Advisory Report - Mid Year 2009

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Robert Lowery of Coldwell Banker Commercial and The Costar Group have teamed up to provide the latest office market information for the Greater Houston area.

Robert Lowery of Coldwell Banker Commercial and The Costar Group have teamed up to provide the latest office market information for the Greater Houston area.

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  • 1. The CoStar Office Report M I D - Y E A R 2 0 0 9 Houston Office Market
  • 2. MID-YEAR 2009 – HOUSTON Houston Office Market Table of Contents Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A Methodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C Terms & Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D Market Highlights & Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 CoStar Markets & Submarkets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Employment & Tenant Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Employment & Unemployment Analysis Tenant Profiles Inventory & Development Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Construction Activity Map Inventory & Development Analysis Select Top Deliveries Select Top Under Construction Properties Figures at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Figures at a Glance by Class & Market Figures at a Glance by Class & Submarket Figures at a Glance Grouped by CBD vs Suburban Historical Figures at a Glance Leasing Activity Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Leasing Activity Map Leasing Activity Analysis Select Top Lease Transactions Sales Activity Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Sales Activity Analysis Select Top Sales Transactions Select Same Building Sales Select Land Sales Bellaire Market Analysis of Individual CoStar Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Downtown Market E Fort Bend Co/Sugar Land Market FM 1960 Market Greenway Plaza Market Gulf Freeway/Pasadena Market I-10 East Market Katy Freeway Market Kingwood/Humble Market NASA/Clear Lake Market North Belt Market Northeast Near Market Northwest Market Richmond/Fountainview Market San Felipe/Voss Market South Market South Hwy 35 Market South Main/Medical Center Market Southwest Market West Loop Market Westchase Market Woodlands Market ©2009 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT A
  • 3. HOUSTON – MID-YEAR 2009 Houston Office Market Table of Contents (Continued) B THE COSTAR OFFICE REPORT ©2009 COSTAR GROUP, INC.
  • 4. MID-YEAR 2009 – HOUSTON Houston Office Market Methodology The CoStar Office Report, unless specifically stated otherwise, calculates office statistics using CoStar Group’s entire database of existing and under construction office buildings in each metropolitan area. Included are office, office condominium, office loft, office medical, all classes and all sizes, and both multi-tenant and single-tenant buildings, including owner-occupied buildings. CoStar Group's national database includes approximately 62.3 billion square feet of coverage in 2.4 million properties. All rental rates reported in the CoStar Office Report have been converted to a Full Service equivalent rental rate. For information on subscribing to CoStar’s Advisory reports, or for information on CoStar’s other products and services, please contact us at 1-877-7COSTAR, or visit our web site at www.costar.com © Copyright 2009 CoStar Group, Inc. All Rights Reserved. Although CoStar makes efforts to ensure the accuracy and reliability of the information contained herein, CoStar makes no guarantee, representation or warranty regarding the quality, accuracy, timeliness or completeness of the information. The publication is provided ‘as is’ and CoStar expressly disclaims any guarantees, representations or warranties of any kind, including those of MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. CoStar Group, Inc. 2 Bethesda Metro Center • Bethesda, MD USA 20814 • (800) 204-5960 • www.costar.com • NASDAQ: CSGP ©2009 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT C
  • 5. HOUSTON – MID-YEAR 2009 Houston Office Market Terms & Definitions Availability Rate: The ratio of available space to total rentable Deliveries: Buildings that complete construction during a specified space, calculated by dividing the total available square feet by the period of time. In order for space to be considered delivered, a total rentable square feet. certificate of occupancy must have been issued for the property. Available Space: The total amount of space that is currently Delivery Date: The date a building completes construction and being marketed as available for lease in a given time period. It receives a certificate of occupancy. includes any space that is available, regardless of whether the Developer: The company, entity or individual that transforms raw space is vacant, occupied, available for sublease, or available at land to improved property by use of labor, capital and entrepre- a future date. neurial efforts. Build-to-Suit: A term describing a particular property, developed Direct Space: Space that is being offered for lease directly from specifically for a certain tenant to occupy, with structural features, the landlord or owner of a building, as opposed to space being systems, or improvement work designed specifically for the needs offered in a building by another tenant (or broker of a tenant) of that tenant. A build-to-suit can be leased or owned by the ten- trying to sublet a space that has already been leased. ant. In a leased build-to-suit, a tenant will usually have a long term lease on the space. Existing Inventory: The square footage of buildings that have received a certificate of occupancy and are able to be occupied Buyer: The individual, group, company, or entity that has pur- by tenants. It does not include space in buildings that are either chased a commercial real estate asset. planned, under construction or under renovation. Cap Rate: Short for capitalization rate. The Cap Rate is a calcula- Flex Building: A type of building designed to be versatile, which tion that reflects the relationship between one year’s net operating may be used in combination with office (corporate headquarters), income and the current market value of a particular property. research and development, quasi-retail sales, and including but The Cap Rate is calculated by dividing the annual net operating not limited to industrial, warehouse, and distribution uses. A typi- income by the sales price (or asking sales price). cal flex building will be one or two stories with at least half of the CBD: Abbreviation for Central Business District. (See also: rentable area being used as office space, have ceiling heights of 16 Central Business District) feet or less, and have some type of drive-in door, even though the door may be glassed in or sealed off. Central Business District: The designations of Central Business District (CBD) and Suburban refer to a particular geographic area Full Service Rental Rate: Rental rates that include all operating within a metropolitan statistical area (MSA) describing the level expenses such as utilities, electricity, janitorial services, taxes and of real estate development found there. The CBD is characterized insurance. by a high density, well organized core within the largest city of a Gross Absorption: The total change in occupied space over a given MSA. given period of time, counting space that is occupied but not Class A: A classification used to describe buildings that generally space that is vacated by tenants. Gross absorption differs from qualify as extremely desirable investment-grade properties and leasing Activity, which is the sum of all space leased over a certain command the highest rents or sale prices compared to other period of time. Unless otherwise noted Gross Absorption includes buildings in the same market. Such buildings are well located direct and sublease space. and provide efficient tenant layouts as well as high quality, and in Growth in Inventory: The change in size of the existing square some buildings, one-of-a-kind floor plans. They can be an archi- footage in a given area over a given period of time, generally due tectural or historical landmark designed by prominent architects. to the construction of new buildings. These buildings contain a modern mechanical system, and have above-average maintenance and management as well as the best Industrial Building: A type of building adapted for such uses as quality materials and workmanship in their trim and interior fit- the assemblage, processing, and/or manufacturing of products tings. They are generally the most attractive and eagerly sought from raw materials or fabricated parts. Additional uses include by investors willing to pay a premium for quality. warehousing, distribution, and maintenance facilities. The pri- mary purpose of the space is for storing, producing, assembling, Class B: A classification used to describe buildings that generally or distributing product. qualify as a more speculative investment, and as such, command lower rents or sale prices compared to Class A properties. Such Landlord Rep: (Landlord Representative) In a typical lease trans- buildings offer utilitarian space without special attractions, and action between an owner/landlord and tenant, the broker that have ordinary design, if new or fairly new; good to excellent represents the interests of the owner/landlord is referred to as the design if an older non-landmark building. These buildings typical- Landlord Rep. ly have average to good maintenance, management and tenants. Leased Space: All the space that has a financial lease obligation. They are less appealing to tenants than Class A properties, and It includes all leased space, regardless of whether the space is may be deficient in a number of respects including floor plans, currently occupied by a tenant. Leased space also includes space condition and facilities. They lack prestige and must depend being offered for sublease. chiefly on a lower price to attract tenants and investors. Leasing Activity: The volume of square footage that is commit- Class C: A classification used to describe buildings that gener- ted to and signed under a lease obligation for a specific building ally qualify as no-frills, older buildings that offer basic space and or market in a given period of time. It includes direct leases, command lower rents or sale prices compared to other buildings subleases and renewals of existing leases. It also includes any in the same market. Such buildings typically have below-average pre-leasing activity in planned, under construction, or under maintenance and management, and could have mixed or low renovation buildings. tenant prestige, inferior elevators, and/or mechanical/electrical systems. These buildings lack prestige and must depend chiefly Market: Geographic boundaries that serve to delineate core areas on a lower price to attract tenants and investors. that are competitive with each other and constitute a generally accepted primary competitive set of areas. Markets are building- Construction Starts: Buildings that began construction during a type specific, and are non-overlapping contiguous geographic specific period of time. (See also: Deliveries) designations having a cumulative sum that matches the boundar- Contiguous Blocks of Space: Space within a building that is, or is ies of the entire Region (See also: Region). Markets can be further able to be joined together into a single contiguous space. subdivided into Submarkets. (See also: Submarkets) D THE COSTAR OFFICE REPORT ©2009 COSTAR GROUP, INC.
  • 6. MID-YEAR 2009 – HOUSTON Houston Office Market Multi-Tenant: Buildings that house more than one tenant at a Seller: The individual, group, company, or entity that sells a par- given time. Usually, multi-tenant buildings were designed and ticular commercial real estate asset. built to accommodate many different floor plans and designs for SF: Abbreviation for Square Feet. different tenant needs. (See also: Tenancy). Single-Tenant: Buildings that are occupied, or intended to be Net Absorption: The net change in occupied space over a given occupied by a single tenant. (See also: Build-to-suit and Tenancy) period of time. Unless otherwise noted Net Absorption includes direct and sublease space. Sublease Space: Space that has been leased by a tenant and is being offered for lease back to the market by the tenant with Net Rental Rate: A rental rate that excludes certain expenses that the lease obligation. Sublease space is sometimes referred to as a tenant could incur in occupying office space. Such expenses sublet space. are expected to be paid directly by the tenant and may include janitorial costs, electricity, utilities, taxes, insurance and other Submarkets: Specific geographic boundaries that serve to delin- related costs. eate a core group of buildings that are competitive with each other and constitute a generally accepted primary competitive New Space: Sometimes called first generation space, refers to set, or peer group. Submarkets are building type specific (office, space that has never been occupied and/or leased by a tenant. industrial, retail, etc.), with distinct boundaries dependent on Occupied Space: Space that is physically occupied by a tenant. different factors relevant to each building type. Submarkets are It does not include leased space that is not currently occupied non-overlapping, contiguous geographic designations having a by a tenant. cumulative sum that matches the boundaries of the Market they are located within (See also: Market). Office Building: A type of commercial building used exclusively or primarily for office use (business), as opposed to manufactur- Suburban: The Suburban and Central Business District (CBD) ing, warehousing, or other uses. Office buildings may sometimes designations refer to a particular geographic area within a metro- have other associated uses within part of the building, i.e., retail politan statistical area (MSA). Suburban is defined as including all sales, financial, or restaurant, usually on the ground floor. office inventory not located in the CBD. (See also: CBD) Owner: The company, entity, or individual that holds title on a Tenancy: A term used to indicate whether or not a building is given building or property. occupied by multiple tenants (See also: Multi-tenant) or a single tenant. (See also: Single-tenant) Planned/Proposed: The status of a building that has been announced for future development but not yet started Tenant Rep: Tenant Rep stands for Tenant Representative. In a construction. typical lease transaction between an owner/landlord and tenant, the broker that represents the interests of the tenant is referred to Preleased Space: The amount of space in a building that has been as a Tenant Rep. leased prior to its construction completion date, or certificate of occupancy date. Time On Market: A measure of how long a currently available space has been marketed for lease, regardless of whether it is Price/SF: Calculated by dividing the price of a building (either vacant or occupied. sales price or asking sales price) by the Rentable Building Area (RBA). Under Construction: The status of a building that is in the process of being developed, assembled, built or constructed. A building is Property Manager: The company and/or person responsible for considered to be under construction after it has begun construc- the day-to-day operations of a building, such as cleaning, trash tion and until it receives a certificate of occupancy. removal, etc. The property manager also makes sure that the vari- ous systems within the building, such as the elevators, HVAC, and Vacancy Rate: A measurement expressed as a percentage of the electrical systems, are functioning properly. total amount of physically vacant space divided by the total amount of existing inventory. Under construction space generally Quoted Rental Rate: The asking rate per square foot for a par- is not included in vacancy calculations. ticular building or unit of space by a broker or property owner. Quoted rental rates may differ from the actual rates paid by Vacant Space: Space that is not currently occupied by a tenant, tenants following the negotiation of all terms and conditions in regardless of any lease obligation that may be on the space. a specific lease. Vacant space could be space that is either available or not avail- RBA: Abbreviation for Rentable Building Area. (See also: able. For example, sublease space that is currently being paid for by a tenant but not occupied by that tenant, would be considered Rentable Building Area) vacant space. Likewise, space that has been leased but not yet Region: Core areas containing a large population nucleus, that occupied because of finish work being done, would also be con- together with adjacent communities have a high degree of eco- sidered vacant space. nomic and social integration. Regions are further divided into Weighted Average Rental Rate: Rental rates that are calculated by market areas, called Markets. (See also: Markets) factoring in, or weighting, the square footage associated with each Relet Space: Sometimes called second generation or direct space, particular rental rate. This has the effect of causing rental rates refers to existing space that has previously been occupied by on larger spaces to affect the average more than that of smaller another tenant. spaces. The weighted average rental rate is calculated by taking Rentable Building Area: (RBA) The total square footage of a the ratio of the square footage associated with the rental rate on building that can be occupied by, or assigned to a tenant for the each individual available space to the square footage associated purpose of determining a tenant’s rental obligation. Generally with rental rates on all available spaces, multiplying the rental rate RBA includes a percentage of common areas including all hall- by that ratio, and then adding together all the resulting numbers. ways, main lobbies, bathrooms, and telephone closets. Unless specifically specified otherwise, rental rate averages include both Direct and Sublet available spaces. Rental Rates: The annual costs of occupancy for a particular space quoted on a per square foot basis. Year Built: The year in which a building completed construction and was issued a certificate of occupancy. Sales Price: The total dollar amount paid for a particular property at a particular point in time. YTD: Abbreviation for Year-to-Date. Describes statistics that are cumulative from the beginning of a calendar year through what- Sales Volume: The sum of sales prices for a given group of build- ever time period is being studied. ings in a given time period. ©2009 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT E
  • 7. MID-YEAR 2009 – HOUSTON Houston Office Market OVERVIEW Houston’s Vacancy Increases to 14.0% Net Absorption Negative (97,834) SF in the Quarter T he Houston Office market ended the second quarter 2009 to positive 561,307 square feet in the first quarter 2009, positive with a vacancy rate of 14.0%. The vacancy rate was up 535,427 in the fourth quarter 2008, and positive 458,075 in the over the previous quarter, with net absorption totaling third quarter 2008. negative (97,834) square feet in the second quarter. Vacant The Class-B office market recorded net absorption of sublease space increased in the quarter, ending the quarter at positive 50 square feet in the second quarter 2009, compared to 2,507,243 square feet. Rental rates ended the second quarter at negative (776,885) square feet in the first quarter 2009, positive $23.26, a decrease over the previous quarter. A total of 21 build- 432,122 in the fourth quarter 2008, and negative (297,800) in the ings delivered to the market in the quarter totaling 1,474,991 third quarter 2008. square feet, with 4,679,094 square feet still under construction at The Class-C office market recorded net absorption of nega- the end of the quarter. tive (31,402) square feet in the second quarter 2009 compared to negative (13,263) square feet in the first quarter 2009, negative Absorption (142,817) in the fourth quarter 2008, and negative (276,882) in Net absorption for the overall Houston office market was the third quarter 2008. negative (97,834) square feet in the second quarter 2009. That Net absorption for Houston’s central business district was compares to negative (228,841) square feet in the first quarter negative (65,279) square feet in the second quarter 2009. That 2009, positive 824,732 square feet in the fourth quarter 2008, compares to negative (173,228) square feet in the first quarter and negative (116,607) square feet in the third quarter 2008. 2009, positive 51,217 in the fourth quarter 2008, and negative Tenants moving out of large blocks of space in 2009 include: (170,292) in the third quarter 2008. American Natural Resources Company moving out of 402,000 Net absorption for the suburban markets was negative square feet at 1001 Louisiana St, United States Government (32,555) square feet in the second quarter 2009. That compares moving out of 151,500 square feet at Park on the Bayou, and to negative (55,613) square feet in first quarter 2009, positive Landmark Graphics International Inc moving out of 140,000 773,515 in the fourth quarter 2008, and positive 53,685 in the square feet at 15150 Memorial Dr. third quarter 2008. Tenants moving into large blocks of space in 2009 include: Tetra Technologies, Inc moving into 188,160 square feet at 25021 Vacancy I-45, Mustang Engineering, LP moving into 174,295 square feet The office vacancy rate in the Houston market area increased at 17000 Katy Fwy; and Worley Parsons Group Inc moving into to 14.0% at the end of the second quarter 2009. The vacancy 141,000 square feet at 575 N Dairy Ashford. rate was 13.4% at the end of the first quarter 2009, 12.5% at The Class-A office market recorded net absorption of nega- the end of the fourth quarter 2008, and 12.3% at the end of the tive (66,482) square feet in the second quarter 2009, compared third quarter 2008. Vacancy Rates by Class 1999-2009 A B C Total Market 20% 18% 16% 14% Vacancy Rate 12% 10% 8% 6% 4% 2% 0% 1999 1999 2000 2000 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 1q 3q 1q 3q 1q 3q 1q 3q 1q 3q 1q 3q 1q 3q 1q 3q 1q 3q 1q 3q 1q Source: CoStar Property® Absorption & Deliveries ©2009 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT U.S. Vacancy Comparison 1 Past 8 Quarters Past 8 Quarters
  • 8. HOUSTON – MID-YEAR 2009 Houston Office Market OVERVIEW Class-A projects reported a vacancy rate of 13.6% at the end quarter 2009. There was 1,952,211 square feet vacant at the end of the second quarter 2009, 12.6% at the end of the first quarter of the fourth quarter 2008 and 1,644,546 square feet at the end 2009, 11.4% at the end of the fourth quarter 2008, and 11.0% of the third quarter 2008. at the end of the third quarter 2008. Houston’s Class-A projects reported vacant sublease space Class-B projects reported a vacancy rate of 15.0% at the end of 1,505,479 square feet at the end of second quarter 2009, up of the second quarter 2009, 14.8% at the end of the first quarter from the 1,320,244 square feet reported at the end of the first 2009, 13.8% at the end of the fourth quarter 2008, and 13.7% quarter 2009. There were 1,034,056 square feet of sublease space at the end of the third quarter 2008. vacant at the end of the fourth quarter 2008, and 946,554 square Class-C projects reported a vacancy rate of 12.1% at the end feet at the end of the third quarter 2008. of the second quarter 2009 and at the end of first quarter 2009, Class-B projects reported vacant sublease space of 935,264 12.0% at the end of the fourth quarter 2008, and 11.7% at the square feet at the end of the second quarter 2009, up from the end of the third quarter 2008. 910,434 square feet reported at the end of the first quarter 2009. The overall vacancy rate in Houston’s central business dis- At the end of the fourth quarter 2008 there were 881,076 square trict at the end of the second quarter 2009 increased to 11.1%. feet, and at the end of the third quarter 2008 there were 662,346 The vacancy rate was 11.0% at the end of the first quarter 2009, square feet vacant. 10.6% at the end of the fourth quarter 2008, and 10.3% at the Class-C projects reported increased vacant sublease space end of the third quarter 2008. from the first quarter 2009 to the second quarter 2009. Sublease B C The Market Total vacancy rate in the suburban markets increased to vacancy went from 45,579 square feet to 66,500 square feet dur- 14.6% in the second quarter 2009. The vacancy rate was 14.0% ing that time. There was 37,079 square feet at the end of the at the end of the first quarter 2009, 13.0% at the end of the fourth fourth quarter 2008, and 35,646 square feet at the end of the quarter 2008, and 12.7% at the end of the third quarter 2008. third quarter 2008. Sublease vacancy in Houston’s central business district stood Largest Lease Signings at 498,186 square feet at the end of the second quarter 2009. The largest lease signings occurring in 2009 included: the It was 438,602 square feet at the end of the first quarter 2009, 844,763-square-foot lease signed by Hess at Hess Tower in 348,107 square feet at the end of the fourth quarter 2008, and the Downtown market; the 96,225-square-foot deal signed by 361,510 square feet at the end of the third quarter 2008. Washington Group International at Richmond Park Westchase in Sublease vacancy in the suburban markets ended the second the Westchase market; and the 85,748-square-foot lease signed by quarter 2009 at 2,009,057 square feet. At the end of the first ABB at 3700 W Sam Houston Pky S in the Westchase market. quarter 2009 sublease vacancy was 1,837,655 square feet, was Sublease Vacancy 1,604,104 square feet at the end of the fourth quarter 2008, and 03 2004 2004 The amount2006 vacant sublease space in 2008 Houston mar- 2005 2005 of 2006 2007 2007 2008 the 2009 was 1,283,036 square feet at the end of the third quarter 2008. q 1q ket increased3q 2,507,243 square feet by1qthe end of1q second 3q 1q to 1q 3q 1q 3q 3q the Rental Rates quarter 2009, from 2,276,257 square feet at the end of the first The average quoted asking rental rate for available office space, all classes, was $23.26 per square foot per year at the end U.S. Vacancy Comparison of the second quarter 2009 in the Houston market area. This Past 8 Quarters represented a 0.6% decrease in quoted rental rates from the end of the first quarter 2009, when rents were reported at $23.40 per Houston United States 16.0% square foot. The average quoted rate within the Class-A sector was 14.0% $28.69 at the end of the second quarter 2009, while Class-B rates 12.0% stood at $19.10, and Class-C rates at $16.67. At the end of the first quarter 2009, Class-A rates were $29.04 per square foot, Vacancy Rate 10.0% 8.0% Class-B rates were $19.18, and Class-C rates were $16.60. The average quoted asking rental rate in Houston’s CBD 6.0% was $30.18 at the end of the second quarter 2009, and $22.16 in 4.0% the suburban markets. In the first quarter 2009, quoted rates were 2.0% $30.67 in the CBD and $22.29 in the suburbs. 0.0% Deliveries and Construction 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q During the second quarter 2009, 21 buildings totaling Source: CoStar Property• 1,474,991 square feet were completed in the Houston market 2 THE COSTAR OFFICE REPORT ©2009 COSTAR GROUP, INC.
  • 9. 4% 2% MID-YEAR 2009 – HOUSTON 0% Houston Office Market 1999 1999 2000 2000 2001 2001 2002 2002 2003 2003 20 1q 3q 1q 3q 1q 3q 1q 3q 1q 3q 1 OVERVIEW Source: CoStar Property® area. This compares to 24 buildings totaling 2,471,039 square feet that were completed in the first quarter 2009, 31 buildings Absorption & Deliveries Past 8 Quarters totaling 1,719,219 square feet completed in the fourth quarter Net Absorption Deliveries 2008, and 1,155,110 square feet in 27 buildings completed in the 3.0 third quarter 2008. 2.47 There were 4,679,094 square feet of office space under con- 2.5 2.22 struction at the end of the second quarter 2009. 2.0 1.72 Some of the notable 2009 deliveries include: Memorial 1.63 1.47 Millions SF Hermann Tower, a 915,034-square-foot facility that delivered in 1.5 1.32 1.34 1.16 first quarter 2009 and is now 75% occupied, and Cemex Center, 1.0 0.91 0.88 0.85 0.82 a 336,000-square-foot building that delivered in second quarter 2009 and is now 50% occupied. 0.5 0.12 The largest projects underway at the end of second quarter 0.0 2009 were Main Place, a 972,474-square-foot building with 11% (0.12) (0.10) (0.23) of its space pre-leased, and Hess Tower, an 844,763-square-foot (0.5) 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q facility that is 100% pre-leased. Source: CoStar Property• Inventory Total office inventory in the Houston market area amounted Total office building sales activity in 2009 was down com- to 254,603,655 square feet in 4,370 buildings as of the end of pared to 2008. In the first three months of 2009, the market saw the second quarter 2009. The Class-A office sector consisted of four office sales transactions with a total volume of $20,600,000. 106,126,184 square feet in 357 projects. There were 1,788 Class- The price per square foot averaged $63.25. In the same first three B buildings totaling 108,241,147 square feet, and the Class-C months of 2008, the market posted 21 transactions with a total sector consisted of 40,236,324 square feet in 2,225 buildings. volume of $190,591,470. The price per square foot averaged Within the Office market there were 404 owner-occupied build- $130.68. ings accounting for 22,025,454 square feet of office space. Cap rates have been higher in 2009, averaging 9.80% com- pared to the same period in 2008 when they averaged 7.66%. Sales Activity One of the largest transactions that has occurred within the Tallying office building sales of 15,000 square feet or larger, last four quarters in the Houston market is the sale of Williams Houston office sales figures fell during the first quarter 2009 in Tower in Houston. This 1,476,973-square-foot office building terms of dollar volume compared to the fourth quarter of 2008. sold for $271,500,000, or $183.82 per square foot. The property In the first quarter, four office transactions closed with a sold on 4/30/2008. total volume of $20,600,000. The four buildings totaled 325,672 square feet and the average price per square foot equated to $63.25 per square foot. That compares to eight transactions total- Reports compiled by: Alfredo Negron, Research Manager; Susie ing $238,668,529 in the fourth quarter 2008. The total square Hernandez, CoStar Research Associate; Martha Liriano, CoStar Research footage in the fourth quarter was 1,280,110 square feet for an Associate; and Nathan Collins, CoStar Research Associate. average price per square foot of $186.44. ©2009 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 3
  • 10. HOUSTON – MID-YEAR 2009 Houston Office Market MARKETS CoStar Markets & Submarkets In analyzing metropolitan areas in the U.S., CoStar has developed geographic designations to help group properties together, called Regions, Markets and Submarkets. Regions are the equivalent of metropolitan areas, or areas containing a large population nucleus, that together with adjacent communities have a high degree of economic and social integration. Regions are then divided into Markets, which are core areas within a metropolitan area that are known to be competitive with each other in terms of attracting and keeping tenants. Markets are then further subdivided into smaller units called Submarkets, which serve to delineate a core group of buildings that are competitive with each other and constitute a generally accepted competitive set, or peer group. Markets Submarkets Bellaire Bellaire Downtown CBD* Midtown E Fort Bend Co/Sugar Land E Fort Bend Co/Sugar Land FM 1960 FM 1960/Champions FM 1960/Hwy 249 FM 1960/I-45 North Greenway Plaza Greenway Plaza Gulf Freeway/Pasadena Gulf Freeway/Pasadena I-10 East I-10 East Katy Freeway Katy Freeway East Katy Freeway West Kingwood/Humble Kingwood/Humble NASA/Clear Lake NASA/Clear Lake North Belt N Belt West/Greenspoint North Belt East Northeast Near Northeast Near Northwest North Loop West Northwest Far Northwest Near Richmond/Fountainview Richmond/Fountainview San Felipe/Voss San Felipe/Voss South South South Hwy 35 South Hwy 35 South Main/Medical Center South Main/Medical Center Southwest Southwest Beltway 8 Southwest/Hillcroft West Loop Galleria/Uptown Post Oak Park Riverway Westchase Westchase Woodlands Woodlands * Submarkets comprising the CBD. For statistics reference the CBD vs Suburban Figures at a Glance Page. 4 THE COSTAR OFFICE REPORT ©2009 COSTAR GROUP, INC.
  • 11. MID-YEAR 2009 – HOUSTON Houston Office Market EMPLOYMENT AND TENANT Total Employment by Industry Total Employment Growth Percent of Total Employment by Industry Total Number of Jobs Added Per Year 8% Natural Resources & Houston U.S. Average 4% 9% Mining 5.0% Construction 4.0% Manufacturing 14% 3.0% Trade, Transportation & Utilities Information 2.0% Percent Growth 20% Financial Activities 1.0% 4% Professional & Business 0.0% Services Education & Health -1.0% 9% Services 1% Leisure & Hospitality -2.0% 6% Other Services -3.0% 11% Government -4.0% 14% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: Department of Labor, Bureau of Labor Statistics Source: Department of Labor, Bureau of Labor Statistics Office* Employment Growth Office* Employment Growth Cumulative Growth in Office* Jobs Over the Past 5 Years Number of Office* Jobs Added Per Year Employment Inventory Houston U.S. Average Market Growth Growth Difference 6.0% Atlanta -2.30% 6.30% -8.60% 5.0% Boston 0.70% 2.50% -1.80% 4.0% 3.0% Chicago -2.00% 3.50% -5.50% 2.0% Percent Growth Dallas/Ft Worth 10.10% 6.40% 3.70% 1.0% Denver 1.20% 4.60% -3.40% 0.0% Los Angeles -2.70% 2.30% -5.00% -1.0% -2.0% New York City 3.70% 1.00% 2.70% -3.0% Seattle/Puget Sound 6.70% 7.30% -0.60% -4.0% Tampa/St Petersburg -8.50% 7.90% -16.40% -5.0% Washington 3.10% 8.60% -5.50% -6.0% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Houston 8.80% 7.60% 1.20% Source: Department of Labor, Bureau of Labor Statistics. * Office employment is defined as jobs in the Information, Source: Department of Labor, Bureau of Labor Statistics Financial Activities, and Professional & Business Services industries Historical Unemployment Rates Houston U.S. Average 10.0% 9.0% 8.0% Percent Unemployment 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 1999 1999 2000 2000 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 1q 3q 1q 3q 1q 3q 1q 3q 1q 3q 1q 3q 1q 3q 1q 3q 1q 3q 1q 3q 1q Source: Department of Labor, Bureau of Labor Statistics. ©2009 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 5
  • 12. HOUSTON – MID-YEAR 2009 Houston Office Market EMPLOYMENT AND TENANT Tenant by Size Range Tenants by Lease Expiration Based on Total Number of Tenants Based on Total Square Footage of Tenants 75,000 SF & Up 2.5% 2015 9.2% 50,000-74,999 SF 1.4% 2014 9.3% 25,000-49,999 SF 3.5% 2013 13.2% 10,000-24,999 SF 11.4% 2012 11.5% 5,000-9,999 SF 13.9% 2011 13.2% 2,500-4,999 SF 19.4% Up to 2,499 SF 47.9% 2010 13.6% 0% 10% 20% 30% 40% 50% 60% 0% 2% 4% 6% 8% 10% 12% 14% 16% Percentage of Tenants Percentage of Tenants Source: CoStar Tenant® Source: CoStar Tenant® Tenants by Industry SF Per Employee by Industry Based on Total Square Footage of Tenants Based on All Tenants Agri/Mining/Util 20.7% Law Firms 425.6 Finance/Ins/RE 15.6% Retailers/Wholes 351.7 Business-Service 9.2% Agri/Mining/Util 347.3 Manufacturing 8.9% Services 321.4 Retailers/Wholes 8.8% Manufacturing 309.5 Law Firms 8.3% Transportation 308.2 Services 7.7% Communications 289.0 Engineers/Archit 6.4% Finance/Ins/RE 287.8 Medical 6.2% Business-Service 259.1 Communications 2.4% Government 256.7 Transportation 2.2% Accountants 254.0 Government 2.0% Engineers/Archit 228.4 Accountants 1.7% Medical 167.5 0% 5% 10% 15% 20% 25% 0 50 100 150 200 250 300 350 400 450 Percentage of Tenants SF Per Employee Source: CoStar Tenant® Source: CoStar Tenant® 6 THE COSTAR OFFICE REPORT ©2009 COSTAR GROUP, INC.
  • 13. MID-YEAR 2009 – HOUSTON Houston Office Market INVENTORY & DEVELOPMENT Construction Highlights in Select CoStar Markets Color Coded by Under Construction Square Footage as a Percentage of Existing Inventory �� ���� ��� ���������� ���� � �� ������� ����� ������ ����� � �� ���������������� ��������� �� ��� �� ����� ���� ��������� ��� ���������� ���� � �� ��� ���������� ����� � �� ����� ������ ��� �� ����� ������ ���� � �� ��������� �� �� ��������� �� �� ���� ������� �� ��� ���������� ��� � �� ���� ���� ��� ����� ������ ��� � �� ��� ���������� ��� �� ��������� �� ��� ����� ������ ���� � �� ��������� �� �� �� �� �� �� �������� ��� ���������� ���� � �� ����� ������ ��� � �� ��������� �� ��� ��� �� �������� ����� ��� ���������� ��� �� ��������� ����� ������ ��� �� ��� ���������� ����� � �� ��� ��������� �� �� ����� ������ ����� � �� ��������� �� ��� �� ����� ������������ ������ ��� ���������� ��� � �� ��������� ����� ������ ��� �� ��������� �� �� ��� ���������� ��� �� ����� ������ ��� �� ��������� �� �� ������������ ������ ���� ���� ����� ����� �� ����� ����� �� ����� ����� �� ����� ���� ����� Source: CoStar Property® ©2009 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 7
  • 14. HOUSTON – MID-YEAR 2009 Houston Office Market INVENTORY & DEVELOPMENT Historical Deliveries 1982 - 2009 Deliveries Average Delivered SF 30.0 24.8 25.0 23.2 20.0 Millions of SF 15.0 13.4 10.0 5.8 6.3 5.5 5.6 4.3 4.6 4.5 4.6 5.0 3.1 3.3 3.5 2.0 2.5 2.4 1.4 1.7 1.4 1.8 1.0 1.0 0.5 1.1 0.6 0.3 0.5 0.0 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: CoStar Property® * Future deliveries based on current under construction buildings. Construction Activity Markets Ranked by Under Construction Square Footage Under Construction Inventory Average Bldg Size Market # Bldgs Total RBA Preleased SF Preleased % All Existing U/C Downtown 3 1,838,112 959,876 52.2% 111,715 612,704 Katy Freeway 4 1,103,759 377,371 34.2% 72,331 275,940 Woodlands 7 641,364 92,357 14.4% 34,005 91,623 Westchase 1 270,000 102,600 38.0% 127,591 270,000 E Fort Bend Co/Sugar Land 6 234,597 43,754 18.7% 42,615 39,099 FM 1960 6 142,098 133,646 94.1% 30,310 23,683 Northwest 1 95,269 0 0.0% 46,324 95,269 Gulf Freeway/Pasadena 1 88,000 44,000 50.0% 19,258 88,000 NASA/Clear Lake 4 84,000 79,500 94.6% 32,570 21,000 South 1 80,000 0 0.0% 18,298 80,000 All Other 2 101,895 2,981 2.9% 64,357 50,947 Totals 36 4,679,094 1,836,085 39.2% 58,262 129,975 Source: CoStar Property® Recent Deliveries Future Deliveries Leased & Un-Leased SF in Deliveries Since 2005 Preleased & Un-Leased SF in Properties Scheduled to Deliver Leased Un-Leased Preleased Un-Leased 7.0 2,000 1,800 6.0 1,600 5.0 1,400 T Thousands of SF Millions of SF 1,200 4.0 1,000 3.0 800 2.0 600 400 1.0 200 0.0 0 2005 2006 2007 2008 2009 2009 3q 2009 4q 2010 1q 2010 2q Source: CoStar Property® Source: CoStar Property® 8 THE COSTAR OFFICE REPORT ©2009 COSTAR GROUP, INC.
  • 15. MID-YEAR 2009 – HOUSTON Houston Office Market INVENTORY & DEVELOPMENT Historical Construction Starts & Deliveries Square Footage Per Quarter Starting and Completing Construction Construction Starts Deliveries 3.0 2.47 2.5 2.33 2.18 2.11 2.06 2.0 1.89 1.72 Millions of SF 1.63 1.63 1.50 1.48 1.47 1.5 1.31 1.34 1.35 1.24 1.16 1.03 0.92 0.91 0.88 1.0 0.77 0.71 0.65 0.5 0.37 0.29 0.23 0.04 0.0 2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Recent Deliveries by Project Size Breakdown of Year-to-Date Development Based on RBA of Project Building Size # Bldgs RBA SF Leased % Leased Avg Rate Single-Tenant Multi-Tenant < 50,000 SF 28 458,885 174,091 37.9% $23.97 54,681 404,204 50,000 SF - 99,999 SF 5 333,061 163,671 49.1% $24.04 0 333,061 100,000 SF - 249,999 SF 8 1,347,465 527,421 39.1% $25.56 0 1,347,465 250,000 SF - 499,999 SF 3 891,585 552,808 62.0% $27.63 0 891,585 >= 500,000 SF 1 915,034 686,276 75.0% $23.00 0 915,034 Source: CoStar Property® Recent Development by Tenancy Existing Inventory Comparison Based on RBA Developed for Single & Multi Tenant Use Based on Total RBA 2009 Deliveries Currently Under Construction By Class By Space Type 16% 17% 1% 19% 42% 42% 99% 81% 83% Class A Class B Class C Multi Single Multi Single Multi Single Source: CoStar Property® Source: CoStar Property® ©2009 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 9
  • 16. HOUSTON – MID-YEAR 2009 Houston Office Market INVENTORY & DEVELOPMENT ������������������������������ ������������������������������� ���� �������������� ���� ��������������������� ���� ������������������� ����������� ������������ ����������� ������������ ����������� ������������ ����� ������� ����� ������� ����� ������� ���������� �� ���������� �� ���������� �� ������� � ������� � ������� � ���������� ��� ���������� ��� ���������� ��� ������������� ������ ������������� ������ ������������� ������ ���������������������������������� ��������������������������������� ��������������������������������� ������������ ������������������ ������������ ������������������� ������������ ������������������ ������������ ������������������������� ������������ ������������������������� ������������ ���������������� ����������� ������������������������� ����������� ��� ����������� ��������������������� ����������� ����������������� ����������� ��� ����������� ����������������������������� � � ���� � ���� ������������������������ ���� �������������� ���� ������������������������ ����������� ��������� ����������� ������������ ����������� ��������� ����� ������� ����� ������� ����� ������� ���������� �� ���������� � ���������� � ������� � ������� � ������� � ���������� ��� ���������� ��� ���������� ��� ������������� ������ ������������� ������ ������������� ������ ���������������������������������� ���������������������������������� ���������������������������������� ������������ ������������������ ������������ ������������������ ������������ ������������������ ������������ ������������������������ ������������ ���������������� ������������ ��� �������� ����������� ��� ����������� ��� ����������� ������������������������ ����������� ��� ����������� ��� ������� � � ����������� ����������������������������� � ���� ������������������������ ���� ������������������������ ���� ����������������� ����������� ��������� ����������� �������������� ����������� ��������� ����� ������� ����� ������� ����� ������� ���������� � ���������� � ���������� � ������� � ������� � ������� � ���������� �� ���������� �� ���������� ��� ������������� ������ ������������� ������ ������������� ������ ���������������������������������� ���������������������������������� ��������������������������������� ������������ ������������������� ������������ ������������������� ������������ ������������������� ������������ ��� ������������ ������������������������������ ������������ ������������������������ ����������� ��������������������� ����������� ������������������������������ ����������� ���������������������� ����������� ��� ����������� ����������������� ����������� ������� � � � ����� ���������� ����� ����������������� ����� ���������������������� ����������� ��������� ����������� ������������ ����������� ������������ ����� ������� ����� ������� ����� ������� ���������� � ���������� � ���������� � ������� � ������� � ������� � ���������� ���� ���������� �� ���������� ��� ������������� ��� ������������� ������ ������������� ������ ���������������������������������� ��������������������������������� ���������������������������������� ������������ ������������������ ������������ ������������������� ������������ ������������������� ������������ ������������������������ ������������ �������������������� ������������ ������������������������ ����������� ����������������������� ����������� ��� ����������� ���������������� ����������� ����������������������������� ����������� ��� ����������� ������� � � � ����� ����������������������� ����� ����������������� ����� ������������ ����������� ��������� ����������� ��������� ����������� ��������� ����� ������ ����� ������ ����� ������ ���������� � ���������� � ���������� � ������� � ������� � ������� � ���������� ���� ���������� ��� ���������� ��� ������������� ��� ������������� ������ ������������� ������ ��������������������������������� ���������������������������������� ���������������������������������� ������������ ������������������� ������������ ������������������� ������������ ������������������ ������������ ���������������������� ������������ ���� ������������ ������������������������ ����������� ��������������������������� ����������� ��� �������� ����������� ������������������������� ����������� ��� ����������� ��������������� � � ����������� ������������������������� � ������������������������ 10 THE COSTAR OFFICE REPORT ©2009 COSTAR GROUP, INC.
  • 17. MID-YEAR 2009 – HOUSTON Houston Office Market INVENTORY & DEVELOPMENT ���������������������������������������� ������������������������������� ���� ����������� ���� ���������������� ���� �������������� ����������� �������� ����������� �������� ����������� ������������ ����� ������� ����� ������� ����� ������� ���������� �� ���������� �� ���������� �� ������� � ������� � ������� � ����������� ��� ����������� ���� ����������� ��� ������������� ���������� ������������� ������ ������������� ������ ��������������������������������� ���������������������������������� ��������������������������������� ������������ ������������������ ������������ ������������������� ������������ ������������������ ������������ ������������������� ������������ ���������������� ������������ ����������������������� ����������� ������������������� ����������� ��������������� ����������� ����������������������� ����������� �������������������������� ����������� ������� ����������� ����������������� � � � ���� ����������������� ���� ���������������� ���� ������������������������ ����������� ������������ ����������� ������������ ����������� ��������� ����� ������� ����� ������� ����� ������� ���������� �� ���������� �� ���������� � ������� � ������� � ������� � ����������� �� ����������� �� ����������� ��� ������������� ���������� ������������� ������ ������������� ������ ���������������������������������� ��������������������������������� ��������������������������������� ������������ ������������������ ������������ ������������������ ������������ ������������������ ������������ ������������������������ ������������ ���������������� ������������ ����������������������� �������� ����������� ��� ����������� ����������������������� ����������� ������������������������ ����������� ��� ����������� ������������������������� �������� � ���������� ����������� ��� � � ���� ����������������� ���� ��������������� ���� ������������������� ����������� ��������� ����������� ��������� ����������� ������������������������� ����� ������� ����� ������� ����� ������� ���������� � ���������� � ���������� � ������� � ������� � ������� � ����������� �� ����������� �� ����������� �� ������������� ������ ������������� ������ ������������� ������ ��������������������������������� ��������������������������������� ���������������������������������� ������������ ������������������� ������������ ������������������� ������������ ������������������ ������������ ������������������� ������������ ���������������������������� ������������ ������������������������ ����������� �������������������������� ����������� ���������������������������� ����������� ���������������� �������� ����������� ������������������������� ����������� ������������������������� ����������� ��� � � � ����� ���������������� ����� ��������������� ����� ���������������� ����������� ��������� ����������� ��������� ����������� ��������������������� ����� ������� ����� ������ ����� ������ ���������� � ���������� � ���������� � ������� � ������� � ������� � ����������� �� ����������� �� ����������� ��� ������������� ������ ������������� ������ ������������� ������ ���������������������������������� ��������������������������������� ��������������������������������� ������������ ������������������� ������������ ������������������ ������������ ������������������ ������������ ���������������� ������������ ���������������������������� ������������ ���������������� ����������� ���������������� ����������� ���������������� ����������� ��� ����������� ������������������������� ����������� ��� ����������� ��� � � � ����� ���������������������� ����� ������������������ ����� ������������������������ ����������� ����� ����������� ��������� ����������� ������� ����� ������ ����� ������ ����� ������ ���������� � ���������� � ���������� � ������� � ������� � ������� � ����������� �� ����������� �� ����������� ���� ������������� ������ ������������� ������ ������������� ��� ���������������������������������� ��������������������������������� ��������������������������������� ������������ ������������������ ������������ ������������������� ������������ ������������������ ������������ ���������������������� ������������ ���������������� ������������ ����������������������� ����������� ��� ����������� ������������������ ����������� ��� ����������� ��� ����������� ��� ����������� ��� � � � ������������������������ ©2009 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 11
  • 18. HOUSTON – MID-YEAR 2009 Houston Office Market FIGURES AT A GLANCE Class A Market Statistics Mid-Year 2009 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Bellaire 6 989,143 68,190 76,891 7.8% 5,419 0 0 $24.27 Downtown 35 30,860,864 2,011,940 2,583,506 8.4% (160,555) 0 1,838,112 $33.87 E Fort Bend Co/Sugar Land 23 3,803,123 671,285 681,407 17.9% 142,629 53,980 186,619 $28.71 FM 1960 24 4,569,344 2,561,492 2,598,402 56.9% (17,792) 7,156 0 $26.92 Greenway Plaza 18 6,309,722 885,990 1,087,623 17.2% (106,684) 0 0 $30.12 Gulf Freeway/Pasadena 2 65,610 16,829 16,829 25.7% 24,118 0 88,000 $20.51 I-10 East 0 0 0 0 0.0% 0 0 0 $0.00 Katy Freeway 74 14,614,618 1,476,051 1,618,931 11.1% 1,038,370 2,119,143 1,084,359 $26.13 Kingwood/Humble 2 134,000 25,904 25,904 19.3% 0 0 22,929 $25.98 NASA/Clear Lake 11 1,058,898 81,886 91,038 8.6% (7,129) 0 48,000 $24.85 North Belt 22 5,085,886 320,950 346,768 6.8% 24,085 63,621 0 $20.93 Northeast Near 3 346,853 315,554 315,554 91.0% 0 160,556 0 $27.53 Northwest 21 3,447,653 1,065,768 1,071,931 31.1% 124,940 416,367 95,269 $22.70 Richmond/Fountainview 0 0 0 0 0.0% 0 0 0 $0.00 San Felipe/Voss 3 1,714,029 175,983 191,589 11.2% (13,881) 0 0 $29.04 South 4 379,788 30,000 30,000 7.9% 0 0 80,000 $28.96 South Hwy 35 0 0 0 0 0.0% 0 0 0 $0.00 South Main/Medical Center 14 4,287,933 392,786 396,808 9.3% 142,690 0 0 $31.22 Southwest 6 1,062,270 182,547 182,547 17.2% (78,552) 0 0 $19.79 West Loop 44 16,536,289 1,472,831 1,731,273 10.5% (490,042) 0 78,966 $30.82 Westchase 27 7,724,745 938,524 1,097,540 14.2% (213,545) 153,342 270,000 $27.15 Woodlands 18 3,135,416 285,327 340,775 10.9% 80,754 272,267 562,364 $29.29 Totals 357 106,126,184 12,979,837 14,485,316 13.6% 494,825 3,246,432 4,354,618 $28.69 Source: CoStar Property® Class B Market Statistics Mid-Year 2009 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Bellaire 23 3,138,248 185,901 207,243 6.6% (74,807) 0 0 $20.21 Downtown 118 17,275,049 2,095,329 2,209,424 12.8% (7,065) 59,462 0 $23.31 E Fort Bend Co/Sugar Land 100 3,173,290 412,093 417,754 13.2% 30,260 0 47,978 $21.08 FM 1960 247 7,764,882 2,184,138 2,279,140 29.4% (44,368) 77,919 142,098 $17.53 Greenway Plaza 42 4,062,166 280,280 282,084 6.9% (2,778) 0 0 $21.32 Gulf Freeway/Pasadena 94 2,757,436 471,879 485,516 17.6% 39,023 0 0 $18.12 I-10 East 26 880,346 116,601 116,601 13.2% 5,641 0 0 $14.82 Katy Freeway 170 11,186,447 1,212,419 1,278,154 11.4% (130,335) 87,872 19,400 $19.67 Kingwood/Humble 63 2,438,731 225,900 238,176 9.8% (26,072) 26,400 0 $20.16 NASA/Clear Lake 111 4,942,174 466,546 481,523 9.7% (11,221) 0 36,000 $21.28 North Belt 61 5,913,487 902,877 1,011,552 17.1% (114,405) 0 0 $16.82 Northeast Near 25 663,935 109,603 109,603 16.5% 64,213 0 0 $16.21 Northwest 132 8,692,039 1,614,763 1,686,019 19.4% (78,043) 72,400 0 $16.43 Richmond/Fountainview 17 786,838 74,103 74,103 9.4% 18,713 0 0 $13.82 San Felipe/Voss 35 3,398,130 306,959 329,176 9.7% (51,669) 0 0 $20.32 South 33 715,383 162,968 188,789 26.4% (38,689) 20,000 0 $22.06 South Hwy 35 10 149,055 3,425 3,425 2.3% (1,500) 0 0 $10.44 South Main/Medical Center 50 3,761,282 263,104 267,904 7.1% 40,051 7,760 0 $21.21 Southwest 117 8,502,532 1,634,862 1,725,459 20.3% (67,696) 0 0 $15.44 West Loop 59 5,798,088 1,226,523 1,274,810 22.0% (360,485) 0 0 $21.73 Westchase 62 6,498,274 796,330 856,970 13.2% (197,691) 89,000 0 $19.70 Woodlands 193 5,743,335 542,394 700,836 12.2% 232,088 258,785 79,000 $21.09 Totals 1,788 108,241,147 15,288,997 16,224,261 15.0% (776,835) 699,598 324,476 $19.10 Source: CoStar Property® 12 THE COSTAR OFFICE REPORT ©2009 COSTAR GROUP, INC.
  • 19. MID-YEAR 2009 – HOUSTON Houston Office Market FIGURES AT A GLANCE Class C Market Statistics Mid-Year 2009 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Bellaire 31 893,934 135,698 135,698 15.2% (2,406) 0 0 $18.68 Downtown 335 6,381,042 1,419,419 1,419,419 22.2% (92,205) 0 0 $21.21 E Fort Bend Co/Sugar Land 65 1,035,272 60,563 60,913 5.9% (3,909) 0 0 $20.94 FM 1960 226 2,729,733 364,642 378,261 13.9% 14,637 0 0 $16.92 Greenway Plaza 157 2,187,169 288,888 290,175 13.3% (12,081) 0 0 $16.49 Gulf Freeway/Pasadena 186 2,607,814 263,053 269,153 10.3% (20,234) 0 0 $15.27 I-10 East 50 405,728 22,665 22,665 5.6% 5,968 0 0 $10.29 Katy Freeway 158 3,275,922 326,323 333,316 10.2% 3,978 0 0 $14.24 Kingwood/Humble 69 754,834 32,271 32,271 4.3% 10,006 0 0 $17.85 NASA/Clear Lake 133 2,304,255 263,422 263,422 11.4% (28,820) 0 0 $15.90 North Belt 57 1,954,093 283,439 295,141 15.1% 51,796 0 0 $13.25 Northeast Near 49 534,383 55,746 55,746 10.4% 5,199 0 0 $13.99 Northwest 174 3,008,324 216,368 216,368 7.2% (13,951) 0 0 $13.55 Richmond/Fountainview 65 1,229,964 111,183 111,183 9.0% (4,164) 0 0 $15.81 San Felipe/Voss 11 381,878 29,618 29,618 7.8% (794) 0 0 $20.96 South 54 569,939 92,129 92,129 16.2% 5,977 0 0 $16.08 South Hwy 35 20 121,552 4,100 4,100 3.4% (4,100) 0 0 $11.49 South Main/Medical Center 122 3,409,931 317,001 324,485 9.5% (5,206) 0 0 $18.17 Southwest 138 3,828,913 384,370 384,370 10.0% 95,810 0 0 $13.42 West Loop 21 755,047 33,468 33,468 4.4% (27,541) 0 0 $16.50 Westchase 31 1,087,941 69,356 88,321 8.1% (24,315) 0 0 $15.53 Woodlands 73 778,656 46,870 46,870 6.0% 1,690 0 0 $18.72 Totals 2,225 40,236,324 4,820,592 4,887,092 12.1% (44,665) 0 0 $16.67 Source: CoStar Property® Total Office Market Statistics Mid-Year 2009 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Bellaire 60 5,021,325 389,789 419,832 8.4% (71,794) 0 0 $21.02 Downtown 488 54,516,955 5,526,688 6,212,349 11.4% (259,825) 59,462 1,838,112 $29.02 E Fort Bend Co/Sugar Land 188 8,011,685 1,143,941 1,160,074 14.5% 168,980 53,980 234,597 $26.43 FM 1960 497 15,063,959 5,110,272 5,255,803 34.9% (47,523) 85,075 142,098 $21.92 Greenway Plaza 217 12,559,057 1,455,158 1,659,882 13.2% (121,543) 0 0 $26.20 Gulf Freeway/Pasadena 282 5,430,860 751,761 771,498 14.2% 42,907 0 88,000 $17.22 I-10 East 76 1,286,074 139,266 139,266 10.8% 11,609 0 0 $14.22 Katy Freeway 402 29,076,987 3,014,793 3,230,401 11.1% 912,013 2,207,015 1,103,759 $23.04 Kingwood/Humble 134 3,327,565 284,075 296,351 8.9% (16,066) 26,400 22,929 $20.57 NASA/Clear Lake 255 8,305,327 811,854 835,983 10.1% (47,170) 0 84,000 $20.47 North Belt 140 12,953,466 1,507,266 1,653,461 12.8% (38,524) 63,621 0 $17.19 Northeast Near 77 1,545,171 480,903 480,903 31.1% 69,412 160,556 0 $22.25 Northwest 327 15,148,016 2,896,899 2,974,318 19.6% 32,946 488,767 95,269 $18.28 Richmond/Fountainview 82 2,016,802 185,286 185,286 9.2% 14,549 0 0 $14.73 San Felipe/Voss 49 5,494,037 512,560 550,383 10.0% (66,344) 0 0 $23.48 South 91 1,665,110 285,097 310,918 18.7% (32,712) 20,000 80,000 $23.37 South Hwy 35 30 270,607 7,525 7,525 2.8% (5,600) 0 0 $10.99 South Main/Medical Center 186 11,459,146 972,891 989,197 8.6% 177,535 7,760 0 $23.78 Southwest 261 13,393,715 2,201,779 2,292,376 17.1% (50,438) 0 0 $15.42 West Loop 124 23,089,424 2,732,822 3,039,551 13.2% (878,068) 0 78,966 $27.40 Westchase 120 15,310,960 1,804,210 2,042,831 13.3% (435,551) 242,342 270,000 $23.85 Woodlands 284 9,657,407 874,591 1,088,481 11.3% 314,532 531,052 641,364 $25.16 Totals 4,370 254,603,655 33,089,426 35,596,669 14.0% (326,675) 3,946,030 4,679,094 $23.26 Source: CoStar Property® ©2009 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 13
  • 20. HOUSTON – MID-YEAR 2009 Houston Office Market FIGURES AT A GLANCE Class A Submarket Statistics Mid-Year 2009 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Bellaire 6 989,143 68,190 76,891 7.8% 5,419 0 0 $24.27 CBD 31 28,969,555 1,924,559 2,345,250 8.1% (123,299) 0 1,817,237 $35.13 E Fort Bend Co/Sugar Land 23 3,803,123 671,285 681,407 17.9% 142,629 53,980 186,619 $28.71 FM 1960/Champions 1 150,000 0 0 0.0% 0 0 0 $27.70 FM 1960/Hwy 249 20 4,023,579 2,526,937 2,551,222 63.4% (8,328) 7,156 0 $27.01 FM 1960/I-45 North 3 395,765 34,555 47,180 11.9% (9,464) 0 0 $21.51 Galleria/Uptown 23 10,248,598 1,027,664 1,189,444 11.6% (463,369) 0 0 $31.52 Greenway Plaza 18 6,309,722 885,990 1,087,623 17.2% (106,684) 0 0 $30.12 Gulf Freeway/Pasadena 2 65,610 16,829 16,829 25.7% 24,118 0 88,000 $20.51 I-10 East 0 0 0 0 0.0% 0 0 0 $0.00 Katy Freeway East 16 3,542,960 787,770 833,806 23.5% 770,078 1,423,558 0 $26.09 Katy Freeway West 58 11,071,658 688,281 785,125 7.1% 268,292 695,585 1,084,359 $26.14 Kingwood/Humble 2 134,000 25,904 25,904 19.3% 0 0 22,929 $25.98 Midtown 4 1,891,309 87,381 238,256 12.6% (37,256) 0 20,875 $22.81 N Belt West/Greenspoint 17 4,341,868 197,119 213,630 4.9% 13,672 0 0 $21.00 NASA/Clear Lake 11 1,058,898 81,886 91,038 8.6% (7,129) 0 48,000 $24.85 North Belt East 5 744,018 123,831 133,138 17.9% 10,413 63,621 0 $20.76 North Loop West 5 1,054,673 314,919 318,669 30.2% (30,903) 0 0 $24.60 Northeast Near 3 346,853 315,554 315,554 91.0% 0 160,556 0 $27.53 Northwest Far 16 2,392,980 750,849 753,262 31.5% 155,843 416,367 95,269 $22.02 Northwest Near 0 0 0 0 0.0% 0 0 0 $0.00 Post Oak Park 9 2,498,115 154,148 213,047 8.5% (26,865) 0 78,966 $30.24 Richmond/Fountainview 0 0 0 0 0.0% 0 0 0 $0.00 Riverway 12 3,789,576 291,019 328,782 8.7% 192 0 0 $29.35 San Felipe/Voss 3 1,714,029 175,983 191,589 11.2% (13,881) 0 0 $29.04 South 4 379,788 30,000 30,000 7.9% 0 0 80,000 $28.96 South Hwy 35 0 0 0 0 0.0% 0 0 0 $0.00 South Main/Medical Center 14 4,287,933 392,786 396,808 9.3% 142,690 0 0 $31.22 Southwest Beltway 8 3 565,768 99,285 99,285 17.5% (38,075) 0 0 $19.96 Southwest/Hillcroft 3 496,502 83,262 83,262 16.8% (40,477) 0 0 $19.63 Westchase 27 7,724,745 938,524 1,097,540 14.2% (213,545) 153,342 270,000 $27.15 Woodlands 18 3,135,416 285,327 340,775 10.9% 80,754 272,267 562,364 $29.29 Totals 357 106,126,184 12,979,837 14,485,316 13.6% 494,825 3,246,432 4,354,618 $28.69 Source: CoStar Property® 14 THE COSTAR OFFICE REPORT ©2009 COSTAR GROUP, INC.
  • 21. MID-YEAR 2009 – HOUSTON Houston Office Market FIGURES AT A GLANCE Class B Submarket Statistics Mid-Year 2009 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Bellaire 23 3,138,248 185,901 207,243 6.6% (74,807) 0 0 $20.21 CBD 45 13,741,280 1,840,415 1,917,910 14.0% (116,698) 0 0 $23.73 E Fort Bend Co/Sugar Land 100 3,173,290 412,093 417,754 13.2% 30,260 0 47,978 $21.08 FM 1960/Champions 67 2,562,216 640,057 646,686 25.2% 9,477 0 0 $15.55 FM 1960/Hwy 249 124 3,650,432 1,267,550 1,312,876 36.0% (13,060) 77,919 119,098 $19.07 FM 1960/I-45 North 56 1,552,234 276,531 319,578 20.6% (40,785) 0 23,000 $15.45 Galleria/Uptown 25 2,903,044 650,906 658,334 22.7% (226,085) 0 0 $22.92 Greenway Plaza 42 4,062,166 280,280 282,084 6.9% (2,778) 0 0 $21.32 Gulf Freeway/Pasadena 94 2,757,436 471,879 485,516 17.6% 39,023 0 0 $18.12 I-10 East 26 880,346 116,601 116,601 13.2% 5,641 0 0 $14.82 Katy Freeway East 55 3,500,143 260,124 260,124 7.4% (43,763) 0 19,400 $20.06 Katy Freeway West 115 7,686,304 952,295 1,018,030 13.2% (86,572) 87,872 0 $19.53 Kingwood/Humble 63 2,438,731 225,900 238,176 9.8% (26,072) 26,400 0 $20.16 Midtown 73 3,533,769 254,914 291,514 8.2% 109,633 59,462 0 $21.14 N Belt West/Greenspoint 46 4,758,449 841,543 945,208 19.9% (108,299) 0 0 $16.85 NASA/Clear Lake 111 4,942,174 466,546 481,523 9.7% (11,221) 0 36,000 $21.28 North Belt East 15 1,155,038 61,334 66,344 5.7% (6,106) 0 0 $16.31 North Loop West 60 4,040,542 790,889 819,668 20.3% (175,932) 0 0 $16.50 Northeast Near 25 663,935 109,603 109,603 16.5% 64,213 0 0 $16.21 Northwest Far 55 4,000,289 684,194 726,671 18.2% 78,819 72,400 0 $16.52 Northwest Near 17 651,208 139,680 139,680 21.4% 19,070 0 0 $15.57 Post Oak Park 23 2,004,813 476,929 501,162 25.0% (133,307) 0 0 $20.25 Richmond/Fountainview 17 786,838 74,103 74,103 9.4% 18,713 0 0 $13.82 Riverway 11 890,231 98,688 115,314 13.0% (1,093) 0 0 $21.56 San Felipe/Voss 35 3,398,130 306,959 329,176 9.7% (51,669) 0 0 $20.32 South 33 715,383 162,968 188,789 26.4% (38,689) 20,000 0 $22.06 South Hwy 35 10 149,055 3,425 3,425 2.3% (1,500) 0 0 $10.44 South Main/Medical Center 50 3,761,282 263,104 267,904 7.1% 40,051 7,760 0 $21.21 Southwest Beltway 8 90 5,950,101 947,042 1,001,903 16.8% (45,897) 0 0 $15.82 Southwest/Hillcroft 27 2,552,431 687,820 723,556 28.3% (21,799) 0 0 $14.97 Westchase 62 6,498,274 796,330 856,970 13.2% (197,691) 89,000 0 $19.70 Woodlands 193 5,743,335 542,394 700,836 12.2% 232,088 258,785 79,000 $21.09 Totals 1,788 108,241,147 15,288,997 16,224,261 15.0% (776,835) 699,598 324,476 $19.10 Source: CoStar Property® ©2009 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 15
  • 22. HOUSTON – MID-YEAR 2009 Houston Office Market FIGURES AT A GLANCE Class C Submarket Statistics Mid-Year 2009 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Bellaire 31 893,934 135,698 135,698 15.2% (2,406) 0 0 $18.68 CBD 67 3,288,774 851,320 851,320 25.9% 1,490 0 0 $16.20 E Fort Bend Co/Sugar Land 65 1,035,272 60,563 60,913 5.9% (3,909) 0 0 $20.94 FM 1960/Champions 91 1,004,854 88,618 88,618 8.8% 12,802 0 0 $13.72 FM 1960/Hwy 249 99 1,060,741 158,141 171,760 16.2% (45,961) 0 0 $15.67 FM 1960/I-45 North 36 664,138 117,883 117,883 17.7% 47,796 0 0 $20.00 Galleria/Uptown 7 419,749 0 0 0.0% 0 0 0 $0.00 Greenway Plaza 157 2,187,169 288,888 290,175 13.3% (12,081) 0 0 $16.49 Gulf Freeway/Pasadena 186 2,607,814 263,053 269,153 10.3% (20,234) 0 0 $15.27 I-10 East 50 405,728 22,665 22,665 5.6% 5,968 0 0 $10.29 Katy Freeway East 114 2,445,594 235,632 239,312 9.8% 27,774 0 0 $14.05 Katy Freeway West 44 830,328 90,691 94,004 11.3% (23,796) 0 0 $14.72 Kingwood/Humble 69 754,834 32,271 32,271 4.3% 10,006 0 0 $17.85 Midtown 268 3,092,268 568,099 568,099 18.4% (93,695) 0 0 $25.89 N Belt West/Greenspoint 46 1,760,956 233,771 245,473 13.9% 49,942 0 0 $13.25 NASA/Clear Lake 133 2,304,255 263,422 263,422 11.4% (28,820) 0 0 $15.90 North Belt East 11 193,137 49,668 49,668 25.7% 1,854 0 0 $13.27 North Loop West 100 1,331,761 63,552 63,552 4.8% (22,479) 0 0 $13.84 Northeast Near 49 534,383 55,746 55,746 10.4% 5,199 0 0 $13.99 Northwest Far 50 1,096,755 96,695 96,695 8.8% 7,380 0 0 $14.12 Northwest Near 24 579,808 56,121 56,121 9.7% 1,148 0 0 $12.01 Post Oak Park 10 175,933 0 0 0.0% 0 0 0 $0.00 Richmond/Fountainview 65 1,229,964 111,183 111,183 9.0% (4,164) 0 0 $15.81 Riverway 4 159,365 33,468 33,468 21.0% (27,541) 0 0 $16.50 San Felipe/Voss 11 381,878 29,618 29,618 7.8% (794) 0 0 $20.96 South 54 569,939 92,129 92,129 16.2% 5,977 0 0 $16.08 South Hwy 35 20 121,552 4,100 4,100 3.4% (4,100) 0 0 $11.49 South Main/Medical Center 122 3,409,931 317,001 324,485 9.5% (5,206) 0 0 $18.17 Southwest Beltway 8 69 1,690,069 121,050 121,050 7.2% 22,809 0 0 $13.99 Southwest/Hillcroft 69 2,138,844 263,320 263,320 12.3% 73,001 0 0 $13.13 Westchase 31 1,087,941 69,356 88,321 8.1% (24,315) 0 0 $15.53 Woodlands 73 778,656 46,870 46,870 6.0% 1,690 0 0 $18.72 Totals 2,225 40,236,324 4,820,592 4,887,092 12.1% (44,665) 0 0 $16.67 Source: CoStar Property® 16 THE COSTAR OFFICE REPORT ©2009 COSTAR GROUP, INC.
  • 23. MID-YEAR 2009 – HOUSTON Houston Office Market FIGURES AT A GLANCE Total Office Submarket Statistics Mid-Year 2009 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Bellaire 60 5,021,325 389,789 419,832 8.4% (71,794) 0 0 $21.02 CBD 143 45,999,609 4,616,294 5,114,480 11.1% (238,507) 0 1,817,237 $30.18 E Fort Bend Co/Sugar Land 188 8,011,685 1,143,941 1,160,074 14.5% 168,980 53,980 234,597 $26.43 FM 1960/Champions 159 3,717,070 728,675 735,304 19.8% 22,279 0 0 $15.58 FM 1960/Hwy 249 243 8,734,752 3,952,628 4,035,858 46.2% (67,349) 85,075 119,098 $23.89 FM 1960/I-45 North 95 2,612,137 428,969 484,641 18.6% (2,453) 0 23,000 $17.37 Galleria/Uptown 55 13,571,391 1,678,570 1,847,778 13.6% (689,454) 0 0 $28.71 Greenway Plaza 217 12,559,057 1,455,158 1,659,882 13.2% (121,543) 0 0 $26.20 Gulf Freeway/Pasadena 282 5,430,860 751,761 771,498 14.2% 42,907 0 88,000 $17.22 I-10 East 76 1,286,074 139,266 139,266 10.8% 11,609 0 0 $14.22 Katy Freeway East 185 9,488,697 1,283,526 1,333,242 14.1% 754,089 1,423,558 19,400 $21.50 Katy Freeway West 217 19,588,290 1,731,267 1,897,159 9.7% 157,924 783,457 1,084,359 $23.60 Kingwood/Humble 134 3,327,565 284,075 296,351 8.9% (16,066) 26,400 22,929 $20.57 Midtown 345 8,517,346 910,394 1,097,869 12.9% (21,318) 59,462 20,875 $23.56 N Belt West/Greenspoint 109 10,861,273 1,272,433 1,404,311 12.9% (44,685) 0 0 $17.04 NASA/Clear Lake 255 8,305,327 811,854 835,983 10.1% (47,170) 0 84,000 $20.47 North Belt East 31 2,092,193 234,833 249,150 11.9% 6,161 63,621 0 $18.23 North Loop West 165 6,426,976 1,169,360 1,201,889 18.7% (229,314) 0 0 $18.05 Northeast Near 77 1,545,171 480,903 480,903 31.1% 69,412 160,556 0 $22.25 Northwest Far 121 7,490,024 1,531,738 1,576,628 21.0% 242,042 488,767 95,269 $18.93 Northwest Near 41 1,231,016 195,801 195,801 15.9% 20,218 0 0 $14.68 Post Oak Park 42 4,678,861 631,077 714,209 15.3% (160,172) 0 78,966 $23.96 Richmond/Fountainview 82 2,016,802 185,286 185,286 9.2% 14,549 0 0 $14.73 Riverway 27 4,839,172 423,175 477,564 9.9% (28,442) 0 0 $27.74 San Felipe/Voss 49 5,494,037 512,560 550,383 10.0% (66,344) 0 0 $23.48 South 91 1,665,110 285,097 310,918 18.7% (32,712) 20,000 80,000 $23.37 South Hwy 35 30 270,607 7,525 7,525 2.8% (5,600) 0 0 $10.99 South Main/Medical Center 186 11,459,146 972,891 989,197 8.6% 177,535 7,760 0 $23.78 Southwest Beltway 8 162 8,205,938 1,167,377 1,222,238 14.9% (61,163) 0 0 $15.93 Southwest/Hillcroft 99 5,187,777 1,034,402 1,070,138 20.6% 10,725 0 0 $14.90 Westchase 120 15,310,960 1,804,210 2,042,831 13.3% (435,551) 242,342 270,000 $23.85 Woodlands 284 9,657,407 874,591 1,088,481 11.3% 314,532 531,052 641,364 $25.16 Totals 4,370 254,603,655 33,089,426 35,596,669 14.0% (326,675) 3,946,030 4,679,094 $23.26 Source: CoStar Property® ©2009 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 17
  • 24. HOUSTON – MID-YEAR 2009 Houston Office Market FIGURES AT A GLANCE Class A Market Statistics Mid-Year 2009 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 31 28,969,555 1,924,559 2,345,250 8.1% (123,299) 0 1,817,237 $35.13 Suburban 326 77,156,629 11,055,278 12,140,066 15.7% 618,124 3,246,432 2,537,381 $27.25 Totals 357 106,126,184 12,979,837 14,485,316 13.6% 494,825 3,246,432 4,354,618 $28.69 Source: CoStar Property® Class B Market Statistics Mid-Year 2009 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 45 13,741,280 1,840,415 1,917,910 14.0% (116,698) 0 0 $23.73 Suburban 1,743 94,499,867 13,448,582 14,306,351 15.1% (660,137) 699,598 324,476 $18.60 Totals 1,788 108,241,147 15,288,997 16,224,261 15.0% (776,835) 699,598 324,476 $19.10 Source: CoStar Property® Class C Market Statistics Mid-Year 2009 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 67 3,288,774 851,320 851,320 25.9% 1,490 0 0 $16.20 Suburban 2,158 36,947,550 3,969,272 4,035,772 10.9% (46,155) 0 0 $16.72 Totals 2,225 40,236,324 4,820,592 4,887,092 12.1% (44,665) 0 0 $16.67 Source: CoStar Property® Class A & B Market Statistics Mid-Year 2009 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 76 42,710,835 3,764,974 4,263,160 10.0% (239,997) 0 1,817,237 $31.36 Suburban 2,069 171,656,496 24,503,860 26,446,417 15.4% (42,013) 3,946,030 2,861,857 $22.86 Totals 2,145 214,367,331 28,268,834 30,709,577 14.3% (282,010) 3,946,030 4,679,094 $24.06 Source: CoStar Property® Total Office Market Statistics Mid-Year 2009 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 143 45,999,609 4,616,294 5,114,480 11.1% (238,507) 0 1,817,237 $30.18 Suburban 4,227 208,604,046 28,473,132 30,482,189 14.6% (88,168) 3,946,030 2,861,857 $22.16 Totals 4,370 254,603,655 33,089,426 35,596,669 14.0% (326,675) 3,946,030 4,679,094 $23.26 Source: CoStar Property® 18 THE COSTAR OFFICE REPORT ©2009 COSTAR GROUP, INC.
  • 25. MID-YEAR 2009 – HOUSTON Houston Office Market FIGURES AT A GLANCE Class A Market Statistics Mid-Year 2009 Existing Inventory Vacancy Net Deliveries UC Inventory Quoted Period # Blds Total RBA Direct SF Total SF Vac % Absorption # Blds Total RBA # Blds Total RBA Rates 2009 2q 357 106,126,184 12,979,837 14,485,316 13.6% (66,482) 8 1,174,410 19 4,354,618 $28.69 2009 1q 349 104,951,774 11,924,180 13,244,424 12.6% 561,307 11 2,072,022 26 5,508,153 $29.04 2008 4q 338 102,879,752 10,699,653 11,733,709 11.4% 535,427 9 1,043,291 34 7,397,885 $29.14 2008 3q 329 101,836,461 10,279,291 11,225,845 11.0% 458,075 7 848,239 41 8,208,557 $28.96 2008 2q 322 100,988,222 9,915,135 10,835,681 10.7% 674,214 8 1,109,824 44 7,833,393 $29.30 2008 1q 314 99,878,398 9,639,999 10,400,071 10.4% 287,618 6 1,259,171 44 7,172,754 $28.29 2007 4q 308 98,619,227 8,548,285 9,428,518 9.6% 536,795 3 503,136 40 6,659,696 $27.23 2007 3q 305 98,116,091 8,591,920 9,462,177 9.6% 1,029,018 3 521,138 36 6,258,216 $25.52 2007 2q 302 97,594,953 8,771,250 9,970,057 10.2% 2,039,924 3 247,148 29 4,964,975 $25.86 2007 1q 299 97,347,805 10,546,138 11,762,833 12.1% 1,199,028 6 1,699,497 25 3,689,365 $24.35 2006 293 95,648,308 10,087,577 11,262,364 11.8% 5,556,186 11 2,019,849 23 4,342,566 $23.79 2005 282 93,628,459 13,249,825 14,798,701 15.8% 2,067,303 8 916,556 12 3,278,943 $20.66 2004 274 92,711,903 14,187,057 15,949,448 17.2% 129,013 5 725,522 11 2,031,273 $20.86 2003 269 91,986,381 13,211,277 15,352,939 16.7% 73,965 7 1,950,656 6 1,021,522 $20.68 2002 262 90,035,725 10,758,302 13,476,248 15.0% (887,807) 4 2,746,151 7 1,950,656 $21.16 2001 258 87,289,574 7,542,402 9,842,290 11.3% 287,292 5 1,057,886 7 4,331,346 $22.53 Source: CoStar Property® Class B Market Statistics Mid-Year 2009 Existing Inventory Vacancy Net Deliveries UC Inventory Quoted Period # Blds Total RBA Direct SF Total SF Vac % Absorption # Blds Total RBA # Blds Total RBA Rates 2009 2q 1,788 108,241,147 15,288,997 16,224,261 15.0% 50 13 300,581 17 324,476 $19.10 2009 1q 1,775 107,940,566 15,013,296 15,923,730 14.8% (776,885) 13 399,017 29 602,057 $19.18 2008 4q 1,763 107,664,549 13,989,752 14,870,828 13.8% 432,122 22 675,928 32 891,293 $19.35 2008 3q 1,741 106,988,621 13,964,676 14,627,022 13.7% (297,800) 20 306,871 44 1,433,941 $19.46 2008 2q 1,721 106,681,750 13,469,454 14,022,351 13.1% 280,688 16 234,778 58 1,617,584 $19.41 2008 1q 1,705 106,446,972 13,498,825 14,068,261 13.2% (167,033) 15 369,098 67 1,737,162 $19.22 2007 4q 1,690 106,077,874 13,015,518 13,532,130 12.8% 592,946 12 377,384 67 1,701,147 $18.77 2007 3q 1,680 105,799,724 12,567,267 13,846,926 13.1% 992,895 18 389,106 67 1,742,122 $18.60 2007 2q 1,662 105,410,618 13,076,124 14,450,715 13.7% 624,457 18 465,920 64 1,613,764 $17.93 2007 1q 1,644 104,944,698 13,353,800 14,609,252 13.9% 273,899 19 405,951 55 1,546,689 $17.62 2006 1,626 104,666,017 13,360,015 14,604,470 14.0% 2,262,650 55 1,470,083 60 1,364,776 $17.14 2005 1,573 103,262,609 13,876,424 15,463,712 15.0% 2,141,556 55 1,430,071 50 1,523,484 $16.22 2004 1,518 101,832,538 14,221,131 16,175,197 15.9% 1,670,533 38 947,791 50 1,444,422 $15.85 2003 1,481 100,981,463 14,657,697 16,994,655 16.8% (62,536) 44 1,301,053 31 1,043,160 $15.72 2002 1,437 99,680,410 13,456,050 15,631,066 15.7% 113,620 40 1,653,356 32 956,040 $16.52 2001 1,397 98,027,054 12,164,296 14,091,330 14.4% (725,670) 33 1,292,304 35 1,587,127 $17.13 Source: CoStar Property® Total Office Market Statistics Mid-Year 2009 Existing Inventory Vacancy Net Deliveries UC Inventory Quoted Period # Blds Total RBA Direct SF Total SF Vac % Absorption # Blds Total RBA # Blds Total RBA Rates 2009 2q 4,370 254,603,655 33,089,426 35,596,669 14.0% (97,834) 21 1,474,991 36 4,679,094 $23.26 2009 1q 4,349 253,128,664 31,747,587 34,023,844 13.4% (228,841) 24 2,471,039 55 6,110,210 $23.40 2008 4q 4,326 250,780,625 29,494,753 31,446,964 12.5% 824,732 31 1,719,219 66 8,289,178 $23.41 2008 3q 4,295 249,061,406 28,907,931 30,552,477 12.3% (116,607) 27 1,155,110 85 9,642,498 $23.41 2008 2q 4,268 247,906,296 27,778,127 29,280,760 11.8% 853,017 24 1,344,602 102 9,450,977 $23.52 2008 1q 4,245 246,641,194 27,480,825 28,868,675 11.7% 117,145 21 1,628,269 111 8,909,916 $22.78 2007 4q 4,224 245,012,925 25,907,519 27,357,551 11.2% 1,321,281 15 880,520 107 8,360,843 $22.07 2007 3q 4,211 244,231,639 25,650,811 27,897,546 11.4% 2,219,264 21 910,244 103 8,000,338 $21.20 2007 2q 4,190 243,321,395 26,565,495 29,206,566 12.0% 2,826,336 21 713,068 93 6,578,739 $20.90 2007 1q 4,169 242,608,327 28,801,610 31,319,834 12.9% 1,299,978 25 2,105,448 80 5,236,054 $20.06 2006 4,146 240,657,491 28,215,153 30,668,976 12.7% 7,383,366 68 3,492,036 83 5,707,342 $19.65 2005 4,084 237,483,691 31,714,745 34,878,542 14.7% 4,411,391 67 2,384,355 64 4,804,531 $17.99 2004 4,020 235,231,972 33,281,781 37,038,214 15.7% 2,097,046 52 1,780,670 63 3,495,223 $17.83 2003 3,972 233,613,348 32,981,480 37,516,636 16.1% (926,704) 57 3,293,943 44 2,168,007 $17.67 2002 3,919 230,571,882 28,607,644 33,548,466 14.6% (628,665) 49 4,516,673 44 2,946,186 $18.12 2001 3,872 226,115,024 24,200,654 28,462,943 12.6% (401,347) 49 2,546,735 47 6,035,639 $18.65 Source: CoStar Property® ©2009 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 19
  • 26. HOUSTON – MID-YEAR 2009 Houston Office Market LEASING ACTIVITY Leasing Highlights in Select CoStar Markets Color Coded by Vacancy Rate �� ���� �������� ����� ������� ��� ���� ���� � �� ���������������� ��� ����� ������ ��� �� ����� ���� ��������� �������� ����� �������� ����� ��� ���� ���� � �� ��� ���� �� � �� ��� ����� ������ ��� ��� ����� ������ ��� ���� ������� �� �������� ����� ���� ���� ��� ��� ���� ��� � �� �������� ����� ��� ����� ������ ��� ��� ���� ����� � �� ��� ����� ������ ��� �� �� �� �� �������� �������� ����� ��� ���� ����� � �� ��� ����� �������� � ��� �� �������� ����� �������� ����� ��������� ��� ���� ����� � �� �������� ����� ��� ��� ����� ������ ��� ��� ���� ����� � �� ��� ����� ������ ��� �� ����� ������������ ������ �������� ���� ��������� ��� ���� ��� � �� ��� ����� ������ ��� �������� ����� ��� ���� ���� � �� ��� ����� ������ ��� ������� ����� ���� ���� �� �� �� ��� ��� �� ��� ��� �� ��� ���� ��� Source: CoStar Property® 20 THE COSTAR OFFICE REPORT ©2009 COSTAR GROUP, INC.
  • 27. MID-YEAR 2009 – HOUSTON Houston Office Market LEASING ACTIVITY Historical Rental Rates Based on Full-Service Equivalent Rental Rates A B C Total Market $35.00 $30.00 $25.00 Dollars/SF/Year $20.00 $15.00 $10.00 $5.00 $0.00 1999 1q 1999 2q 1999 3q 1999 4q 2000 1q 2000 2q 2000 3q 2000 4q 2001 1q 2001 2q 2001 3q 2001 4q 2002 1q 2002 2q 2002 3q 2002 4q 2003 1q 2003 2q 2003 3q 2003 4q 2004 1q 2004 2q 2004 3q 2004 4q 2005 1q 2005 2q 2005 3q 2005 4q 2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Vacancy by Available Space Type Vacancy by Class Percent of All Vacant Space in Direct vs. Sublet Percent of All Vacant Space by Class Houston United States Houston United States 7% 7% 14% 15% 45% 47% 41% 38% 93% 93% Direct Sublet Direct Sublet Class A Class B Class C Class A Class B Class C Source: CoStar Property® Source: CoStar Property® U.S. Rental Rate Comparison Future Space Available Based on Full-Service Equivalent Rental Rates Space Scheduled to be Available for Occupancy* Houston United States 3.5 $30.00 3.06 3.0 $25.00 2.5 $20.00 Dollars/SF/Year 2.0 Millions $15.00 1.5 $10.00 0.88 1.0 0.49 $5.00 0.5 0.20 0.17 0.00 $0.00 0.0 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q 2010 3q 2010 4q Source: CoStar Property® * Includes Under Construction Spaces Source: CoStar Property® ©2009 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 21
  • 28. HOUSTON – MID-YEAR 2009 Houston Office Market LEASING ACTIVITY Select Top Office Leases Based on Leased Square Footage For Deals Signed in 2009 Building Submarket SF Qtr Tenant Name Tenant Rep Company Landlord Rep Company 1 Hess Tower CBD 844,763 1st Hess Cushman & Wakefield, Inc. CB Richard Ellis 2 Houston Pavilions CBD 240,000 2nd NRG Texas Cushman & Wakefield, Inc. Transwestern Commercial Services 3 Richmond Park Westchase Westchase 96,225 1st Washington Group International Washington Group International Zenith Real Estate Services, Inc. 4 3700 W Sam Houston Pky S Westchase 85,748 1st ABB Jones Lang LaSalle Americas, Inc. Simmons Vedder Partners 5 One Commerce Green Bldg N Belt West/Greenspoint 70,047 2nd Southwestern Energy Newmark Knight Frank Moody Rambin Interests 6 550 Greens Pky* N Belt West/Greenspoint 55,643 2nd LENNAR Homes Direct Deal Moody Rambin Interests 7 Energy Crossing II Katy Freeway West 50,000 2nd N/A N/A CB Richard Ellis 8 Eco Centre at Lake Pointe E Fort Bend Co/Sugar Land 50,000 1st Cosentino Group N/A Cushman & Wakefield, Inc. 9 Deerwood Glen Office Park Gulf Freeway/Pasadena 44,000 1st Mustang Engineering N/A CB Richard Ellis 10 801 Louisiana St CBD 36,750 2nd Goodrich Petroleum Colliers International Colliers International 11 Houston Data Center CBD 36,661 2nd N/A N/A Griffin Partners Inc. 12 Pinnacle Westchase* Westchase 36,000 1st Quorum Business Solutions, Inc. CB Richard Ellis PM Realty Group, LP 13 Town & Country Central I* Katy Freeway East 33,112 2nd The Automation Group Direct Deal Parkway Realty Services, LLC 14 One Commerce Green Bldg N Belt West/Greenspoint 31,283 2nd Southwestern Energy Newmark Knight Frank Moody Rambin Interests 15 Heritage Plaza CBD 28,534 2nd Vestas Technology R&D Jones Lang LaSalle Americas, Inc. Lincoln Property Company 16 Houston Pavilions CBD 28,009 1st Sheehy, Serpe & Ware, P.C Cushman & Wakefield, Inc. Transwestern Commercial Services 17 Pinnacle Westchase Westchase 27,084 1st Quorum Business Solutions, Inc. CB Richard Ellis PM Realty Group, LP 18 1 Houston Center* CBD 23,520 1st Powers & Frost, LLP N/A Studley 19 Williams Tower Galleria/Uptown 22,784 2nd N/A N/A Hines Holdings Inc. 20 Park Towers South Post Oak Park 22,309 2nd N/A N/A TPMC Realty Corporation 21 Chase Tower CBD 22,242 1st Locke Lord Bissell & Liddell LLP N/A Hines Holdings Inc. 22 Energy Center II Katy Freeway West 22,163 1st Carbo Ceramics Studley CB Richard Ellis 23 11757 Katy Fwy* Katy Freeway West 21,735 1st N/A N/A Transwestern Commercial Services 24 Three Memorial City Plaza Katy Freeway East 21,230 1st MindWireless Transwestern Commercial Services Jones Lang LaSalle Americas, Inc. 25 Heron Lakes Office Park FM 1960/Hwy 249 20,711 1st N/A N/A Caldwell Companies 26 Cross Continents I North Belt East 20,456 1st N/A N/A Cushman & Wakefield, Inc. 27 3900 Essex Post Oak Park 20,349 1st Aquinas Companies LLC N/A Fuller Realty Partners, LLC 28 10333 Richmond Ave* Westchase 20,141 2nd Williams, Morgan & Amerson, P.C. Yancey-Hausman, Inc. Lincoln Property Company 29 3355 W Alabama St Greenway Plaza 20,013 1st N/A N/A PM Realty Group, LP 30 San Felipe Plaza San Felipe/Voss 19,978 1st N/A N/A Cushman & Wakefield, Inc. 31 Wells Fargo Bank Tower Riverway 19,652 1st N/A N/A Transwestern Commercial Services 32 The Offices at Pin Oak Park* Bellaire 18,816 2nd Frost Bank CB Richard Ellis Navisys Group 33 Millennium Tower* Westchase 18,400 1st Friede & Goldman, Ltd. Poynter Commercial Properties, Inc. CB Richard Ellis 34 2636 S Loop Fwy W South Main/Medical Center 18,002 1st Community Health Choice, Inc. Kensington Property Group Kensington Property Group 35 2636 S Loop Fwy W South Main/Medical Center 18,000 2nd Harris County Hospital District Kensington Property Group Kensington Property Group 36 3700 W Sam Houston Pky S Westchase 17,915 2nd N/A N/A Simmons Vedder Partners 37 Texas Citizens Bank Building Gulf Freeway/Pasadena 15,838 1st Fluor Enterprises, Inc Cushman & Wakefield, Inc. MSC Properties, Inc. 38 Post Oak Central Three* Galleria/Uptown 14,652 2nd SUEZ Energy Newmark Knight Frank CAPSTAR Commercial Real Estate Svcs 39 Sam Houston Crossing One Northwest Far 14,276 2nd US Steel Jones Lang LaSalle Americas, Inc. Duke Realty 40 Marina Plaza* NASA/Clear Lake 12,990 1st Standard Automation & Control Fritsche Anderson Realty Partners, CB Richard Ellis Source: CoStar Property® * Renewal 22 THE COSTAR OFFICE REPORT ©2009 COSTAR GROUP, INC.
  • 29. MID-YEAR 2009 – HOUSTON Houston Office Market SALES ACTIVITY The Optimist Sales Index Average of Two Highest Price/SF's and Two Lowest Cap Rates Per Quarter Cap Rate Price/SF 12.0% $300 10.0% $250 Cap Rate Percentage 8.0% $200 Dollars/SF 6.0% $150 4.0% $100 2.0% $50 0.0% $0 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q Source: CoStar COMPS® Sales Volume & Price Sales Analysis by Building Size Based on Office Building Sales of 15,000 SF and Larger Based on Office Building Sales From April 2008 - March 2009 Sales Volume Price/SF Bldg Size # RBA $ Volume Price/SF Cap Rate $1,200 $250 < 50,000 SF 191 1,995,480 $ 110,452,244 $ 55.35 8.29% $1,000 Millions of Sales Volume Dollars $200 $800 $150 Price/SF 50K-249K SF 27 3,286,538 $ 260,072,529 $ 79.13 8.05% $600 $100 $400 250K-499K SF 5 1,636,470 $ 283,050,000 $ 172.96 - $50 $200 $0 $0 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 >500K SF 6 6,942,285 $ 1,241,350,000 $ 178.81 - 2q 4q 2q 4q 2q 4q 2q 4q 2q 4q Source: CoStar COMPS® Source: CoStar COMPS® U.S. Price/SF Comparison U.S. Cap Rate Comparison Based on Office Building Sales of 15,000 SF and Larger Based on Office Building Sales of 15,000 SF and Larger Houston US Houston US $320 11.0% 10.0% $270 9.0% Cap Rate Percentage $220 8.0% Dollars per SF $170 7.0% 6.0% $120 5.0% $70 4.0% $20 3.0% 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2q 4q 2q 4q 2q 4q 2q 4q 2q 4q 2q 4q 2q 4q 2q 4q 2q 4q 2q 4q Source: CoStar COMPS® Source: CoStar COMPS® ©2009 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 23
  • 30. HOUSTON – MID-YEAR 2009 Houston Office Market SALES ACTIVITY ���������������� ������������������������������������������������ ���������������������� ���������������������������� ���������������� ������� ������� ������� ������ ������������ ������ ������������ ������ ������������ ��������� ������� ��������� ������� ��������� ������� ��������� ��� ��������� ��� ��������� ��� ���� ��������� ���� ������� ���� ������� ����� ��������� ����� ��������� ����� ��������� ����������� ���� ����������� ���� ����������� ���� ������ ���������������������������������������� ������ ����������������� ������ ������������������������������ ������� ����������������������� ������� ���������������������������������� ������� ������������������������������������ ��������������������� ��������������� �������������� ������� ������������� ������� ������ ������������ ������ ����������� ������ ����������� ��������� ������� ��������� ������� ��������� ������� ��������� ���� ��������� ��� ��������� ��� ���� ������� ���� ������� ���� ������� ����� ��������� ����� ���������� ����� ��������� ����������� ���� ����������� ���� ����������� ���� ������ ������������������������ ������ ����������������������� ������ ������������������� ������� ������������������������������������� ������� ����������������������������������� ������� �������������������������� ���� ��������������������������������� ��������������������� ������������������ ������� ������� ������� ������ ����������� ������ ����������� ������ ����������� ��������� ������� ��������� ������� ��������� ������� ��������� ��� ��������� ���� ��������� ��� ���� ������� ���� ������� ���� ������� ����� ��������� ����� ���������� ����� ���������� ����������� ���� ����������� ���� ����������� ���� ������ ������������������������������� ������ ����������������������������������� ������ ���������������������������������� ������� �������������������� ������� �������������������������� ������� ����������������������������������� ��������������������� 24 THE COSTAR OFFICE REPORT ©2009 COSTAR GROUP, INC.
  • 31. MID-YEAR 2009 – HOUSTON Houston Office Market SALES ACTIVITY �������������������������� ����������������������������������������������������� ��������������� ���������������� ������������������������������ �������� ������������ ������ ������������ ������ ������������ ����� ������� ��������� ������� ��������� ������� ���� ������� ��������� ��� ��������� ��� ����������� ���� ����� ��������� ����� ���������� ������������� ����������� ������ ���������������������������� ������ ��������������������������� ������������� ��� ������� ���������������������������� ������� �������������� ����������� �� �������� ��� �������� ��� ������������ �� �������������������� ���������������� ������������������������������ �������� ������������������� ������ ����������� ������ ����������� ����� ������� ��������� ������� ��������� ������ ���� ������� ��������� ����� ��������� ���� ����������� ���� ����� ��������� ����� ��������� ������������� ����������� ������ ����������� ������ ������������������ ������������� ��� ������� ������������������ ������� ���������������������������� ����������� ��� �������� ��� �������� ��� ������������ �� ������������ ���������������� ������������������������������ �������� ���������� ������ ����������� ������ ����������� ����� ������� ��������� ������� ��������� ������ ���� ������� ��������� ���� ��������� ��� ����������� ���� ����� ���������� ����� ���������� ������������� ����������� ������ �������������������� ������ �������������������� ������������� ��� ������� �������������������� ������� ���������������������������� ����������� ��� �������� ��� �������� ���������������� ������������ �� ������������������ ���������������� ������������������������������ �������� ���������������������� ������ ����������� ������ ����������� ����� ������� ��������� ������� ��������� ������� ���� ������� ��������� ���� ��������� ��� ����������� ���� ����� ���������� ����� ��������� ������������� ���������� ������ ����������������� ������ ���������������������������� ������������� ��� ������� ���������������������������� ������� ��������������������������� ����������� ��� �������� ���������������������������� �������� ��� ������������ �� ��������������������� Select Land Sales Based on Commercially Zoned Land Sales Occurring From April 2008 - June 2009 S Mason Rd, Katy Sam Houston Pky E, Houston Barker Clodine Rd, Houston Sale Price: $6,021,082 Sale Price: $4,839,080 Sale Price: $2,880,315 Acres: 18.43 Acres: 16.10 Acres: 21.33 Price/SF: $7.50 Price/SF: $6.90 Price/SF: $3.10 Closing Date: 05/02/2008 Closing Date: 09/10/2008 Closing Date: 05/21/2008 Zoning: X-Outside the Flood Plain Zoning: N/Ap Zoning: N/A Intended Use: Commercial Intended Use: Hold for Development Intended Use: Commercial Buyer: Claremont Property Co. Buyer: Kalkan Development & Construction Buyer: N/A Seller: Verkin Properties Inc Seller: Avera Companies Seller: N/A Aldine Westfield, Houston 2526 E Beltway 8, Pasadena Sale Price: $2,060,933 Sale Price: $1,400,000 Acres: 37.85 Acres: 2.70 Price/SF: $1.25 Price/SF: $11.90 Closing Date: 02/01/2009 Closing Date: 10/17/2008 Zoning: N/av Zoning: Unknown Intended Use: Commercial Intended Use: Commercial Buyer: The National Realty Group, Inc. Buyer: 2510 Sam Houston Pkwy LLC Seller: Morris Kagan & Israel Rudy Seller: Pasadena Piping Products Inc Source: CoStar COMPS® ©2009 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 25
  • 32. HOUSTON – MID-YEAR 2009 Houston Office Market B E L L A I R E M A R K E T MARKET HIGHLIGHTS – CLASS “A, B & C” Deliveries, Absorption & Vacancy Historical Analysis, All Classes Delivered SF Absorption SF Vacancy 0.200 14.0% 0.150 12.0% 0.100 10.0% Percent Vacant 0.050 Millions SF 8.0% 0.000 6.0% (0.050) 4.0% (0.100) (0.150) 2.0% (0.200) 0.0% 2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $23.50 0.70 $23.00 0.60 $22.50 0.50 Dollars/SF/Year $22.00 Millions SF 0.40 $21.50 0.30 $21.00 0.20 $20.50 0.10 $20.00 0.00 $19.50 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Source: CoStar Property® Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates 2009 2q 60 5,021,325 419,832 8.4% (9,996) 0 0 0 0 $21.02 2009 1q 60 5,021,325 409,836 8.2% (61,798) 0 0 0 0 $21.86 2008 4q 60 5,021,325 348,038 6.9% 175,364 0 0 0 0 $23.24 2008 3q 60 5,021,325 523,402 10.4% 89,420 0 0 0 0 $22.99 2008 2q 60 5,021,325 612,822 12.2% 16,471 0 0 0 0 $22.89 2008 1q 60 5,021,325 629,293 12.5% (156,941) 1 24,000 0 0 $21.85 2007 4q 59 4,997,325 448,352 9.0% (36,149) 0 0 1 24,000 $21.32 2007 3q 59 4,997,325 412,203 8.2% 54,923 0 0 1 24,000 $20.82 2007 2q 59 4,997,325 467,126 9.3% 78,487 0 0 1 24,000 $18.54 2007 1q 59 4,997,325 545,613 10.9% 60,219 0 0 0 0 $18.26 2006 4q 59 4,997,325 605,832 12.1% 22,415 0 0 0 0 $17.72 2006 3q 59 4,997,325 628,247 12.6% (80,860) 0 0 0 0 $17.16 2006 2q 59 4,997,325 547,387 11.0% 39,713 0 0 0 0 $16.30 2006 1q 59 4,997,325 587,100 11.7% 110,064 0 0 0 0 $16.01 2005 4q 59 4,997,325 697,164 14.0% (17,565) 0 0 0 0 $14.44 2005 3q 59 4,997,325 679,599 13.6% 40,422 0 0 0 0 $14.77 Source: CoStar Property® 26 THE COSTAR OFFICE REPORT ©2009 COSTAR GROUP, INC.
  • 33. MID-YEAR 2009 – HOUSTON Houston Office Market D O W N T O W N M A R K E T MARKET HIGHLIGHTS – CLASS “A, B & C” Deliveries, Absorption & Vacancy Historical Analysis, All Classes Delivered SF Absorption SF Vacancy 1.400 18.0% 1.200 16.0% 1.000 14.0% 0.800 12.0% Percent Vacant Millions SF 0.600 10.0% 0.400 8.0% 0.200 6.0% 0.000 4.0% (0.200) 2.0% (0.400) 0.0% 2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $31.00 7.00 $30.50 6.00 $30.00 5.00 Dollars/SF/Year $29.50 Millions SF 4.00 $29.00 3.00 $28.50 2.00 $28.00 1.00 $27.50 0.00 $27.00 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Source: CoStar Property® Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates 2009 2q 488 54,516,955 6,212,349 11.4% (110,863) 0 0 3 1,838,112 $29.02 2009 1q 488 54,516,955 6,101,486 11.2% (148,962) 2 59,462 2 1,817,237 $29.51 2008 4q 486 54,457,493 5,893,062 10.8% 20,775 1 232,962 4 1,876,699 $30.64 2008 3q 485 54,224,531 5,680,875 10.5% (169,326) 0 0 4 2,097,661 $30.58 2008 2q 485 54,224,531 5,511,549 10.2% 51,073 0 0 3 1,125,187 $30.73 2008 1q 485 54,224,531 5,562,622 10.3% 83,747 0 0 2 280,424 $28.33 2007 4q 485 54,224,531 5,646,369 10.4% 118,092 0 0 1 232,962 $27.73 2007 3q 485 54,224,531 5,764,461 10.6% 554,851 1 55,000 1 232,962 $25.07 2007 2q 484 54,169,531 6,264,312 11.6% 1,323,165 0 0 2 287,962 $25.75 2007 1q 484 54,169,531 7,587,477 14.0% (67,874) 0 0 2 287,962 $24.25 2006 4q 484 54,169,531 7,519,603 13.9% 469,358 0 0 1 55,000 $23.07 2006 3q 484 54,169,531 7,988,961 14.7% 543,528 0 0 1 55,000 $21.63 2006 2q 485 54,232,581 8,595,539 15.8% 550,148 0 0 1 55,000 $21.05 2006 1q 486 54,357,581 9,270,687 17.1% 11,807 1 9,016 0 0 $20.33 2005 4q 485 54,348,565 9,273,478 17.1% (57,450) 0 0 1 9,016 $20.78 2005 3q 486 54,368,565 9,236,028 17.0% 112,594 0 0 1 9,016 $20.94 Source: CoStar Property® ©2009 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 27
  • 34. HOUSTON – MID-YEAR 2009 Houston Office Market E F O R T B E N D C O / S U G A R L A N D M A R K E T MARKET HIGHLIGHTS – CLASS “A, B & C” Deliveries, Absorption & Vacancy Historical Analysis, All Classes Delivered SF Absorption SF Vacancy 0.400 20.0% 18.0% 0.300 16.0% 14.0% 0.200 Percent Vacant Millions SF 12.0% 0.100 10.0% 8.0% 0.000 6.0% 4.0% (0.100) 2.0% (0.200) 0.0% 2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $27.00 1.40 $26.50 1.20 $26.00 1.00 $25.50 Dollars/SF/Year Millions SF 0.80 $25.00 $24.50 0.60 $24.00 0.40 $23.50 0.20 $23.00 0.00 $22.50 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Source: CoStar Property® Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates 2009 2q 188 8,011,685 1,160,074 14.5% 87,696 0 0 6 234,597 $26.43 2009 1q 188 8,011,685 1,247,770 15.6% 81,284 2 53,980 6 234,597 $26.67 2008 4q 186 7,957,705 1,275,074 16.0% 304,537 3 317,050 8 288,577 $24.87 2008 3q 183 7,640,655 1,262,561 16.5% (31,566) 5 358,576 8 414,030 $24.58 2008 2q 178 7,282,079 872,419 12.0% (75,771) 0 0 12 763,606 $24.87 2008 1q 178 7,282,079 796,648 10.9% (2,431) 1 5,990 12 763,606 $23.93 2007 4q 177 7,276,089 788,227 10.8% 136,144 2 19,246 13 769,596 $24.05 2007 3q 175 7,256,843 905,125 12.5% 42,908 0 0 12 724,662 $23.46 2007 2q 175 7,256,843 948,033 13.1% 316,611 2 159,645 9 233,602 $22.18 2007 1q 173 7,097,198 1,104,999 15.6% (104,420) 2 196,452 9 381,267 $21.87 2006 4q 171 6,900,746 804,127 11.7% 74,704 0 0 8 437,877 $20.13 2006 3q 171 6,900,746 878,831 12.7% 265,441 4 67,560 7 407,097 $19.74 2006 2q 167 6,833,186 1,076,712 15.8% 136,247 1 10,000 10 468,357 $18.90 2006 1q 166 6,823,186 1,202,959 17.6% 147,908 5 238,858 7 422,677 $18.65 2005 4q 161 6,584,328 1,112,009 16.9% (61,708) 1 72,863 10 497,190 $18.49 2005 3q 160 6,511,465 977,438 15.0% 49,951 2 28,528 5 270,721 $17.32 Source: CoStar Property® 28 THE COSTAR OFFICE REPORT ©2009 COSTAR GROUP, INC.
  • 35. MID-YEAR 2009 – HOUSTON Houston Office Market F M 1 9 6 0 M A R K E T MARKET HIGHLIGHTS – CLASS “A, B & C” Deliveries, Absorption & Vacancy Historical Analysis, All Classes Delivered SF Absorption SF Vacancy 0.400 40.0% 0.300 35.0% 0.200 30.0% 0.100 Percent Vacant 0.000 25.0% Millions SF (0.100) 20.0% (0.200) (0.300) 15.0% (0.400) 10.0% (0.500) 5.0% (0.600) (0.700) 0.0% 2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $23.00 6.00 $22.80 5.00 $22.60 Dollars/SF/Year 4.00 $22.40 Millions SF $22.20 3.00 $22.00 2.00 $21.80 1.00 $21.60 0.00 $21.40 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Source: CoStar Property® Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates 2009 2q 497 15,063,959 5,255,803 34.9% (21,431) 1 10,000 6 142,098 $21.92 2009 1q 496 15,053,959 5,224,372 34.7% (26,092) 4 75,075 6 129,098 $21.90 2008 4q 492 14,978,884 5,123,205 34.2% 62,193 10 296,887 10 204,173 $22.23 2008 3q 482 14,681,997 4,888,511 33.3% (611,710) 6 158,873 16 472,430 $22.33 2008 2q 476 14,523,124 4,117,928 28.4% (32,358) 2 171,699 21 575,835 $22.84 2008 1q 474 14,351,425 3,913,871 27.3% (291,995) 5 69,756 19 730,482 $22.80 2007 4q 469 14,281,669 3,552,120 24.9% (532,367) 3 79,400 16 663,681 $20.84 2007 3q 466 14,202,269 2,940,353 20.7% (54,584) 12 50,800 15 713,581 $19.42 2007 2q 454 14,151,469 2,834,969 20.0% 36,541 8 129,938 26 648,587 $18.89 2007 1q 446 14,021,531 2,741,572 19.6% 223,420 11 199,745 25 352,546 $18.02 2006 4q 435 13,821,786 2,765,247 20.0% (144,039) 3 75,173 34 475,291 $18.08 2006 3q 432 13,746,613 2,546,035 18.5% 172,928 4 188,446 31 473,174 $17.67 2006 2q 428 13,558,167 2,530,517 18.7% (36,483) 1 33,358 20 553,652 $17.66 2006 1q 427 13,524,809 2,460,676 18.2% 20,163 3 16,600 13 438,650 $17.27 2005 4q 424 13,508,209 2,464,239 18.2% 52,936 1 13,375 10 303,153 $17.79 2005 3q 423 13,494,834 2,503,800 18.6% 170,541 6 260,832 7 187,383 $17.06 Source: CoStar Property® ©2009 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 29
  • 36. HOUSTON – MID-YEAR 2009 Houston Office Market G R E E N W A Y P L A Z A M A R K E T MARKET HIGHLIGHTS – CLASS “A, B & C” Deliveries, Absorption & Vacancy Historical Analysis, All Classes Delivered SF Absorption SF Vacancy 0.400 16.0% 0.300 14.0% 12.0% 0.200 Percent Vacant 10.0% Millions SF 0.100 8.0% 0.000 6.0% (0.100) 4.0% (0.200) 2.0% (0.300) 0.0% 2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $26.80 1.80 $26.60 1.60 $26.40 1.40 $26.20 Dollars/SF/Year 1.20 Millions SF $26.00 1.00 $25.80 0.80 0.60 $25.60 0.40 $25.40 0.20 $25.20 0.00 $25.00 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Source: CoStar Property® Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates 2009 2q 217 12,559,057 1,659,882 13.2% 3,519 0 0 0 0 $26.20 2009 1q 217 12,559,057 1,663,401 13.2% (125,062) 0 0 0 0 $26.32 2008 4q 217 12,559,057 1,538,339 12.2% (102,538) 0 0 0 0 $26.59 2008 3q 217 12,559,057 1,435,801 11.4% (87,554) 0 0 0 0 $26.47 2008 2q 217 12,559,057 1,348,247 10.7% 28,285 1 20,000 0 0 $26.68 2008 1q 216 12,539,057 1,356,532 10.8% (210,939) 1 104,671 1 20,000 $25.59 2007 4q 215 12,434,386 1,040,922 8.4% 294,208 0 0 2 124,671 $24.31 2007 3q 215 12,434,386 1,335,130 10.7% 116,620 0 0 2 124,671 $22.58 2007 2q 215 12,434,386 1,451,750 11.7% 58,577 0 0 2 124,671 $21.01 2007 1q 215 12,434,386 1,510,327 12.1% (41,480) 0 0 2 124,671 $20.60 2006 4q 215 12,434,386 1,468,847 11.8% (32,377) 0 0 0 0 $21.02 2006 3q 215 12,434,386 1,436,470 11.6% 255,299 0 0 0 0 $19.17 2006 2q 215 12,434,386 1,691,769 13.6% 15,845 1 4,500 0 0 $19.22 2006 1q 214 12,429,886 1,703,114 13.7% 239,348 0 0 1 4,500 $19.01 2005 4q 215 12,487,397 1,999,973 16.0% 738 0 0 1 4,500 $18.36 2005 3q 215 12,487,397 2,000,711 16.0% 419,171 0 0 1 4,500 $18.13 Source: CoStar Property® 30 THE COSTAR OFFICE REPORT ©2009 COSTAR GROUP, INC.
  • 37. MID-YEAR 2009 – HOUSTON Houston Office Market G U L F F R E E W A Y / P A S A D E N A M A R K E T MARKET HIGHLIGHTS – CLASS “A, B & C” Deliveries, Absorption & Vacancy Historical Analysis, All Classes Delivered SF Absorption SF Vacancy 0.150 18.0% 16.0% 0.100 14.0% 12.0% Percent Vacant Millions SF 0.050 10.0% 8.0% 0.000 6.0% (0.050) 4.0% 2.0% (0.100) 0.0% 2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $19.50 0.90 0.80 $19.00 0.70 $18.50 Dollars/SF/Year 0.60 Millions SF $18.00 0.50 0.40 $17.50 0.30 $17.00 0.20 $16.50 0.10 0.00 $16.00 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Source: CoStar Property® Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates 2009 2q 282 5,430,860 771,498 14.2% 45,980 0 0 1 88,000 $17.22 2009 1q 282 5,430,860 817,478 15.1% (3,073) 0 0 1 88,000 $17.80 2008 4q 282 5,430,860 814,405 15.0% (57,457) 1 28,800 0 0 $18.29 2008 3q 281 5,402,060 728,148 13.5% 13,057 0 0 1 28,800 $18.79 2008 2q 281 5,402,060 741,205 13.7% (44,321) 0 0 1 28,800 $19.00 2008 1q 281 5,402,060 696,884 12.9% 37,919 1 52,362 1 28,800 $18.14 2007 4q 280 5,349,698 682,441 12.8% 75,271 0 0 2 81,162 $17.16 2007 3q 280 5,349,698 757,712 14.2% 3,632 0 0 2 81,162 $17.25 2007 2q 280 5,349,698 761,344 14.2% 41,708 1 60,000 2 81,162 $17.51 2007 1q 279 5,289,698 743,052 14.0% 129,747 1 19,837 1 60,000 $17.03 2006 4q 278 5,269,861 852,962 16.2% (67,881) 0 0 2 79,837 $16.42 2006 3q 278 5,269,861 785,081 14.9% 19,116 0 0 1 19,837 $15.24 2006 2q 278 5,269,861 804,197 15.3% 22,938 1 504 1 19,837 $15.76 2006 1q 277 5,269,357 826,631 15.7% (20,914) 1 90,014 1 504 $15.39 2005 4q 276 5,179,343 715,703 13.8% (1,409) 0 0 2 90,518 $14.66 2005 3q 277 5,231,289 766,240 14.6% (291,768) 0 0 2 90,518 $14.20 Source: CoStar Property® ©2009 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 31
  • 38. HOUSTON – MID-YEAR 2009 Houston Office Market I - 1 0 E A S T M A R K E T MARKET HIGHLIGHTS – CLASS “A, B & C” Deliveries, Absorption & Vacancy Historical Analysis, All Classes Delivered SF Absorption SF Vacancy 0.080 25.0% 0.060 20.0% 0.040 Percent Vacant 0.020 Millions SF 15.0% 0.000 10.0% (0.020) (0.040) 5.0% (0.060) (0.080) 0.0% 2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $15.60 0.25 $15.40 $15.20 0.20 $15.00 Dollars/SF/Year $14.80 Millions SF 0.15 $14.60 0.10 $14.40 $14.20 0.05 $14.00 $13.80 0.00 $13.60 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Source: CoStar Property® Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates 2009 2q 76 1,286,074 139,266 10.8% 21,092 0 0 0 0 $14.22 2009 1q 76 1,286,074 160,358 12.5% (9,483) 0 0 0 0 $14.45 2008 4q 76 1,286,074 150,875 11.7% 42,904 0 0 0 0 $15.00 2008 3q 76 1,286,074 193,779 15.1% (1,166) 0 0 0 0 $15.00 2008 2q 76 1,286,074 192,613 15.0% (16,128) 0 0 0 0 $14.89 2008 1q 76 1,286,074 176,485 13.7% 1,296 0 0 0 0 $15.35 2007 4q 76 1,286,074 177,781 13.8% 65,361 0 0 0 0 $14.68 2007 3q 77 1,346,854 303,922 22.6% (41,367) 0 0 0 0 $14.49 2007 2q 77 1,346,854 262,555 19.5% (21,015) 1 25,000 0 0 $13.73 2007 1q 76 1,321,854 216,540 16.4% (67,876) 1 11,923 1 25,000 $13.77 2006 4q 75 1,309,931 136,741 10.4% 2,983 0 0 2 36,923 $13.69 2006 3q 75 1,309,931 139,724 10.7% 39,308 0 0 2 36,923 $13.81 2006 2q 75 1,309,931 179,032 13.7% 4,253 0 0 1 11,923 $12.95 2006 1q 76 1,329,931 203,285 15.3% 7,843 0 0 0 0 $12.87 2005 4q 76 1,329,931 211,128 15.9% (5,048) 0 0 0 0 $12.92 2005 3q 76 1,329,931 206,080 15.5% 10,461 0 0 0 0 $13.40 Source: CoStar Property® 32 THE COSTAR OFFICE REPORT ©2009 COSTAR GROUP, INC.
  • 39. MID-YEAR 2009 – HOUSTON Houston Office Market K A T Y F R E E W A Y M A R K E T MARKET HIGHLIGHTS – CLASS “A, B & C” Deliveries, Absorption & Vacancy Historical Analysis, All Classes Delivered SF Absorption SF Vacancy 1.800 12.0% 1.600 10.0% 1.400 1.200 8.0% Percent Vacant Millions SF 1.000 0.800 6.0% 0.600 4.0% 0.400 0.200 2.0% 0.000 (0.200) 0.0% 2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $24.00 3.50 $23.80 3.00 $23.60 2.50 Dollars/SF/Year Millions SF $23.40 2.00 $23.20 1.50 1.00 $23.00 0.50 $22.80 0.00 $22.60 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Source: CoStar Property® Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates 2009 2q 402 29,076,987 3,230,401 11.1% 356,438 5 668,324 4 1,103,759 $23.04 2009 1q 397 28,408,663 2,918,515 10.3% 555,575 6 1,538,691 9 1,772,083 $23.19 2008 4q 391 26,869,972 1,935,399 7.2% 100,486 1 101,300 14 3,295,450 $23.38 2008 3q 390 26,768,672 1,934,585 7.2% 640,041 1 343,541 13 3,346,678 $23.62 2008 2q 389 26,425,131 2,231,085 8.4% 222,215 8 118,126 14 3,690,219 $23.21 2008 1q 381 26,307,005 2,335,174 8.9% 301,431 2 632,000 20 3,430,345 $23.76 2007 4q 379 25,675,005 2,004,605 7.8% 428,001 2 370,000 17 3,038,886 $22.88 2007 3q 377 25,305,005 2,062,606 8.2% 101,435 1 174,521 17 3,039,686 $21.18 2007 2q 376 25,130,484 1,989,520 7.9% 237,306 4 79,944 14 2,221,081 $19.77 2007 1q 372 25,050,540 2,146,882 8.6% (92,811) 0 0 11 1,342,181 $19.41 2006 4q 374 25,205,152 2,208,683 8.8% 706,147 4 623,333 8 1,086,465 $20.05 2006 3q 370 24,581,819 2,291,497 9.3% 249,157 4 364,163 10 1,203,277 $18.27 2006 2q 366 24,217,656 2,176,491 9.0% 156,142 4 84,028 10 1,039,299 $17.72 2006 1q 362 24,133,628 2,248,605 9.3% (21,059) 2 312,040 11 1,005,374 $17.46 2005 4q 361 23,868,263 1,962,181 8.2% 269,952 3 39,606 11 1,060,231 $17.23 2005 3q 358 23,828,657 2,192,527 9.2% 212,122 1 75,000 13 1,091,487 $17.11 Source: CoStar Property® ©2009 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 33
  • 40. HOUSTON – MID-YEAR 2009 Houston Office Market K I N G W O O D / H U M B L E M A R K E T MARKET HIGHLIGHTS – CLASS “A, B & C” Deliveries, Absorption & Vacancy Historical Analysis, All Classes Delivered SF Absorption SF Vacancy 0.080 10.0% 9.0% 0.060 8.0% 7.0% 0.040 Percent Vacant Millions SF 6.0% 0.020 5.0% 4.0% 0.000 3.0% 2.0% (0.020) 1.0% (0.040) 0.0% 2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $21.60 0.35 $21.40 0.30 $21.20 0.25 Dollars/SF/Year $21.00 Millions SF 0.20 $20.80 0.15 $20.60 0.10 $20.40 0.05 $20.20 0.00 $20.00 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Source: CoStar Property® Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates 2009 2q 134 3,327,565 296,351 8.9% (2,201) 6 26,400 1 22,929 $20.57 2009 1q 128 3,301,165 267,750 8.1% (13,865) 0 0 7 49,329 $21.23 2008 4q 128 3,301,165 253,885 7.7% (1,179) 0 0 2 26,529 $21.41 2008 3q 128 3,301,165 252,706 7.7% (3,646) 0 0 1 22,929 $20.60 2008 2q 128 3,301,165 249,060 7.5% (6,151) 0 0 0 0 $21.18 2008 1q 128 3,301,165 242,909 7.4% 27,842 1 16,100 0 0 $21.41 2007 4q 127 3,285,065 254,651 7.8% (12,530) 1 2,620 1 16,100 $21.36 2007 3q 126 3,282,445 239,501 7.3% 38,492 2 67,688 2 18,720 $21.07 2007 2q 124 3,214,757 210,305 6.5% 14,890 0 0 4 86,408 $21.22 2007 1q 124 3,214,757 225,195 7.0% (30,343) 1 44,000 2 67,688 $21.05 2006 4q 123 3,170,757 150,852 4.8% (7,262) 0 0 3 111,688 $21.42 2006 3q 123 3,170,757 143,590 4.5% 5,067 1 27,518 3 111,688 $21.40 2006 2q 122 3,143,239 121,139 3.9% (5,852) 0 0 2 71,518 $21.83 2006 1q 122 3,143,239 115,287 3.7% 32,764 2 36,833 1 27,518 $18.96 2005 4q 120 3,106,406 111,218 3.6% 5,184 0 0 3 64,351 $18.31 2005 3q 120 3,106,406 116,402 3.7% (7,725) 0 0 2 36,833 $16.06 Source: CoStar Property® 34 THE COSTAR OFFICE REPORT ©2009 COSTAR GROUP, INC.
  • 41. MID-YEAR 2009 – HOUSTON Houston Office Market N A S A / C L E A R L A K E M A R K E T MARKET HIGHLIGHTS – CLASS “A, B & C” Deliveries, Absorption & Vacancy Historical Analysis, All Classes Delivered SF Absorption SF Vacancy 0.200 16.0% 14.0% 0.150 12.0% 0.100 Percent Vacant 10.0% Millions SF 0.050 8.0% 6.0% 0.000 4.0% (0.050) 2.0% (0.100) 0.0% 2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $21.00 0.90 $20.50 0.85 $20.00 Dollars/SF/Year 0.80 Millions SF $19.50 0.75 0.70 $19.00 0.65 $18.50 0.60 $18.00 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Source: CoStar Property® Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates 2009 2q 255 8,305,327 835,983 10.1% 7,658 0 0 4 84,000 $20.47 2009 1q 255 8,305,327 843,641 10.2% (54,828) 0 0 4 84,000 $20.14 2008 4q 255 8,305,327 788,813 9.5% 80,712 2 138,407 2 57,000 $20.09 2008 3q 253 8,166,920 731,118 9.0% 90,397 1 1,800 4 195,407 $19.85 2008 2q 252 8,165,120 819,715 10.0% 2,994 0 0 4 149,207 $19.57 2008 1q 252 8,165,120 822,709 10.1% (38,619) 1 13,020 4 149,207 $19.11 2007 4q 251 8,152,100 771,070 9.5% 7,081 4 46,118 3 124,820 $18.05 2007 3q 248 8,144,436 770,487 9.5% 12,802 2 57,100 6 169,138 $17.09 2007 2q 246 8,087,336 726,189 9.0% 159,710 2 63,545 7 116,238 $16.64 2007 1q 244 8,023,791 822,354 10.2% 63,748 1 5,005 9 179,783 $15.74 2006 4q 243 8,018,786 881,097 11.0% 152,125 2 122,537 5 88,570 $14.88 2006 3q 241 7,896,249 910,685 11.5% 91,383 0 0 6 204,107 $15.34 2006 2q 241 7,896,249 1,002,068 12.7% 60,469 0 0 4 140,562 $15.16 2006 1q 241 7,896,249 1,062,537 13.5% (38,855) 0 0 3 135,557 $15.46 2005 4q 241 7,896,249 1,023,682 13.0% (5,719) 0 0 2 123,020 $15.33 2005 3q 241 7,896,249 1,017,963 12.9% 120,814 0 0 2 123,020 $15.71 Source: CoStar Property® ©2009 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 35
  • 42. HOUSTON – MID-YEAR 2009 Houston Office Market N O R T H B E LT M A R K E T MARKET HIGHLIGHTS – CLASS “A, B & C” Deliveries, Absorption & Vacancy Historical Analysis, All Classes Delivered SF Absorption SF Vacancy 0.150 18.0% 16.0% 0.100 14.0% 12.0% Percent Vacant Millions SF 0.050 10.0% 8.0% 0.000 6.0% (0.050) 4.0% 2.0% (0.100) 0.0% 2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $17.40 1.80 $17.20 1.60 $17.00 1.40 $16.80 Dollars/SF/Year 1.20 Millions SF $16.60 1.00 $16.40 0.80 0.60 $16.20 0.40 $16.00 0.20 $15.80 0.00 $15.60 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Source: CoStar Property® Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates 2009 2q 140 12,953,466 1,653,461 12.8% (46,420) 1 63,621 0 0 $17.19 2009 1q 139 12,889,845 1,543,420 12.0% 7,896 0 0 1 63,621 $17.03 2008 4q 139 12,889,845 1,551,316 12.0% 25,003 1 84,125 1 63,621 $16.60 2008 3q 138 12,805,720 1,492,194 11.7% 80,881 0 0 2 147,746 $16.23 2008 2q 138 12,805,720 1,573,075 12.3% (18,861) 3 79,500 2 147,746 $16.91 2008 1q 135 12,726,220 1,474,714 11.6% 28,529 0 0 4 163,625 $16.94 2007 4q 135 12,726,220 1,503,243 11.8% 107,994 0 0 4 163,625 $16.78 2007 3q 135 12,726,220 1,611,237 12.7% 71,566 1 135,030 4 163,625 $16.60 2007 2q 134 12,591,190 1,547,773 12.3% 8,724 0 0 4 282,755 $16.05 2007 1q 134 12,591,190 1,556,497 12.4% 140,619 0 0 1 135,030 $15.63 2006 4q 134 12,591,190 1,697,116 13.5% 92,591 0 0 1 135,030 $15.90 2006 3q 134 12,591,190 1,789,707 14.2% 90,560 0 0 0 0 $15.45 2006 2q 134 12,591,190 1,880,267 14.9% 106,793 0 0 0 0 $15.35 2006 1q 134 12,591,190 1,987,060 15.8% 54,059 0 0 0 0 $15.19 2005 4q 134 12,591,190 2,041,119 16.2% 33,389 0 0 0 0 $15.43 2005 3q 134 12,591,190 2,074,508 16.5% 63,182 0 0 0 0 $15.52 Source: CoStar Property® 36 THE COSTAR OFFICE REPORT ©2009 COSTAR GROUP, INC.
  • 43. MID-YEAR 2009 – HOUSTON Houston Office Market N O R T H E A S T N E A R M A R K E T MARKET HIGHLIGHTS – CLASS “A, B & C” Deliveries, Absorption & Vacancy Historical Analysis, All Classes Delivered SF Absorption SF Vacancy 0.200 35.0% 30.0% 0.150 25.0% Percent Vacant Millions SF 0.100 20.0% 15.0% 0.050 10.0% 0.000 5.0% (0.050) 0.0% 2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $22.50 0.60 $22.00 0.50 $21.50 Dollars/SF/Year 0.40 $21.00 Millions SF $20.50 0.30 $20.00 0.20 $19.50 0.10 $19.00 0.00 $18.50 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Source: CoStar Property® Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates 2009 2q 77 1,545,171 480,903 31.1% 62,587 1 160,556 0 0 $22.25 2009 1q 76 1,384,615 382,934 27.7% 6,825 0 0 1 160,556 $21.15 2008 4q 76 1,384,615 389,759 28.1% 27,663 0 0 1 160,556 $20.62 2008 3q 76 1,384,615 417,422 30.1% 7,886 0 0 1 160,556 $20.97 2008 2q 76 1,384,615 425,308 30.7% 29,171 3 185,383 1 160,556 $19.87 2008 1q 73 1,199,232 269,096 22.4% (18,361) 1 17,400 3 185,383 $20.55 2007 4q 72 1,181,832 233,335 19.7% (8,732) 0 0 4 202,783 $16.02 2007 3q 72 1,181,832 224,603 19.0% 21,534 0 0 4 202,783 $15.82 2007 2q 72 1,181,832 246,137 20.8% (17,192) 0 0 1 17,400 $15.76 2007 1q 72 1,181,832 228,945 19.4% (17,842) 0 0 0 0 $17.24 2006 4q 72 1,181,832 211,103 17.9% 7,069 0 0 0 0 $15.97 2006 3q 72 1,181,832 218,172 18.5% (23,690) 0 0 0 0 $15.56 2006 2q 72 1,181,832 194,482 16.5% (9,070) 0 0 0 0 $16.29 2006 1q 72 1,181,832 185,412 15.7% (31,658) 0 0 0 0 $16.32 2005 4q 72 1,181,832 153,754 13.0% 1,384 0 0 0 0 $15.79 2005 3q 72 1,181,832 155,138 13.1% 4,967 0 0 0 0 $15.28 Source: CoStar Property® ©2009 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 37
  • 44. HOUSTON – MID-YEAR 2009 Houston Office Market N O R T H W E S T M A R K E T MARKET HIGHLIGHTS – CLASS “A, B & C” Deliveries, Absorption & Vacancy Historical Analysis, All Classes Delivered SF Absorption SF Vacancy 0.400 25.0% 0.300 20.0% 0.200 Percent Vacant Millions SF 15.0% 0.100 10.0% 0.000 5.0% (0.100) (0.200) 0.0% 2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $19.40 3.50 $19.20 3.00 $19.00 2.50 $18.80 Dollars/SF/Year $18.60 Millions SF 2.00 $18.40 1.50 $18.20 $18.00 1.00 $17.80 0.50 $17.60 0.00 $17.40 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Source: CoStar Property® Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates 2009 2q 327 15,148,016 2,974,318 19.6% 29,128 2 238,767 1 95,269 $18.28 2009 1q 325 14,909,249 2,764,679 18.5% 3,818 1 250,000 3 334,036 $18.45 2008 4q 324 14,659,249 2,518,497 17.2% 191,223 4 340,551 4 584,036 $18.14 2008 3q 320 14,318,698 2,369,169 16.5% 69,913 1 48,139 8 924,587 $18.04 2008 2q 319 14,270,559 2,390,943 16.8% 11,409 1 40,925 9 972,726 $18.96 2008 1q 318 14,229,634 2,361,427 16.6% 111,583 0 0 9 847,284 $19.18 2007 4q 318 14,229,634 2,473,010 17.4% 133,073 2 303,136 7 679,615 $18.91 2007 3q 316 13,926,498 2,302,947 16.5% 157,441 1 158,518 7 550,937 $18.21 2007 2q 315 13,767,980 2,301,870 16.7% 224,697 1 130,000 4 509,793 $17.44 2007 1q 314 13,637,980 2,396,567 17.6% (51,007) 0 0 4 591,654 $17.07 2006 4q 314 13,637,980 2,345,560 17.2% 41,778 1 65,000 4 591,654 $16.62 2006 3q 313 13,572,980 2,322,338 17.1% 3,718 1 36,183 2 223,518 $16.60 2006 2q 312 13,536,797 2,289,873 16.9% (128,208) 0 0 3 259,701 $15.86 2006 1q 312 13,536,797 2,161,665 16.0% (11,922) 1 129,505 2 101,183 $15.40 2005 4q 311 13,407,292 2,020,238 15.1% 10,187 0 0 2 165,688 $15.16 2005 3q 311 13,407,292 2,030,425 15.1% 18,476 0 0 1 129,505 $15.34 Source: CoStar Property® 38 THE COSTAR OFFICE REPORT ©2009 COSTAR GROUP, INC.
  • 45. MID-YEAR 2009 – HOUSTON Houston Office Market R I C H M O N D / F O U N T A I N V I E W M A R K E T MARKET HIGHLIGHTS – CLASS “A, B & C” Deliveries, Absorption & Vacancy Historical Analysis, All Classes Delivered SF Absorption SF Vacancy 0.060 18.0% 0.040 16.0% 14.0% 0.020 12.0% Percent Vacant 0.000 Millions SF 10.0% (0.020) 8.0% (0.040) 6.0% (0.060) 4.0% (0.080) 2.0% (0.100) 0.0% 2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $15.00 0.35 $14.80 0.30 $14.60 0.25 $14.40 Dollars/SF/Year $14.20 Millions SF 0.20 $14.00 0.15 $13.80 $13.60 0.10 $13.40 0.05 $13.20 0.00 $13.00 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Source: CoStar Property® Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates 2009 2q 82 2,016,802 185,286 9.2% 14,442 0 0 0 0 $14.73 2009 1q 82 2,016,802 199,728 9.9% 107 0 0 0 0 $14.33 2008 4q 82 2,016,802 199,835 9.9% 34,875 0 0 0 0 $14.41 2008 3q 82 2,016,802 234,710 11.6% 52,000 0 0 0 0 $13.65 2008 2q 82 2,016,802 286,710 14.2% 12,258 0 0 0 0 $13.98 2008 1q 82 2,016,802 298,968 14.8% 3,454 0 0 0 0 $13.64 2007 4q 82 2,016,802 302,422 15.0% 31,424 0 0 0 0 $13.48 2007 3q 82 2,016,802 333,846 16.6% (31,973) 0 0 0 0 $13.31 2007 2q 82 2,016,802 301,873 15.0% (32,187) 0 0 0 0 $14.59 2007 1q 82 2,016,802 269,686 13.4% (84,385) 0 0 0 0 $14.23 2006 4q 82 2,016,802 185,301 9.2% (133) 0 0 0 0 $13.85 2006 3q 82 2,016,802 185,168 9.2% 2,554 0 0 0 0 $13.59 2006 2q 83 2,022,802 193,722 9.6% (4,031) 0 0 0 0 $14.12 2006 1q 83 2,022,802 189,691 9.4% (4,649) 0 0 0 0 $13.67 2005 4q 83 2,022,802 185,042 9.1% 19,006 0 0 0 0 $13.93 2005 3q 83 2,022,802 204,048 10.1% (9,374) 0 0 0 0 $14.10 Source: CoStar Property® ©2009 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 39
  • 46. HOUSTON – MID-YEAR 2009 Houston Office Market S A N F E L I P E / V O S S M A R K E T MARKET HIGHLIGHTS – CLASS “A, B & C” Deliveries, Absorption & Vacancy Historical Analysis, All Classes Delivered SF Absorption SF Vacancy 0.150 20.0% 18.0% 0.100 16.0% 14.0% Percent Vacant Millions SF 0.050 12.0% 10.0% 0.000 8.0% 6.0% (0.050) 4.0% 2.0% (0.100) 0.0% 2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $25.00 0.60 $24.50 0.50 $24.00 $23.50 Dollars/SF/Year 0.40 Millions SF $23.00 0.30 $22.50 0.20 $22.00 $21.50 0.10 $21.00 0.00 $20.50 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Source: CoStar Property® Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates 2009 2q 49 5,494,037 550,383 10.0% 284 0 0 0 0 $23.48 2009 1q 49 5,494,037 550,667 10.0% (66,628) 0 0 0 0 $24.43 2008 4q 49 5,494,037 484,039 8.8% (47,659) 0 0 0 0 $23.58 2008 3q 49 5,494,037 436,380 7.9% 5,161 0 0 0 0 $24.36 2008 2q 49 5,494,037 441,541 8.0% (34,635) 0 0 0 0 $23.89 2008 1q 50 5,573,537 486,406 8.7% 70,110 0 0 0 0 $21.85 2007 4q 50 5,573,537 556,516 10.0% 94,264 0 0 0 0 $20.25 2007 3q 50 5,573,537 650,780 11.7% 99,561 0 0 0 0 $19.80 2007 2q 50 5,573,537 750,341 13.5% 128,890 0 0 0 0 $19.76 2007 1q 50 5,573,537 879,231 15.8% 73,444 1 8,333 0 0 $19.53 2006 4q 49 5,565,204 944,342 17.0% 13,474 0 0 1 8,333 $19.08 2006 3q 49 5,565,204 957,816 17.2% 26,474 0 0 1 8,333 $18.65 2006 2q 49 5,565,204 984,290 17.7% 59,638 0 0 1 8,333 $18.01 2006 1q 49 5,565,204 1,043,928 18.8% 85,358 0 0 0 0 $17.25 2005 4q 49 5,565,204 1,129,286 20.3% 118,432 0 0 0 0 $17.03 2005 3q 49 5,565,204 1,247,718 22.4% (197,155) 0 0 0 0 $16.67 Source: CoStar Property® 40 THE COSTAR OFFICE REPORT ©2009 COSTAR GROUP, INC.
  • 47. MID-YEAR 2009 – HOUSTON Houston Office Market S O U T H M A R K E T MARKET HIGHLIGHTS – CLASS “A, B & C” Deliveries, Absorption & Vacancy Historical Analysis, All Classes Delivered SF Absorption SF Vacancy 0.350 20.0% 0.300 18.0% 0.250 16.0% 14.0% 0.200 Percent Vacant Millions SF 12.0% 0.150 10.0% 0.100 8.0% 0.050 6.0% 0.000 4.0% (0.050) 2.0% (0.100) 0.0% 2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $24.00 0.35 0.30 $23.00 0.25 $22.00 Dollars/SF/Year Millions SF 0.20 $21.00 0.15 $20.00 0.10 $19.00 0.05 0.00 $18.00 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Source: CoStar Property® Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates 2009 2q 91 1,665,110 310,918 18.7% (58,033) 0 0 1 80,000 $23.37 2009 1q 91 1,665,110 252,885 15.2% 25,321 1 20,000 1 80,000 $23.15 2008 4q 90 1,645,110 258,206 15.7% 35,812 2 50,000 2 100,000 $22.83 2008 3q 88 1,595,110 244,018 15.3% 30,888 1 72,000 3 70,000 $21.70 2008 2q 87 1,523,110 202,906 13.3% (9,684) 0 0 4 142,000 $19.98 2008 1q 87 1,523,110 193,222 12.7% (32,277) 1 30,000 4 142,000 $21.89 2007 4q 86 1,493,110 130,945 8.8% 24,226 0 0 3 80,000 $21.58 2007 3q 86 1,493,110 155,171 10.4% 27,816 0 0 3 80,000 $20.18 2007 2q 86 1,493,110 182,987 12.3% (14,182) 0 0 3 80,000 $20.04 2007 1q 86 1,493,110 168,805 11.3% (24,051) 1 37,714 3 80,000 $18.16 2006 4q 85 1,455,396 107,040 7.4% 33,976 3 64,738 1 37,714 $13.05 2006 3q 82 1,390,658 76,278 5.5% 26,652 1 10,500 4 102,452 $12.53 2006 2q 81 1,380,158 92,430 6.7% 30,220 0 0 5 112,952 $12.30 2006 1q 81 1,380,158 122,650 8.9% 326,643 1 322,708 5 112,952 $12.55 2005 4q 80 1,057,450 126,585 12.0% 14,627 0 0 3 375,208 $12.62 2005 3q 80 1,057,450 141,212 13.4% (4,587) 1 10,245 1 322,708 $13.46 Source: CoStar Property® ©2009 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 41
  • 48. HOUSTON – MID-YEAR 2009 Houston Office Market S O U T H H W Y 3 5 M A R K E T MARKET HIGHLIGHTS – CLASS “A, B & C” Deliveries, Absorption & Vacancy Historical Analysis, All Classes Delivered SF Absorption SF Vacancy 0.030 14.0% 12.0% 0.020 10.0% 0.010 Percent Vacant Millions SF 8.0% 0.000 6.0% (0.010) 4.0% (0.020) 2.0% (0.030) 0.0% 2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $14.00 0.02 0.02 $12.00 0.01 $10.00 Dollars/SF/Year 0.01 Millions SF $8.00 0.01 0.01 $6.00 0.01 $4.00 0.00 $2.00 0.00 0.00 $0.00 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Source: CoStar Property® Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates 2009 2q 30 270,607 7,525 2.8% (3,800) 0 0 0 0 $10.99 2009 1q 30 270,607 3,725 1.4% (1,800) 0 0 0 0 $10.99 2008 4q 30 270,607 1,925 0.7% 6,580 0 0 0 0 $10.25 2008 3q 30 270,607 8,505 3.1% 7,175 0 0 0 0 $11.97 2008 2q 30 270,607 15,680 5.8% (15,680) 0 0 0 0 $13.28 2008 1q 30 270,607 0 0.0% 0 0 0 0 0 $10.02 2007 4q 30 270,607 0 0.0% 2,800 0 0 0 0 $10.02 2007 3q 30 270,607 2,800 1.0% 5,800 0 0 0 0 $19.75 2007 2q 30 270,607 8,600 3.2% 23,454 0 0 0 0 $19.75 2007 1q 30 270,607 32,054 11.8% (24,654) 0 0 0 0 $19.75 2006 4q 30 270,607 7,400 2.7% 0 0 0 0 0 $23.76 2006 3q 30 270,607 7,400 2.7% 0 0 0 0 0 $23.76 2006 2q 30 270,607 7,400 2.7% 0 0 0 0 0 $23.76 2006 1q 30 270,607 7,400 2.7% 0 0 0 0 0 $23.76 2005 4q 30 270,607 7,400 2.7% 0 0 0 0 0 $0.00 2005 3q 30 270,607 7,400 2.7% 0 0 0 0 0 $0.00 Source: CoStar Property® 42 THE COSTAR OFFICE REPORT ©2009 COSTAR GROUP, INC.
  • 49. MID-YEAR 2009 – HOUSTON Houston Office Market S O U T H M A I N / M E D I C A L C E N T E R M A R K E T MARKET HIGHLIGHTS – CLASS “A, B & C” Deliveries, Absorption & Vacancy Historical Analysis, All Classes Delivered SF Absorption SF Vacancy 1.600 14.0% 1.400 12.0% 1.200 1.000 10.0% Percent Vacant Millions SF 0.800 8.0% 0.600 6.0% 0.400 0.200 4.0% 0.000 2.0% (0.200) (0.400) 0.0% 2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $26.00 1.60 1.40 $25.50 1.20 $25.00 Dollars/SF/Year Millions SF 1.00 $24.50 0.80 $24.00 0.60 $23.50 0.40 $23.00 0.20 0.00 $22.50 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Source: CoStar Property® Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates 2009 2q 186 11,459,146 989,197 8.6% 40,302 0 0 0 0 $23.78 2009 1q 186 11,459,146 1,029,499 9.0% 137,233 2 7,760 0 0 $23.79 2008 4q 184 11,451,386 1,158,972 10.1% 265,066 0 0 2 7,760 $25.65 2008 3q 184 11,451,386 1,424,038 12.4% (210,489) 1 23,000 2 7,760 $25.24 2008 2q 183 11,428,386 1,190,549 10.4% 90,764 1 300,000 2 26,000 $25.17 2008 1q 182 11,128,386 981,313 8.8% (2,122) 0 0 3 326,000 $24.35 2007 4q 182 11,128,386 979,191 8.8% (9,921) 0 0 3 326,000 $24.20 2007 3q 182 11,128,386 969,270 8.7% 76,816 0 0 2 303,000 $24.03 2007 2q 182 11,128,386 1,046,086 9.4% (48,562) 0 0 2 303,000 $22.74 2007 1q 182 11,128,386 997,524 9.0% 913,719 2 1,382,581 1 300,000 $21.17 2006 4q 180 9,745,805 528,662 5.4% 213,590 0 0 3 1,682,581 $21.28 2006 3q 180 9,745,805 742,252 7.6% (40,087) 0 0 3 1,682,581 $21.01 2006 2q 180 9,745,805 702,165 7.2% (8,825) 0 0 2 1,382,581 $21.22 2006 1q 180 9,745,805 693,340 7.1% (61,742) 1 26,663 2 1,382,581 $20.79 2005 4q 179 9,719,142 604,935 6.2% 92,417 0 0 3 1,409,244 $20.84 2005 3q 179 9,719,142 697,352 7.2% (126,720) 0 0 3 1,409,244 $21.28 Source: CoStar Property® ©2009 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 43
  • 50. HOUSTON – MID-YEAR 2009 Houston Office Market S O U T H W E S T M A R K E T MARKET HIGHLIGHTS – CLASS “A, B & C” Deliveries, Absorption & Vacancy Historical Analysis, All Classes Delivered SF Absorption SF Vacancy 0.500 25.0% 0.400 20.0% 0.300 Percent Vacant Millions SF 15.0% 0.200 0.100 10.0% 0.000 5.0% (0.100) (0.200) 0.0% 2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $15.70 3.00 $15.60 2.50 $15.50 Dollars/SF/Year 2.00 Millions SF $15.40 1.50 $15.30 1.00 $15.20 0.50 $15.10 0.00 $15.00 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Source: CoStar Property® Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates 2009 2q 261 13,393,715 2,292,376 17.1% 95,448 0 0 0 0 $15.42 2009 1q 261 13,393,715 2,387,824 17.8% (145,886) 0 0 0 0 $15.25 2008 4q 261 13,393,715 2,241,938 16.7% 25,527 0 0 0 0 $15.38 2008 3q 261 13,393,715 2,267,465 16.9% (164,844) 0 0 0 0 $15.62 2008 2q 261 13,393,715 2,102,621 15.7% (43,047) 1 37,884 0 0 $15.56 2008 1q 260 13,355,831 2,021,690 15.1% 22,926 0 0 1 37,884 $15.37 2007 4q 260 13,355,831 2,044,616 15.3% 108,738 0 0 1 37,884 $15.13 2007 3q 260 13,355,831 2,153,354 16.1% 450,179 1 211,587 1 37,884 $14.99 2007 2q 259 13,144,244 2,391,946 18.2% 219,409 1 39,996 1 211,587 $14.94 2007 1q 258 13,104,248 2,571,359 19.6% (94,831) 3 174,958 2 251,583 $14.85 2006 4q 255 12,929,290 2,301,570 17.8% 347,362 0 0 5 426,541 $14.82 2006 3q 255 12,929,290 2,648,932 20.5% (124,749) 0 0 3 194,954 $14.75 2006 2q 255 12,929,290 2,524,183 19.5% 49,382 3 93,550 2 154,958 $14.60 2006 1q 252 12,835,740 2,480,015 19.3% 79,984 2 84,978 5 248,508 $14.43 2005 4q 250 12,750,762 2,475,021 19.4% 39,356 0 0 7 333,486 $14.42 2005 3q 250 12,750,762 2,514,377 19.7% (37,290) 0 0 6 201,680 $14.31 Source: CoStar Property® 44 THE COSTAR OFFICE REPORT ©2009 COSTAR GROUP, INC.
  • 51. MID-YEAR 2009 – HOUSTON Houston Office Market W E S T L O O P M A R K E T MARKET HIGHLIGHTS – CLASS “A, B & C” Deliveries, Absorption & Vacancy Historical Analysis, All Classes Delivered SF Absorption SF Vacancy 0.500 18.0% 0.400 16.0% 0.300 14.0% 0.200 12.0% Percent Vacant 0.100 Millions SF 0.000 10.0% (0.100) 8.0% (0.200) 6.0% (0.300) 4.0% (0.400) (0.500) 2.0% (0.600) 0.0% 2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $28.00 3.50 $27.50 3.00 $27.00 2.50 $26.50 Dollars/SF/Year $26.00 Millions SF 2.00 $25.50 1.50 $25.00 $24.50 1.00 $24.00 0.50 $23.50 0.00 $23.00 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Source: CoStar Property® Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates 2009 2q 124 23,089,424 3,039,551 13.2% (420,501) 0 0 1 78,966 $27.40 2009 1q 124 23,089,424 2,619,050 11.3% (457,567) 0 0 1 78,966 $27.32 2008 4q 125 23,212,424 2,284,483 9.8% (91,989) 0 0 0 0 $27.07 2008 3q 125 23,212,424 2,192,494 9.4% (45,902) 0 0 0 0 $26.61 2008 2q 125 23,212,424 2,146,592 9.2% 84,006 0 0 0 0 $26.09 2008 1q 125 23,212,424 2,230,598 9.6% 37,605 0 0 0 0 $24.64 2007 4q 125 23,212,424 2,268,203 9.8% 114,428 0 0 0 0 $24.45 2007 3q 125 23,212,424 2,382,631 10.3% 357,495 0 0 0 0 $23.09 2007 2q 125 23,212,424 2,740,126 11.8% 10,364 0 0 0 0 $22.69 2007 1q 125 23,212,424 2,750,490 11.8% 199,037 0 0 0 0 $21.88 2006 4q 125 23,212,424 2,949,527 12.7% 409,981 0 0 0 0 $20.54 2006 3q 125 23,212,424 3,359,508 14.5% 168,259 0 0 0 0 $19.63 2006 2q 125 23,212,424 3,527,767 15.2% 237,858 0 0 0 0 $19.00 2006 1q 125 23,212,424 3,765,625 16.2% 250,805 0 0 0 0 $18.63 2005 4q 125 23,212,424 4,016,430 17.3% 174,273 0 0 0 0 $18.30 2005 3q 125 23,212,424 4,190,703 18.1% 118,431 0 0 0 0 $18.26 Source: CoStar Property® ©2009 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 45
  • 52. HOUSTON – MID-YEAR 2009 Houston Office Market W E S T C H A S E M A R K E T MARKET HIGHLIGHTS – CLASS “A, B & C” Deliveries, Absorption & Vacancy Historical Analysis, All Classes Delivered SF Absorption SF Vacancy 0.600 16.0% 0.500 14.0% 0.400 12.0% 0.300 Percent Vacant 10.0% Millions SF 0.200 8.0% 0.100 6.0% 0.000 4.0% (0.100) (0.200) 2.0% (0.300) 0.0% 2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $24.40 2.50 $24.20 $24.00 2.00 $23.80 Dollars/SF/Year $23.60 Millions SF 1.50 $23.40 1.00 $23.20 $23.00 0.50 $22.80 $22.60 0.00 $22.40 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Source: CoStar Property® Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates 2009 2q 120 15,310,960 2,042,831 13.3% (244,146) 2 222,342 1 270,000 $23.85 2009 1q 118 15,088,618 1,576,343 10.4% (191,405) 1 20,000 3 492,342 $24.22 2008 4q 117 15,068,618 1,364,938 9.1% (126,525) 1 24,000 4 512,342 $23.48 2008 3q 116 15,044,618 1,214,413 8.1% 112,285 0 0 5 536,342 $23.03 2008 2q 116 15,044,618 1,326,698 8.8% 498,837 2 371,585 5 536,342 $23.78 2008 1q 114 14,673,033 1,453,950 9.9% (66,237) 2 309,200 6 838,927 $23.70 2007 4q 112 14,363,833 1,078,513 7.5% 101,771 0 0 6 724,785 $22.68 2007 3q 112 14,363,833 1,180,284 8.2% 76,641 0 0 4 680,785 $22.79 2007 2q 112 14,363,833 1,256,925 8.8% 48,749 0 0 3 627,751 $22.07 2007 1q 112 14,363,833 1,305,674 9.1% 86,146 0 0 3 627,751 $21.29 2006 4q 112 14,363,833 1,391,820 9.7% 269,184 0 0 0 0 $20.37 2006 3q 112 14,363,833 1,661,004 11.6% (41,189) 1 206,362 0 0 $19.50 2006 2q 111 14,157,471 1,413,453 10.0% 174,939 0 0 1 206,362 $19.30 2006 1q 111 14,157,471 1,588,392 11.2% (31,261) 0 0 1 206,362 $19.09 2005 4q 111 14,157,471 1,557,131 11.0% 254,653 1 20,000 1 206,362 $19.08 2005 3q 110 14,137,471 1,791,784 12.7% 59,922 0 0 2 226,362 $18.06 Source: CoStar Property® 46 THE COSTAR OFFICE REPORT ©2009 COSTAR GROUP, INC.
  • 53. MID-YEAR 2009 – HOUSTON Houston Office Market W O O D L A N D S M A R K E T MARKET HIGHLIGHTS – CLASS “A, B & C” Deliveries, Absorption & Vacancy Historical Analysis, All Classes Delivered SF Absorption SF Vacancy 0.500 12.0% 0.400 10.0% 0.300 8.0% Percent Vacant Millions SF 0.200 6.0% 0.100 4.0% 0.000 2.0% (0.100) (0.200) 0.0% 2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $26.20 1.20 $26.00 1.00 $25.80 Dollars/SF/Year 0.80 $25.60 Millions SF $25.40 0.60 $25.20 0.40 $25.00 0.20 $24.80 0.00 $24.60 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q Source: CoStar Property® Source: CoStar Property® Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates 2009 2q 284 9,657,407 1,088,481 11.3% 54,983 3 84,981 7 641,364 $25.16 2009 1q 281 9,572,426 1,058,483 11.1% 259,549 5 446,071 10 726,345 $25.82 2008 4q 276 9,126,355 871,961 9.6% (146,641) 5 105,137 12 1,112,435 $25.75 2008 3q 271 9,021,218 620,183 6.9% 10,492 11 149,181 17 1,217,572 $26.12 2008 2q 260 8,872,037 481,494 5.4% 102,170 2 19,500 24 1,132,753 $25.80 2008 1q 258 8,852,537 564,164 6.4% 210,625 4 353,770 22 965,949 $25.94 2007 4q 254 8,498,767 421,019 5.0% 78,104 1 60,000 23 1,070,273 $25.02 2007 3q 253 8,438,767 439,123 5.2% 76,676 0 0 20 852,742 $24.76 2007 2q 253 8,438,767 515,799 6.1% 28,192 1 25,000 8 722,742 $24.19 2007 1q 252 8,413,767 518,991 6.2% 111,453 1 24,900 4 428,938 $23.16 2006 4q 251 8,388,867 605,544 7.2% 259,862 3 76,804 5 453,838 $23.05 2006 3q 248 8,312,063 788,602 9.5% (21,694) 1 20,444 8 530,642 $23.08 2006 2q 247 8,291,619 746,464 9.0% 147,231 1 5,000 6 192,344 $20.20 2006 1q 246 8,286,619 888,695 10.7% 147,251 4 45,120 6 172,444 $20.39 2005 4q 242 8,241,499 990,826 12.0% 163,179 5 269,409 8 162,564 $19.79 2005 3q 237 7,972,090 884,596 11.1% 66,798 4 120,359 11 351,529 $19.96 Source: CoStar Property® ©2009 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 47
  • 54. The CoStar Market Report Order Form Name: My check for $ is enclosed. (Please add local sales tax.) Title: Charge to my: Company: Visa Master Card American Express Street Address: Credit Card No: City: State: Zip: Exp (xx/xxx): Phone: ( ) Email: Signature: CoStar Market Report MARKET QTY:OFFICE INDUSTRIAL RETAIL SUBTOTAL National Overview*** Atlanta In today’s uncertain economic times, the Austin difference between the right decision Baltimore Birmingham and a wrong one can mean hundreds of Boston Broward County* thousands, if not millions of dollars. With Charlotte the CoStar Market Report, you’ll have the Chicago The CoStar Cincinnati critical information you need to help you Office Report Cleveland Columbus and your clients make smarter decisions. M I D - Y E A R 2 0 0 9 Houston Office Market Dallas/Ft Worth Dayton Denver CoStar’s Office or Industrial or Retail Market Detroit East Bay/Oakland Report, updated every quarter, contains Greensboro/Winston-S. the most current statistics available for you Greenville/Spartanburg Hampton Roads Local market, right down to the submarket Hartford Houston level. Comprehensive charts, graphs and Indianapolis detailed narrative will give you a precise Inland Empire (California) Jacksonville (Florida) picture of absorption, vacancy rates, rental rates, existing inventory and Kansas City Las Vegas buildings under construction, sales prices, and cap rates. Long Island (New York) Los Angeles Individual Markets Memphis Miami-Dade County* Milwaukee Individual market reports include comprehensive statistics and analysis Madison Minneapolis on local market conditions, right down to the submarket level. Individual Nashville reports are available for most U.S. Office, Industrial or Retail markets Nassau and Suffolk Co.** New York City tracked by CoStar. For a full list of the CoStar Markets please view the list NY Outer Boroughs** Northern New Jersey of all Report Markets view the following webpage http://www.costar.com/ Oklahoma City products/MarketReports.aspx. Orange (California) Orlando Single Market (office, industrial or retail) – Palm Beach County* Philadelphia Purchased online in Electronic Format $99 Phoenix Single Market (office, industrial or retail) - Pittsburgh Portland Purchased offline in Electronic Format $250 Providence Raleigh/Durham Richmond VA Online Purchase Discounts Sacramento Salt Lake City Purchase the previous quarter report for $49. San Antonio San Diego San Francisco Offline Purchase Discounts Seattle/Puget Sound South Bay/San Jose South Florida Receive 15% off when you buy two copies. Southwest Florida Receive 25% off when you purchase 3 or more. St. Louis Tampa/St Petersburg Receive 25% off when you purchase a four-quarter subscription. Toledo Tucson Tulsa Washington West Michigan Westchester/So Conn. * South Florida Report included at no cost with offline purchase of Broward Mail to: CoStar Group Subtotal: County, Miami-Dade County, or Palm Beach County Report of the same Attn: Sales building type. Discount: 2 Bethesda Metro Center ** Nassau and Suffolk County and New York Outer Boroughs Reports are subsets of the Long Island and Westchester/So Connecticut markets. Tax: ** National Report included at no cost with offline purchase of any Market Bethesda, MD 20814 Total: Report of the same building type. Fax to: (800) 494-0052