter. Total SF: 1.3M built in 2008, was 100% leased at the Average Price/SF: $53 time of sale. The most significant transaction was Average Cap: 7.5% the sale of Colglazier Properties’ Source: Costar Comps 111,000 SF, Class B Industrial Warehouse to Cabot Investment Properties LLC for $43 per SF. The building, located at 8017 Pinemont Drive in the Northwest Inner Loop Industrial submarket, is a multi-tenant 8017 Pinemont 7401 Railhead Ln. warehouse distribution center which was 82% occupied at the time of sale. HOUSTON INDUSTRIAL MARKET SUMMARY Direct Sublet Total Direct Sublet Total 4Q Net 2011 Net 4Q 2011 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 508,774,532 25,650,720 5.0% 633,434 0.1% 26,284,154 5.2% 1,541,538 4,379,039 176,950 1,670,619 2,942,666 0 NW Inner Loop 12,796,454 537,073 4.2% - 0.0% 537,073 4.2% 82,657 69,504 - - - CBD 32,753,573 1,658,800 5.1% - 0.0% 1,658,800 5.1% (17,423) 42,535 - - - North Inner Loop 5,344,049 545,113 10.2% - 0.0% 545,113 10.2% - (15,000) - - - SW Inner Loop 10,308,342 153,769 1.5% - 0.0% 153,769 1.5% 61,566 40,335 - - - Total Inner Loop 61,202,418 2,894,755 4.7% - 0.0% 2,894,755 4.7% 126,800 137,374 - - - 0 North Fwy/Tomball Pky 15,182,984 1,074,425 7.1% 58,892 0.4% 1,133,317 7.5% 30,903 239,452 - 130,962 370,556 North Hardy Toll Rd 24,730,930 1,315,766 5.3% 7,617 0.0% 1,323,383 5.4% 104,456 449,790 - 216,082 180,238 North Outer Loop 17,810,995 1,061,081 6.0% 100,000 0.6% 1,161,081 6.5% 44,364 238,040 50,225 528,651 146,630 The Woodlands/Conroe 14,807,533 703,850 4.8% - 0.0% 703,850 4.8% 47,263 86,777 - 19,721 65,000 Total North Corridor 72,532,442 4,155,122 5.7% 166,509 0.2% 4,321,631 6.0% 226,986 1,014,059 50,225 895,416 762,424 0 Northeast Hwy 321 1,501,740 - 0.0% - 0.0% - 0.0% 12,000 0 - - - Northeast Hwy 90 16,525,880 329,851 2.0% 129,000 0.8% 458,851 2.8% 245,501 53,291 - - 20,000 Northeast I-10 4,426,297 136,722 3.1% 17,808 0.4% 154,530 3.5% 27,152 (50,335) - - - Northeast Inner Loop 11,666,780 539,704 4.6% - 0.0% 539,704 4.6% 230,388 458,614 - - - Total Northeast Corridor 34,120,697 1,006,277 2.9% 146,808 0.4% 1,153,085 3.4% 515,041 461,570 - - 20,000 0 Hwy 290/Tomball Pky 15,766,407 606,306 3.8% 17,524 0.1% 623,830 4.0% 141,348 263,840 83,225 83,225 242,028 Northwest Hwy 6 6,961,025 106,427 1.5% - 0.0% 106,427 1.5% (3,733) 674,619 - - Northwest Inner Loop 62,368,037 3,321,880 5.3% 109,852 0.2% 3,431,732 5.5% 92,685 (30,039) - - 267,273 Northwest Near 16,776,186 1,037,166 6.2% 50,512 0.3% 1,087,678 6.5% (52,443) (143,061) - 24,377 - Northwest Outlier 14,083,318 315,375 2.2% 49,055 0.3% 364,430 2.6% 101,774 142,399 13,500 34,469 51,000 West Outer Loop 22,663,542 1,452,291 6.4% - 0.0% 1,452,291 6.4% 15,302 298,776 - 334,125 83,710 Total Northwest Corridor 138,618,515 6,839,445 4.9% 226,943 0.2% 7,066,388 5.1% 294,933 1,206,534 96,725 476,196 644,011 0 South Highway 35 32,413,863 1,169,633 3.6% - 0.0% 1,169,633 3.6% 80,215 287,175 - - - South Inner Loop 13,701,524 459,214 3.4% 42,000 0.3% 501,214 3.7% (35,721) 870,866 - 158,210 - Total South Corridor 46,115,387 1,628,847 3.5% 42,000 0.1% 1,670,847 3.6% 44,494 (162,116) - 158,210 - 906,937 East I-10 Outer Loop 15,692,562 176,135 1.1% - 0.0% 176,135 1.1% 8,800 8,800 - - - East-SE Far 48,901,733 4,060,326 8.3% 42,666 0.1% 4,102,992 8.4% 146,149 157,474 - - 640,800 SE Outer Loop 21,398,798 648,672 3.0% - 0.0% 648,672 3.0% 16,312 (133,089) - - - Total Southeast Corridor 85,993,093 4,885,133 5.7% 42,666 0.0% 4,927,799 5.7% 171,261 33,185 - - 640,800 0 Highway 59/Highway 90 23,354,515 1,188,477 5.1% 3,058 0.0% 1,191,535 5.1% 59,181 178,881 - - 728,727 Southwest Far 10,970,085 913,322 8.3% 5,450 0.0% 918,772 8.4% 24,647 109,678 - 58,797 50,449 Southwest Outer Loop 15,148,759 922,959 6.1% - 0.0% 922,959 6.1% 8,245 168,735 - - - Fort Bend County/Sugar Land 20,718,621 1,216,383 5.9% - 0.0% 1,216,383 5.9% 69,950 117,592 30,000 82,000 96,255 Total Southwest Corridor 70,191,980 4,241,141 6.0% 8,508 0.0% 4,249,649 6.1% 162,023 574,886 30,000 140,797 875,431 COLLIERS INTERNATIONAL | P. 3
  • 4. RESEARCH & FORECAST REPORT | Q4 2011 | HOUSTON INDUSTRIAL MARKET 4Q 2011 Industrial Under Construction Estimated Submarket Building Address RBA % Leased Developer Delivery Southwest Corridor Ind 1001 Cravens Rd 475,000 100.00 Ben E Keith Jan-13 Southeast Corridor Ind 1445 Sens Rd 267,320 71.45 Carson Companies Apr-12 Northwest Corridor Ind 10650 Okanella Ln 267,273 0.00 Proterra Properties, Inc. Feb-12 Southeast Corridor Ind 300 Delta Pky 168,480 100.00 National Property Holdings, LP Feb-12 Southeast Corridor Ind 5200 Gulf Fwy 165,000 100.00 Del Papa Distributing Apr-12 North Corridor Ind 330 Northpark Central Dr 146,700 0.00 Prologis Apr-12 Northwest Corridor Ind W Little York & Langfield Rd 133,480 0.00 CBRE Nov-12 North Corridor Ind 14200 Hollister Rd 128,000 0.00 Liberty Property Trust Feb-12 Southwest Corridor Ind 13423 S Gessner Dr 116,480 0.00 Stream Jul-12 North Corridor Ind 4554 Kennedy Commerce Dr 101,250 100.00 Clay Development Feb-12 Southwest Corridor Ind 12682 Cardinal Meadow 96,255 100.00 API Realty Feb-12 Southwest Corridor Ind 13323 S Gessner Dr 91,520 0.00 Stream Jul-12 North Corridor Ind 5500 N Sam Houston Pky W 84,000 0.00 Liberty Property Trust Jan-12 North Corridor Ind 12309 Cutten Rd 80,000 0.00 Clay Development Mar-12 North Corridor Ind 7607 Bluff Point Dr 78,556 0.00 Insite Jun-12 North Corridor Ind 3375 Pollock Dr 65,000 100.00 KDW Jun-12 Northwest Corridor Ind 10120 Houston Oaks Dr. 51,000 100.00 Urban Construction Southwest Inc. Jan-12 Southwest Corridor Ind 30444 Southwest Fwy 50,449 100.00 Steam Feb-12 Northwest Corridor Ind 13411 West Rd 45,835 100.00 PROEM Mar-12 Southwest Corridor Ind 4230 Greenbriar Dr 45,727 100.00 Puffer Sweiven Jan-12 North Corridor Ind 14000 Vickery Dr 45,380 100.00 Clay Development Jul-12 Southeast Corridor Ind 310 W Deerwood Glen Dr 40,000 0.00 Clay Development Mar-12 Northwest Corridor Ind 12223 FM 529 37,875 0.00 Texas Development Co Jun-12 North Corridor Ind 2438 Greens Rd 33,538 0.00 Capital Commercial Mar-12 Northwest Corridor Ind 12616 N Houston Rosslyn Rd 30,145 0.00 Capital Commercial Jun-12 Northwest Corridor Ind 7645 Railhead Ln 30,000 0.00 TNRG Jul-12 Northwest Corridor Ind 12626 N Houston Rosslyn Rd 21,403 0.00 Capital Commercial May-12 Northeast Corridor Ind 14446 Smith Rd 20,000 0.00 Capital Real Estate Commercial Jan-12 Northwest Corridor Ind 8725 Golden Spike Ln 15,000 0.00 TNRG Jul-12 Northwest Corridor Ind 8715 Golden Spike Ln 12,000 0.00 TNRG Jul-12 2,942,666 Total SF Under Construction 4Q 2011 Industrial Deliveries Submarket Building Address RBA % Leased Developer Delivered Hwy 290/Tomball Pky Ind 12606 N Houston Rosslyn - B3 57,415 100 2004 Nw Park Ltd 11-Oct North Outer Loop Ind 4551 Kennedy Commerce Dr 50,225 100 Clay Development 11-Oct Sugar Land Ind 1101 Gillingham Ln 30,000 100 Himalaya Herbal Healthcare 11-Nov Hwy 290/Tomball Pky Ind 8105 Breen 25,810 100 Woodland Oaks Ventures LP 11-Oct Northwest Outlier 1777 Westborough Dr. B 5 13,500 0 Southwind Properties 11-Oct 176,950 Total SF Delivered 4Q 2011 COLLIERS INTERNATIONAL | P. 4
  • 5. RESEARCH & FORECAST REPORT | Q4 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