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Q4 2012 houston_industrial_market_report
Q4 2012 houston_industrial_market_report
Q4 2012 houston_industrial_market_report
Q4 2012 houston_industrial_market_report
Q4 2012 houston_industrial_market_report
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Q4 2012 houston_industrial_market_report

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  • 1. Q4 2012 | INDUSTRIAL MARKET HOUSTON INDUSTRIAL MARKET RESEARCH & FORECAST REPORT Houston YE 2012 Industrial Absorption – 6.2M SF Houston’s industrial market remains one of the ten healthiest U.S. industrial markets because of its low vacancy, stable rental rates and positive absorption. Houston posted 1.4M SF of positive net absorption in the fourth quarter, pushing the year-end total to 6.2M SF. Leasing activity reached 3.3M SF in the fourth quarter, pushing the year-to-date total to 13.2M SF. Houston’s average industrial vacancy rate decreased from 5.3% to 5.2% in the between quarters. Due to the large amount of new inventory deliveries, Houston’s industrial vacancy only decreased 1% between quarters despite the significant positive absorption. The CITYWIDE MARKET INDICATORS overall average quoted industrial rental rate increased from $5.51 to $5.59 per SF NNN between quarters, and increased by 2.6% on a year-over-year basis from Houston YE 2011 YE 2012 $5.45 per SF NNN at the end of 2011. Net Absorption 5.2M 6.2M (SF) Houston’s lack of available industrial inventory has spurred demand for new Average Rental product. Developers have responded and currently have 2.6M SF under $5.45 $5.59 Rate per SF construction. Much of the increased activity has been driven by build-to-suit projects for companies expanding in or relocating to the Houston market, Vacancy 5.9% 5.2% however, there are now more spec developments (1.9M SF) than build-to-suit projects. As Houston’s available industrial inventory shrinks, we believe the SF Delivered 1.9M 4.0M increasing demand for new product will continue to spur both build-to-suit and spec development. SF Under 2.9M 2.6M Construction The Houston metropolitan area added 85,000 jobs between November 2011 and November 2012, an annual increase of 3.2% over the prior years job growth. Further, Houston’s unemployment rate fell to 5.8% from 7.3% one year ago which has bolstered Houston area home sales. With continued expansion in the energy industry and a strong housing market, Houston’s economy is expected to remain healthy for both the near and long-term. JOB GROWTH & UNEMPLOYMENT (Not Seasonally Adjusted) UNEMPLOYMENT 11/11 11/12 ABSORPTION, NEW SUPPLY & VACANCY RATES 2,500,000 8% Houston 7.3% 5.8% 2,000,000 7% Texas 7.2% 5.8% 1,500,000 6% U.S. 8.2% 7.4% 1,000,000 5% ANNUAL # OF JOBS 500,000 JOB GROWTH CHANGE ADDED 0 4% Houston 3.2% 85K 3% -500,000 Texas 2.6% 274K -1,000,000 2% U.S. 1.4% 1.9M Absorption New Supply Vacancy www.colliers.com/houston
  • 2. RESEARCH & FORECAST REPORT | Q4 2012 | HOUSTON INDUSTRIAL MARKET Vacancy & Availability NNN. By property type, the average Core Labs Instruments2 Windfern Distribution Center 1 quoted NNN rental rates are as follows: Houston’s industrial vacancy decreased Oct-12 187,147 SF $5.36 per SF for Distribution space; from 5.3% to 5.2% between quarters $4.36 per SF for Bulk Warehouse space; Supply Chain Management1 because close to 1M SF of new inventory 3007 Pasadena Fwy $7.08 per SF for Flex/Service space; was added to the market. Dec-12 137,000 SF with Tech/R&D space averaging $8.07 At the close of the fourth quarter, per SF. International Distribution Center2 Bay Area Business Park Houston had 24.3M SF of vacant Nov-12 104,300 SF Absorption & Demand industrial space citywide, 126K SF less than the previous quarter. Among the Houston’s industrial market posted 1.4M Overland Distribution1,3 Port Crossing Commerce Center major industrial corridors, the Northwest SF of positive net absorption in the fourth Oct-12 103,185 SF submarket has the largest amount of quarter pushing the year-to-date total to vacant space with 5.5M SF (4.1% 6.2M SF. International Distribution Center vacancy), followed by the Southeast Bayport North Distribution Center Oct-12 100,000 SF submarket with 4.9M SF vacant (5.9% Among Houston’s major industrial vacancy), the Southwest submarket with corridors, the Northwest and Southeast Parker Uniform 4.3M SF vacant (6.9% vacancy), and the submarkets outperformed all others in the West by Northwest Industrial Park fourth quarter, posting the highest Dec-12 67,089 SF North submarket with 3.9M SF vacant (5.5% vacancy). positive net quarterly absorption of 915K Jv Industrial Companies Ltd SF and 380K SF respectively. The 4100 Underwood Rd Houston’s industrial construction pipeline Southwest submarket followed with 280K Dec-12 52,592 SF had 2.6M SF of projects underway at the SF of positive net absorption. Advanced Rig Services2 end of the fourth quarter, including 1.9M 6750 Bender Rd SF of spec development. The largest There were several major tenant move- Nov-12 51,040 SF project under construction is a 475,000- ins contributing to net absorption gains in Noah’s Manufacturing SF state-of-the-art foodservice the fourth quarter, including Francesca’s 6028 Navigation distribution facility that will be the new Collections, Inc. (217,869 SF); See Notes Nov-12 44,000 SF Gulf Coast regional distribution hub for (197,708 SF); Floor & Décor Outlets of Windfield Solutions the Ben E. Keith Company. The facility is American, Inc. (109,200 SF); Zoyto, Inc. Bammel Business park being constructed on an 82-acre tract (63,600 SF); Bayou Well Services Oct-12 41,250 SF located in Missouri City in the Beltway (60,000 SF); and MI Group (36,960 SF). Severn Trent Environmental Services1,3 Crossing Business Park. A list of Leasing 16680 Central Green additional buildings currently under Oct-12 41,170 SF construction can be found on Page 4 of Houston’s industrial leasing activity reached 3.3M SF in the fourth quarter, Katalyst Data Management, LLC1 this report. The largest spec project in pushing the year-to-date total to over 10311 Westpark Dr. the pipeline is a 299,840-SF distribution Dec-12 40,095 SF warehouse located on Langfield Rd. in the 13.2M SF. Some of Houston’s top fourth Northwest industrial submarket. quarter industrial leases include: Protect 12130 Highway 3 Schenker, Inc. Nov-12 32,238 SF Rental Rates DCT Northwest 8 Distribution Ctr Dec-12 267,201 SF Skyline Art Services, Inc.1 Houston’s overall average quoted 8011 Blankenship Dr. industrial rental rate increased from PCS-CTS2 Dec-12 32,220 SF $5.51 to $5.59 per SF NNN in the fourth 4949 Windfern quarter, increasing by 2.6% on a year- Nov-12 201,574 SF 1 Colliers International transaction over-year basis from $5.45 per SF 2 Renewal 3 Expansion 4Sublease COLLIERS INTERNATIONAL | P. 2
  • 3. RESEARCH & FORECAST REPORT | Q4 2012 | HOUSTON INDUSTRIAL MARKET Sales Activity W.P. Carey & Co. sold a 49,600-SF Sharewell Properties, L.P. sold a flex light industrial building to 15,900-SF, Class B, flex light Archway Properties, LP for an industrial building to Michael undisclosed amount. The Class B Nguyen for $76 per SF. The property was built in 1985 and is building is located at 12200 W Little located at 500 Century Plaza Dr. in York Rd. in the West Outer Loop the North Hardy Toll Rd industrial Industrial submarket. The property submarket. The building was 52.0% was 100% leased at the time of leased at the time of sale. sale. Allied Group L.P. sold a 46,000- DriveTime Automotive Group, Inc. The industrial sales statistics shown SF Class B, industrial warehouse purchased a 51,000-SF Class B, above only include October and to Hose & Accessories Sales for showroom warehouse from East $27 per SF. The building located at Freeway Properties Llc for $68 per November 2012 sales. We expect 5731 Harvey Wilson Dr., is in the SF. The property is located at December sales statistics to be Downtown Inner Loop Industrial 6335 Southwest Fwy in the Hwy published after the initial release date submarket. The new owner will 59/Hwy 90 Industrial submarket. of this report, at which time we will occupy the building. The new owner will occupy the update the statistics. building. HOUSTON INDUSTRIAL MARKET SUMMARY Houston Industrial Market Statistical Summary 4th Quarter 2012 Direct Sublet Total Direct Sublet Total 4Q12 Net YE 2012 Net 4Q12 2012 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 482,535,159 24,271,066 5.0% 592,377 0.1% 24,863,443 5.2% 1,440,472 6,245,393 949,497 4,017,344 2,554,598 NW Inner Loop 11,738,184 545,998 4.7% 22,200 0.2% 568,198 4.8% (103,966) (32,041) - - - Downtown 31,839,034 1,713,109 5.4% - 0.0% 1,713,109 5.4% 139,780 88,523 38,232 38,232 - North Inner Loop 5,185,017 475,369 9.2% - 0.0% 475,369 9.2% (40,000) 35,641 - - - SW Inner Loop 7,527,531 134,013 1.8% - 0.0% 134,013 1.8% (11,100) 19,756 - - - Total Inner Loop 56,289,766 2,868,489 5.1% 22,200 0.0% 2,890,689 5.1% (15,286) 111,879 38,232 38,232 - North Fwy/Tomball Pky 14,537,557 1,139,243 7.8% - 0.0% 1,139,243 7.8% (34,470) 516,754 120,670 533,913 299,011 North Hardy Toll Rd 25,165,275 1,235,023 4.9% - 0.0% 1,235,023 4.9% (41,024) 471,457 - 376,758 738,751 North Outer Loop 17,862,050 782,014 4.4% - 0.0% 782,014 4.4% 96,767 635,366 - 232,470 25,000 The Woodlands/Conroe 13,539,822 746,425 5.5% - 0.0% 746,425 5.5% 110,967 45,254 65,000 65,000 - Total North Corridor 71,104,704 3,902,705 5.5% - 0.0% 3,902,705 5.5% 132,240 1,668,831 185,670 1,208,141 1,062,762 Northeast Hwy 321 1,188,527 1,980 0.2% 7,500 0.6% 9,480 0.8% 0 0 - - - Northeast Hwy 90 15,728,690 415,106 2.6% 129,000 0.8% 544,106 3.5% (124,510) (41,255) - 20,000 20,000 Northeast I-10 3,901,655 126,972 3.3% - 0.0% 126,972 3.3% 1,492 29,058 - - - Northeast Inner Loop 11,542,388 722,240 6.3% - 0.0% 722,240 6.3% (338,652) (68,073) - - - Total Northeast Corridor 32,361,260 1,266,298 3.9% 136,500 0.4% 1,402,798 4.3% (461,670) (80,270) - 20,000 20,000 Hwy 290/Tomball Pky 15,178,208 719,603 4.7% 25,636 0.2% 745,239 4.9% 52,647 89,336 - 198,555 52,000 Northwest Hwy 6 4,163,324 107,827 2.6% 11,520 0.3% 119,347 2.9% (1,435) 28,332 - 40,452 - Northwest Inner Loop 60,616,406 2,669,448 4.4% 75,590 0.1% 2,745,038 4.5% 609,467 1,022,827 65,400 332,673 150,000 Northwest Near 16,450,213 678,005 4.1% 83,051 0.5% 761,056 4.6% 2,627 678,287 112,653 377,183 317,840 Northwest Outlier 13,005,394 373,837 2.9% 49,055 0.4% 422,892 3.3% 32,804 21,193 26,480 48,980 West Outer Loop 22,911,320 650,154 2.8% 31,897 0.1% 682,051 3.0% 219,320 1,098,523 149,842 217,677 58,250 Total Northwest Corridor 132,324,865 5,198,874 3.9% 276,749 0.2% 5,475,623 4.1% 915,430 2,938,498 354,375 1,215,520 578,090 South Highway 35 30,995,323 1,331,793 4.3% 23,600 0.1% 1,355,393 4.4% 167,242 (84,143) 66,841 224,341 87,975 South Inner Loop 13,360,202 589,701 4.4% - 0.0% 589,701 4.4% 41,579 (25,679) - - - Total South Corridor 44,355,525 1,921,494 4.3% 23,600 0.1% 1,945,094 4.4% 208,821 (109,822) 66,841 224,341 87,975 East I-10 Outer Loop 15,623,397 115,535 0.7% - 0.0% 115,535 0.7% 2,000 62,700 - - - East-SE Far 46,895,170 4,429,353 9.4% 36,488 0.1% 4,465,841 9.5% 339,217 932,997 62,115 862,915 292,771 SE Outer Loop 20,410,167 326,802 1.6% - 0.0% 326,802 1.6% 38,940 273,915 - - - Total Southeast Corridor 82,928,734 4,871,690 5.9% 36,488 0.0% 4,908,178 5.9% 380,157 1,269,612 62,115 862,915 292,771 Highway 59/Highway 90 21,768,198 1,147,815 5.3% - 0.0% 1,147,815 5.3% 55,347 359,554 223,000 282,227 475,000 Southwest Far 10,217,779 901,597 8.8% - 0.0% 901,597 8.8% 120,156 88,488 19,264 69,713 38,000 Southwest Outer Loop 12,714,944 893,583 7.0% 4,240 0.0% 897,823 7.1% 27,988 (18,854) - - - Fort Bend County/Sugar Land 18,469,384 1,298,521 7.0% 92,600 0.5% 1,391,121 7.5% 77,289 17,477 - 96,255 - Total Southwest Corridor 63,170,305 4,241,516 6.7% 96,840 0.2% 4,338,356 6.9% 280,780 446,665 242,264 448,195 513,000 COLLIERS INTERNATIONAL | P. 3
  • 4. RESEARCH & FORECAST REPORT | Q4 2012 | HOUSTON INDUSTRIAL MARKET 4Q 2012 Industrial Under Construction – 20,000 SF or greater Estimated Submarket Cluster Submarket Building Address RBA % Leased Developer Delivery Southwest Corridor Ind Hwy 59/Hwy 90 1001 Cravens Rd 475,000 100.0 Ben E Keith Jan-13 Northwest Corridor Ind Northwest Near 7310 Langfield - Bldg 200 299,840 0.0 Avera Companies Apr-13 North Corridor Ind North Hardy Toll Rd Airtex Dr & I-45 267,113 0.0 DCT Industrial Trust Aug-13 Southeast Corridor Ind East-SE Far 1902 S 16th St 261,291 0.0 ML Realty Partners Jan-13 North Corridor Ind North Hardy Toll Rd 16330 Central Green Blvd - Bldg 10 163,600 0.0 Liberty Property Trust Feb-13 North Corridor Ind North Fwy/Tomball Pky 14300 Hollister Rd 111,065 76.8 Liberty Property Trust Jan-13 North Corridor Ind North Fwy/Tomball Pky 12101 Cutten Rd 101,123 100.0 Clay Development Feb-13 North Corridor Ind North Hardy Toll Road 250 Century Plaza Dr 91,520 0 Avera Companies Jul-13 North Corridor Ind North Fwy/Tomball Pky 7505 Bluff Point Dr 86,823 0.0 EastGroup Properties Jan-13 Northwest Corridor Ind Northwest Inner Loop 1315 W Sam Houston Pky N - Bldg 1 70,000 0.0 Caldwell Companies Feb-13 North Corridor Ind North Hardy Toll Rd 2330 Peyton Rd 56,915 0.0 Capital Commercial Jan-13 North Corridor Ind North Hardy Toll Rd 4741 World Houston Pky 56,513 0.0 EastGroup Properties Feb-13 South Corridor Ind South Hwy 35 2425 Mowery Rd - Bldg A 53,000 0.0 Colliers International Apr-13 North Corridor Ind North Hardy Toll Rd 4721 World Houston Pky 45,040 0.0 EastGroup Properties Feb-13 Northwest Corridor Ind Northwest Inner Loop 1315 W Sam Houston Pky N - Bldg 2 40,000 0.0 Caldwell Companies Feb-13 Northwest Corridor Ind Northwest Inner Loop 1315 W Sam Houston Pky N - Bldg 3 40,000 0.0 Caldwell Companies Feb-13 Southwest Corridor Ind Southwest Far 1145 Highway 90 A 38,000 0 Jacob Realty Group Jun-13 Northwest Corridor Ind West Outer Loop 5915 Brittmoore Rd 35,750 0 Triten Real Estate Partners Mar-13 North Corridor Ind North Hardy Toll Rd 1368 E Richey Rd 33,000 0.0 Northwinds Commercial Feb-13 Southeast Corridor Ind East-Southeast Far 11804 Fairmont Pky 31,480 0 VIGAVI Realty Feb-13 North Corridor Ind North Hardy Toll Road 20221 Carriage Point Dr 25,050 100 The National Realty Group, Inc. Mar-13 North Corridor Ind North Outer Loop 6010 Dwyer Dr 25,000 0 Nobel House Real Estate Feb-13 Northwest Corridor Ind West Outer Loop 7530 Fairview Rd 22,500 100 Metroway Commercial Realty Apr-13 Northwest Corridor Ind Hwy 290/Tomball Pky 10030 Fairbanks North Houston Rd 20,000 100 The National Realty Group, Inc. Jan-13 Northeast Corridor Ind Northeast Hwy 90 14452 Smith Rd 20,000 0 Capital Real Estate Commercial, Inc. Jan-13 4Q 2012 Industrial Deliveries - 20,000 SF or greater Submarket Cluster Submarket Building Address RBA % Leased Developer Delivered Southwest Corridor Ind Hwy 59/Hwy 90 13443 S Gessner 116,480 100.0 Stream Realty Partners Oct-12 Southwest Corridor Ind Hwy 59/Hwy 90 13513 S Gessner Dr 91,520 0.0 Stream Realty Partners Nov-12 North Corridor Ind North Fwy/Tomball Pky 14400 Hollister Rd 88,170 70.6 Liberty Property Trust Dec-12 Southern Corridor Ind South Hwy 35 9225 Park South Vw 66,841 100.0 Loomis Armored US Dec-12 North Corridor Ind Woodland/Conroe 3375 Pollock Dr 65,000 100.0 KDW Oct-12 Northwest Corridor Ind Northwest Near 6410 Langfield Rd - Bldg F 41,641 0.0 Capital Commercial Nov-12 Inner Loop Corridor Ind Downtown 6363 Navigation Blvd 38,232 100.0 GSL Welcome Group Dec-12 Northwest Corridor Ind West Outer Loop 12223 FM 529 37,875 0.0 Texas Development Company Dec-12 Northwest Corridor Ind Northwest Inner Loop 9855 Genard Rd 36,000 100.0 First Industrial Texas Dec-12 Northwest Corridor Ind West Outer Loop 12014 FM 529 - Building B 35,000 0.0 United Equities, Ltd. Dec-12 Southeast Corridor Ind East-SE Far 10200 New Decade Dr 32,000 0.0 Unknown Oct-12 Northwest Corridor Ind Northwest Near 6410 Langfield Rd - Bldg E 30,070 0.0 Clay Development Dec-12 Southeast Corridor Ind East-SE Far 5349 Bay Oaks Dr 30,115 0.0 Unknown Dec-12 Northwest Corridor Ind Northwest Inner Loop 10892 Shadow Wood 29,400 0.0 Greater Houston Commerical Dec-12 Northwest Corridor Ind West Outer Loop 12601 FM 529 27,267 100.0 Challenger Tire Topete, Inc. Dec-12 Northwest Corridor Ind Northwest Outlier 21414 Julie Marie Ln 26,480 0.0 Ivest Dec-12 Northwest Corridor Ind West Outer Loop 14040 West Rd 25,200 0.0 Nickson Industrial Dev Llc Dec-12 Northwest Corridor Ind West Outer Loop 12010 FM 529 - Bldg A 24,500 100.0 United Equities, Ltd. Dec-12 Northwest Corridor Ind Northwest Near 6511 West Little York Rd 22,942 0.0 Levey Development Dec-12 COLLIERS INTERNATIONAL | P. 4
  • 5. RESEARCH & FORECAST REPORT | Q4 2012 | HOUSTON INDUSTRIAL MARKET LISA R. BRIDGES COLLIERS INTERNATIONAL | HOUSTON Director of Market Research Houston 1300 Post Oak Boulevard Direct +1 713 830 2125 Suite 200 Fax +1 713 830 2118 Houston, Texas 77056 lisa.bridges@colliers.com Main +1 713 222 2111 Accelerating success. COLLIERS INTERNATIONAL | P. 5

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