www.colliers.com/houstonQ1 2013 | INDUSTRIAL MARKET2%3%4%5%6%7%8%-1,000,000-500,0000500,0001,000,0001,500,0002,000,0002,50...
RESEARCH & FORECAST REPORT | Q1 2013 | HOUSTON INDUSTRIAL MARKETCOLLIERS INTERNATIONAL | P. 2Vacancy & AvailabilityAlthoug...
RESEARCH & FORECAST REPORT | Q1 2013 | HOUSTON INDUSTRIAL MARKETCOLLIERS INTERNATIONAL | P. 3Houston Industrial Market Sum...
RESEARCH & FORECAST REPORT | Q1 2013 | HOUSTON INDUSTRIAL MARKETCOLLIERS INTERNATIONAL | P. 4Q1 2013 Industrial Under Cons...
RESEARCH & FORECAST REPORT | Q1 2013 | HOUSTON INDUSTRIAL MARKETAccelerating success.COLLIERS INTERNATIONAL | HOUSTON1300 ...
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Q1 2013 houston_industrial_market_report

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Q1 2013 houston_industrial_market_report

  1. 1. www.colliers.com/houstonQ1 2013 | INDUSTRIAL MARKET2%3%4%5%6%7%8%-1,000,000-500,0000500,0001,000,0001,500,0002,000,0002,500,000Absorption New Supply VacancyHouston’s industrial market remains one of the ten healthiest U.S. industrialmarkets because of its low vacancy, stable rental rates and positive absorption.Houston posted 1.3M SF of positive net absorption in the first quarter, slightly lessthan the previous quarter. Leasing activity reached 3.3M SF in the first quarter,the same amount as the previous quarter. Houston’s average industrial vacancyrate remained at 5.0%, between quarters, due to 1.1M SF of new inventorydeliveries. The overall average quoted industrial rental rate increased from $5.59to $5.62 per SF NNN between quarters, and increased by 2.0% on a year-over-year basis from $5.51 per SF NNN at the end of 2012.Houston’s lack of available industrial inventory has spurred demand for newproduct. Developers have responded and currently have 2.7M SF underconstruction. Much of the increased activity has been driven by build-to-suitprojects for companies expanding in or relocating to the Houston market;however, there are now more spec developments (1.7M SF) than build-to-suitprojects. As Houston’s available industrial inventory shrinks, we believe theincreasing demand for new product will continue to spur both build-to-suit andspec development.The Houston metropolitan area added 118,700 jobs between February 2012 andFebruary 2013, an astounding annual increase of 4.5% over the prior year’s jobgrowth. Further, Houston’s unemployment fell to 6.3% from 7.3% one year ago,which bolstered annual Houston area home sales by 17.1%. With continuedexpansion in the energy industry and a strong housing market, Houston’seconomy is expected to remain healthy in both the near and long-term.RESEARCH & FORECAST REPORTHOUSTON INDUSTRIAL MARKETABSORPTION, NEW SUPPLY & VACANCY RATESHouston’s Industrial Market Remains HealthyCITYWIDE MARKET INDICATORSHOUSTON Q1 2012 Q1 2013Net Absorption(SF)1.7M 1.3MAverage RentalRate per SF$5.51 $5.62Vacancy 5.5% 5.0%SF Delivered 0.8M 1.1MSF UnderConstruction3.0M 2.7MUNEMPLOYMENT 2/12 2/13Houston 7.3% 6.3%Texas 7.2% 6.5%U.S. 8.7% 8.1%JOB GROWTHANNUALCHANGE# OF JOBSADDEDHouston 4.5% 118.7KTexas 3.3% 355.6KU.S. 1.7% 2.2MJOB GROWTH & UNEMPLOYMENT(Not Seasonally Adjusted)
  2. 2. RESEARCH & FORECAST REPORT | Q1 2013 | HOUSTON INDUSTRIAL MARKETCOLLIERS INTERNATIONAL | P. 2Vacancy & AvailabilityAlthough 1.1M SF of new inventorydelivered during the first quarter,Houston’s industrial vacancy rateremained unchanged between quarters at5.0% and decreased by 30 basis pointsfrom 5.3% reported in first quarter 2012.At the close of the first quarter, Houstonhad 24.1M SF of vacant industrial spacecitywide, 224K SF less than the previousquarter. Among the major industrialcorridors, the Northwest submarket hasthe largest amount of vacant space with5.0M SF (3.8% vacancy), followed by theSoutheast submarket with 4.9M SFvacant (5.9% vacancy), the Northsubmarket with 4.6M SF vacant (6.3%vacancy), and the Southwest submarketwith 3.7M SF vacant (5.9% vacancy).Houston’s industrial construction pipelinehad 2.7M SF of projects underway at theend of the first quarter, including 1.7M SFof spec development. The largest projectunder construction is a 475,000-SFstate-of-the-art foodservice distributionfacility that will be the new Gulf Coastregional distribution hub for the Ben E.Keith Company. The facility is beingconstructed on an 82-acre tract locatedin Missouri City in the Beltway CrossingBusiness Park. A list of additionalbuildings currently under constructioncan be found on Page 4 of this report.The largest spec project in the pipeline isa 299,840-SF distribution warehouselocated on Langfield Rd. in the Northwestindustrial submarket.Rental RatesHouston’s overall average quotedindustrial rental rate increased from$5.59 to $5.62 per SF NNN in the firstquarter, and increased by 2.0% on ayear-over-year basis from $5.51 per SFNNN. By property type, the averagequoted NNN rental rates are as follows:$5.45 per SF for Distribution space;$4.43 per SF for Bulk Warehouse space;$7.21 per SF for Flex/Service space; withTech/R&D space averaging $8.21 per SF.Absorption & DemandHouston’s industrial market posted 1.3MSF of positive net absorption in the firstquarter, slightly less than the previousquarter. The Northwest and Southwestsubmarkets outperformed all others in thefirst quarter, posting the largest positivenet quarterly absorption of 589K SF and556K SF respectively. The Northeastsubmarket followed with 273K SF ofpositive net absorption.There were several major tenant move-ins contributing to net absorption gains inthe first quarter, including Applied CyroTechnologies (173,000 SF); CraneWorldwide (150,000 SF); DicksonFurniture (94,000 SF); Seatex (38,405SF); Noble Drilling (28,800 SF); andBosch Rexroth Corporation (28,080 SF).LeasingHouston’s industrial leasing activityreached 3.3M SF in the first quarter, thesame as the previous quarter. Some ofHouston’s top first quarter industrialleases transactions include:PCS-CTS1,2Alamo CrossingMar-13 231,348 SFCADECO Industries, Inc.21060 Lockwood Distribution Ct.Jan-13 154,114 SFCrane Worldwide6501 Navigation BlvdFeb-13 150,000 SFIntermarine Industrial Terminals13901 Industrial RdMar-13 132,000 SFDickson Furniture6000 S Loop Fwy EJan-13 94,000 SFOverseas Import Export, Inc.21800-1802 South St.Jan-13 66,000 SFGuardian Building Products1,27603 Prairie Oak DrMar-13 63,763 SFDelta Petroleum Co., Inc.1,23710 Cedar BlvdFeb-13 62,100 SFBass Computers2,310558 BissonnetFeb-13 55,967 SFVeritrust, Inc.2155 Silber RdJan-13 41,937 SFAluminum Screen Manufacturers19505 West TidwellMar-13 40,856 SFThyssenKrupp Materials NA, Inc.112321 Cutten RdMar-13 40,000 SFSeatex1406 Southgate Dr.Feb-13 38,405 SF1 Colliers International transaction2 Renewal3 Expansion4Sublease
  3. 3. RESEARCH & FORECAST REPORT | Q1 2013 | HOUSTON INDUSTRIAL MARKETCOLLIERS INTERNATIONAL | P. 3Houston Industrial Market SummaryHouston industrial sales activityslowed between quarters with only 90property sales recorded in Q1 2013,compared to 267 in Q4 2012. A fewof the sales transactions that occurredin Q1 2013 are summarized at right.Sales ActivityAmigo Real Estate Investments sold a13,510-SF office/warehouse to anundisclosed owner/user for $63 per SF.The Class C property was built in 1979and is located at 5092 Steadmont Dr. inthe Northwest Inner Loop industrialsubmarket. The building was 100.0%leased at the time of sale.Market Rentable AreaDirectVacant SFDirectVacancyRateSubletVacant SFSubletVacancyRateTotalVacant SFTotalVacancyRate1Q13 NetAbsorption4Q12 NetAbsorption1Q13Completions4Q12CompletionsSF UnderConstructionGreater Houston Total 485,486,002 23,575,216 4.9% 549,350 0.1% 24,124,566 5.0% 1,332,391 1,882,980 1,108,430 949,497 2,670,272CBD-NW Inner Loop 11,735,797 538,450 4.6% 22,200 0.2% 560,650 4.8% 7,548 (103,966) - - -Downtown 31,867,298 1,864,372 5.9% - 0.0% 1,864,372 5.9% (146,663) 175,283 - 38,232 -North Inner Loop 5,158,517 451,369 8.7% - 0.0% 451,369 8.7% - (40,000) - - -SW Inner Loop 7,434,557 108,923 1.5% - 0.0% 108,923 1.5% 25,090 (11,100) - - -Total Inner Loop 56,196,169 2,963,114 5.3% 22,200 0.0% 2,985,314 5.3% (114,025) 20,217 - 38,232 -North Fwy/Tomball Pky 15,731,936 1,638,618 10.4% 19,050 0.1% 1,657,668 10.5% (134,703) (101,093) 333,272 120,670 26,000North Hardy Toll Rd 25,755,261 1,257,283 4.9% 11,956 0.0% 1,269,239 4.9% 133,234 (1,674) 290,665 - 897,599North Outer Loop 17,779,955 977,544 5.5% - 0.0% 977,544 5.5% (107,271) (17,363) - - 123,391The Woodlands/Conroe 13,649,381 696,961 5.1% - 0.0% 696,961 5.1% 45,462 107,445 - 65,000 74,901Total North Corridor 72,916,533 4,570,406 6.3% 31,006 0.0% 4,601,412 6.3% (63,278) (12,685) 623,937 185,670 1,121,891Northeast Hwy 321 1,188,527 1,980 0.2% 7,500 0.6% 9,480 0.8% 0 0 - - -Northeast Hwy 90 15,684,326 314,892 2.0% 129,000 0.8% 443,892 2.8% 13,914 10,190 20,000 - -Northeast I-10 3,975,829 118,003 3.0% - 0.0% 118,003 3.0% 30,669 1,492 21,000 - -Northeast Inner Loop 11,589,888 494,240 4.3% - 0.0% 494,240 4.3% 228,000 (40,652) - - -Total Northeast Corridor 32,438,570 929,115 2.9% 136,500 0.4% 1,065,615 3.3% 272,583 (28,970) 41,000 - -Hwy 290/Tomball Pky 15,036,842 652,292 4.3% 25,636 0.2% 677,928 4.5% 126,211 68,047 74,300 - 40,000Northwest Hwy 6 4,234,621 96,123 2.3% - 0.0% 96,123 2.3% 23,924 1,865 - - -Northwest Inner Loop 60,107,686 2,499,502 4.2% 81,527 0.1% 2,581,029 4.3% 191,249 606,827 - 65,400 150,000Northwest Near 16,509,429 675,066 4.1% 83,051 0.5% 758,117 4.6% 2,939 2,627 - 112,653 320,267Northwest Outlier 13,029,062 351,050 2.7% 49,055 0.4% 400,105 3.1% 7,787 32,804 - 26,480 -West Outer Loop 22,948,670 475,204 2.1% 6,000 0.0% 481,204 2.1% 236,597 219,320 35,750 149,842 22,500Total Northwest Corridor 131,866,310 4,749,237 3.6% 245,269 0.2% 4,994,506 3.8% 588,707 931,490 110,050 354,375 532,767South Highway 35 31,243,555 1,133,397 3.6% 23,600 0.1% 1,156,997 3.7% (62,932) 216,492 10,672 66,841 88,000South Inner Loop 13,358,702 641,050 4.8% - 0.0% 641,050 4.8% (51,349) 42,379 - - -Total South Corridor 44,602,257 1,774,447 4.0% 23,600 0.1% 1,798,047 4.0% (114,281) 258,871 10,672 66,841 88,000East I-10 Outer Loop 15,747,527 115,135 0.7% - 0.0% 115,135 0.7% 400 2,500 - - -East-SE Far 47,891,137 4,498,359 9.4% 31,163 0.1% 4,529,522 9.5% 172,985 386,337 292,771 62,115 365,462SE Outer Loop 20,408,405 293,812 1.4% - 0.0% 293,812 1.4% 32,990 38,940 - - -Total Southeast Corridor 84,047,069 4,907,306 5.8% 31,163 0.0% 4,938,469 5.9% 206,375 427,777 292,771 62,115 365,462Highway 59/Highway 90 21,873,520 901,913 4.1% 50,372 0.2% 952,285 4.4% 195,530 60,247 - 223,000 475,000Southwest Far 10,253,568 909,688 8.9% - 0.0% 909,688 8.9% 16,489 120,156 - 19,264 57,152Southwest Outer Loop 12,640,729 772,901 6.1% 4,240 0.0% 777,141 6.1% 119,207 27,988 - - -Fort Bend County/Sugar Land 18,651,277 1,097,089 5.9% 5,000 0.0% 1,102,089 5.9% 225,084 77,889 30,000 - 30,000Total Southwest Corridor 63,419,094 3,681,591 5.8% 59,612 0.1% 3,741,203 5.9% 556,310 286,280 30,000 242,264 562,152Houston Industrial Market Statistical Summary1st Quarter 2013Intermarine, LLC sold a 132,000-SFClass C industrial warehouse and 95-acre industrial shipping terminal toLexington Real Trust for $81.4M.Intermarine leased back the propertyand is constructing a $10M operationscenter on the site. This terminal issituated along the Houston ShipChannel.Sources: Real Capital Analytics; CoStar Comps
  4. 4. RESEARCH & FORECAST REPORT | Q1 2013 | HOUSTON INDUSTRIAL MARKETCOLLIERS INTERNATIONAL | P. 4Q1 2013 Industrial Under Construction – 25,000 SF or greaterQ1 2013 Industrial Deliveries - 25,000 SF or greaterSubmarket Cluster Submarket Building Address RBA % Leased DeveloperEstimatedDeliverySouthwest Corridor Ind Hwy 59/Hwy 90 1001 Cravens Rd 475,000 100.0 Ben E Keith Jun-13Northwest Corridor Ind Northwest Near 7310 Langfield - Bldg 200 299,840 0.0 Avera Companies Jun-13Southeast Corridor Ind East-Southeast Far 3750 Highway 225 185,168 0.0 The Carson Companies Sep-13North Corridor Ind North Hardy Toll Rd 16200 Central Green Blvd 181,067 100.0 Liberty Property Trust Sep-13North Corridor Ind North Hardy Toll Rd 500 Northpark Central Dr 174,200 0.0 Prologis Inc. Jun-13North Corridor Ind North Hardy Toll Rd 14650 Heathrow Forest Pky 121,919 100.0 Wolff Properties Jun-13Southeast Corridor Ind East-Southeast Far 3700 Highway 225 118,500 0.0 The Carson Companies Sep-13North Corridor Ind North Hardy Toll Rd 4730 Consulate Plaza Dr 101,200 0.0 EastGroup Properties Jun-13North Corridor Ind North Hardy Toll Rd 250 Century Plaza Dr 91,520 0.0 Avera Companies Jul-13North Corridor Ind Woodlands/Conroe 4001 Technology Forest Blvd 74,901 0.0 Stream Realty Partners, L.P. May-13Northwest Corridor Ind Northwest Inner Loop 1315 W Sam Houston Pky N - Bldg 1 70,000 0.0 Caldwell Companies May-13Southeast Corridor Ind East-Southeast Far 3800 Highway 225 61,794 0.0 The Carson Companies Sep-13North Corridor Ind North Hardy Toll Rd 4741 World Houston Pky 56,513 0.0 EastGroup Properties Jun-13South Corridor Ind South Hwy 35 2425 Mowery Rd - Bldg A 53,000 0.0 Colliers International Apr-13North Corridor Ind North Hardy Toll Rd 4740 Consulate Plaza Dr 50,340 100.0 EastGroup Properties Jun-13North Corridor Ind North Hardy Toll Rd 4721 World Houston Pky 45,040 0.0 EastGroup Properties Jul-13North Corridor Ind North Outer Loop 14134 Vickery Dr 41,964 100.0 Clay Development & Construction Inc. Apr-13Northwest Corridor Ind Northwest Inner Loop 1315 W Sam Houston Pky N - Bldg 2 40,000 0.0 Caldwell Companies May-13Northwest Corridor Ind Northwest Inner Loop 1315 W Sam Houston Pky N - Bldg 3 40,000 0.0 Caldwell Companies May-13Southwest Corridor Ind Southwest Far 1145 Highway 90 A 38,000 0.0 Jacob Realty Group Jun-13North Corridor Ind North Hardy Toll Rd 1368 E Richey Rd 33,000 0.0 Northwinds Commercial Jun-13North Corridor Ind North Outer Loop 4641 Kennedy Commerce Dr 31,427 100.0 Clay Development & Construction Inc. Jun-13Southwest Corridor Ind Fort Bend Co/Sugar Land 19830 FM 1093 30,000 0.0 Moody Rambin Interests Aug-13North Corridor Ind North Fwy/Tomball Pky 6611 Willowbrook Park Dr 26,000 0.0 Capital Commercial Investments May-13North Corridor Ind North Outer Loop 6010 Dwyer Dr 25,000 0.0 Nobel House Real Estate Jun-13North Corridor Ind North Outer Loop 4615 Kennedy Commerce Dr 25,000 100.0 Clay Development & Construction Inc. Aug-13South Corridor Ind South Hwy 35 12233 Robin Blvd 25,000 0.0 Colliers International Sep-13Submarket Cluster Submarket Building Address RBA % Leased Developer DeliveredSoutheast Corridor Ind East-SE Far 1902 S 16th St 261,291 0.0 ML Realty Partners Jan-13North Corridor Ind North Hardy Toll Rd 16330 Central Green Blvd - B 10 163,600 0.0 Liberty Property Trust Jan-13North Corridor Ind North Fwy/Tomball Pky 14300 Hollister Rd 111,065 76.8 Liberty Property Trust Jan-13North Corridor Ind North Fwy/Tomball Pky 12101 Cutten Rd 101,123 100.0 Clay Development Feb-13North Corridor Ind North Fwy/Tomball Pky 7505 Bluff Point Dr 86,823 0.0 EastGroup Properties Jan-13North Corridor Ind North Hardy Toll Rd 2330 Peyton Rd 56,915 0.0 Capital Commercial Feb-13Northwest Corridor Ind West Outer Loop 5915 Brittmoore Rd 35,750 0.0 Triten Real Estate Partners Mar-13North Corridor Ind North Fwy/Tomball Pky 12031 North Fwy 34,261 100.0 Structure Tone, Inc. Jan-13Southeast Corridor Ind East-Southeast Far 11804 Fairmont Pky 31,480 0.0 VIGAVI Realty Feb-13Southwest Corridor Fort Bend Co/Sugar Land6510 FM 723 Rd - B 1 30,000 16.7 Wayne Stone Properties Jan-13North Corridor Ind North Hardy Toll Rd 20221 Carriage Point Dr 25,050 100.0 The National Realty Group, Inc. Feb-13
  5. 5. RESEARCH & FORECAST REPORT | Q1 2013 | HOUSTON INDUSTRIAL MARKETAccelerating success.COLLIERS INTERNATIONAL | HOUSTON1300 Post Oak BoulevardSuite 200Houston, Texas 77056Main +1 713 222 21115COLLIERS INTERNATIONAL | P.LISA R. BRIDGESDirector of Market Research HoustonDirect +1 713 830 2125Fax +1 713 830 2118lisa.bridges@colliers.com

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