Houston Office Market Report: Mid-Year 2010
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Houston Office Market Report: Mid-Year 2010

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Costar's Mid-Year 2010 - Houston Office Market Report

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Houston Office Market Report: Mid-Year 2010 Houston Office Market Report: Mid-Year 2010 Document Transcript

  • The CoStar Office Report M I D - Y E A R 2 0 1 0 Houston Office Market
  • MID-YEAR 2010 – HOUSTON Houston Office Market Table of Contents Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A Methodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B Terms & Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C 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 Analysis of Individual CoStar Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Select Same Building Sales Select Land Sales Austin County Market Bellaire Market 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 San Jacinto County Market South Market South Hwy 35 Market South Main/Medical Center Market Southwest Market West Loop Market Westchase Market Woodlands Market ©2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT A
  • HOUSTON – MID-YEAR 2010 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 71.7 billion square feet of coverage in 3 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 other products and services, please contact us at 1-877-7COSTAR, or visit our web site at www.costar.com © Copyright 2010 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 B THE COSTAR OFFICE REPORT ©2010 COSTAR GROUP, INC.
  • MID-YEAR 2010 – HOUSTON 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) ©2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT C
  • HOUSTON – MID-YEAR 2010 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. D THE COSTAR OFFICE REPORT ©2010 COSTAR GROUP, INC.
  • MID-YEAR 2010 – HOUSTON Houston Office Market OVERVIEW Houston’s Vacancy Increases to 14.2% Net Absorption Negative (311,935) SF in the Quarter T he Houston Office market ended the second quarter the third quarter 2009. 2010 with a vacancy rate of 14.2%. The vacancy rate The Class-B office market recorded net absorption of posi- was up over the previous quarter, with net absorption tive 170,010 square feet in the second quarter 2010, compared totaling negative (311,935) square feet in the second quarter. to positive 275,369 square feet in the first quarter 2010, positive Vacant sublease space decreased in the quarter, ending the quarter 140,779 in the fourth quarter 2009, and positive 156,105 in the at 2,228,545 square feet. Rental rates ended the second quarter third quarter 2009. at $23.07, a decrease over the previous quarter. A total of five The Class-C office market recorded net absorption of posi- buildings delivered to the market in the quarter totaling 78,828 tive 27,356 square feet in the second quarter 2010 compared to square feet, with 2,334,122 square feet still under construction at positive 126,812 square feet in the first quarter 2010, positive the end of the quarter. 84,765 in the fourth quarter 2009, and positive 131,943 in the third quarter 2009. Absorption Net absorption for Houston’s central business district was Net absorption for the overall Houston office market was negative (33,470) square feet in the second quarter 2010. That negative (311,935) square feet in the second quarter 2010. That compares to negative (221,150) square feet in the first quarter compares to positive 505,004 square feet in the first quarter 2010, 2010, positive 138,950 in the fourth quarter 2009, and negative positive 105,274 square feet in the fourth quarter 2009, and posi- (1,590) in the third quarter 2009. tive 84,514 square feet in the third quarter 2009. Net absorption for the suburban markets was negative Tenants moving out of large blocks of space in 2010 include: (278,465) square feet in the second quarter 2010. That compares Fluor Enterprises moving out of 187,908 square feet at The Lake to positive 726,154 square feet in first quarter 2010, negative Corporate Center; and Sverdrup Technology moving out of (33,676) in the fourth quarter 2009, and positive 86,104 in the 170,576 square feet at 2224 Bay Area Blvd. third quarter 2009. Tenants moving into large blocks of space in 2010 include: Tax Masters, Inc. moving into 107,890 square feet at Dairy Vacancy Ashford Plaza; CyrusOne moving into 92,420 square feet at The office vacancy rate in the Houston market arean 5150 Westway Park Blvd; and NRG moving into 84,644 square increased to 14.2% at the end of the second quarter 2010. The feet at 1300 Main St. vacancy rate was 14.0% at the end of the first quarter 2010, The Class-A office market recorded net absorption of nega- 14.2% at the end of the fourth quarter 2009, and 14.0% at the tive (509,301) square feet in the second quarter 2010, compared end of the third quarter 2009. to positive 102,823 square feet in the first quarter 2010, negative Class-A projects reported a vacancy rate of 15.6% at the (120,270) in the fourth quarter 2009, and negative (203,534) in end of the second quarter 2010, 15.1% at the end of the first Vacancy Rates by Class 1999-2010 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 2009 2010 1q 3q 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 ©2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT U.S. Vacancy Comparison 1 Past 8 Quarters Past 8 Quarters
  • HOUSTON – MID-YEAR 2010 Houston Office Market OVERVIEW quarter 2010, 15.2% at the end of the fourth quarter 2009, and of the third quarter 2009. 14.7% at the end of the third quarter 2009. Houston’s Class-A projects reported vacant sublease space of Class-B projects reported a vacancy rate of 14.0% at the end 1,274,699 square feet at the end of second quarter 2010, up from of the second quarter 2010, 14.1% at the end of the first quarter the 1,269,173 square feet reported at the end of the first quarter 2010, 14.3% at the end of the fourth quarter 2009, and 14.4% 2010. There were 1,264,833 square feet of sublease space vacant at the end of the third quarter 2009. at the end of the fourth quarter 2009, and 1,358,951 square feet Class-C projects reported a vacancy rate of 10.9% at the at the end of the third quarter 2009. end of the second quarter 2010, 10.9% at the end of first quarter Class-B projects reported vacant sublease space of 920,896 2010, 11.2% at the end of the fourth quarter 2009, and 11.4% square feet at the end of the second quarter 2010, down from the at the end of the third quarter 2009. 944,627 square feet reported at the end of the first quarter 2010. The overall vacancy rate in Houston’s central business dis- At the end of the fourth quarter 2009 there were 979,829 square trict at the end of the second quarter 2010 increased to 11.6%. feet, and at the end of the third quarter 2009 there were 871,711 The vacancy rate was 11.5% at the end of the first quarter 2010, square feet vacant. 11.0% at the end of the fourth quarter 2009, and 11.3% at the Class-C projects reported decreased vacant sublease space end of the third quarter 2009. from the first quarter 2010 to the second quarter 2010. Sublease The vacancy rate in the suburban markets increased to vacancy went from 46,242 square feet to 32,950 square feet dur- 14.8% in the second quarter 2010. The vacancy rate was 14.6% ing that time. There was 27,378 square feet at the end of the at the end of the first quarter 2010, 14.9% at the end of the fourth fourth quarter 2009, and 55,031 square feet at the end of the B Cquarter 2009, and 14.6% at the end of the third quarter 2009. Total Market third quarter 2009. Sublease vacancy in Houston’s central business district stood Largest Lease Signings at 493,501 square feet at the end of the second quarter 2010. The largest lease signings occurring in 2010 included: the It was 507,653 square feet at the end of the first quarter 2010, 695,800-square-foot lease signed by Kellogg Brown & Root Llc 414,389 square feet at the end of the fourth quarter 2009, and at KBR Tower in the Downtown market; the 291,536-square-foot 471,445 square feet at the end of the third quarter 2009. deal signed by Kellogg Brown & Root at 500 Jefferson Bldg in Sublease vacancy in the suburban markets ended the second the Downtown market; and the 182,687-square-foot lease signed quarter 2010 at 1,735,044 square feet. At the end of the first by Kellogg Brown & Root Llc at KBR Tower in the Downtown quarter 2010 sublease vacancy was 1,752,389 square feet, was market. Two of the three deals were renewals. 1,857,651 square feet at the end of the fourth quarter 2009, and Sublease Vacancy was 1,814,248 square feet at the end of the third quarter 2009. The amount of vacant sublease space in the Houston mar- Rental Rates ket decreased to 2,228,545 square feet by the end of the second The average quoted asking rental rate for available office 004 2004 quarter 2010, from 2,260,042 square feet2009 the end of the first 2005 2005 2006 2006 2007 2007 2008 2008 at 2009 2010 space, all classes, was $23.07 per square foot per year at the end 1q 3q quarter 2010. There was 2,272,040 square1q vacant at the end 1q 3q 1q 3q 1q 3q 1q 3q feet 3q 1q of the second quarter 2010 in the Houston market area. This of the fourth quarter 2009 and 2,285,693 square feet at the end represented a 0.7% decrease in quoted rental rates from the end of the first quarter 2010, when rents were reported at $23.23 per U.S. Vacancy Comparison square foot. Past 8 Quarters The average quoted rate within the Class-A sector was $29.06 at the end of the second quarter 2010, while Class-B rates Houston United States 16.0% stood at $19.04, and Class-C rates at $15.40. At the end of the first quarter 2010, Class-A rates were $29.08 per square foot, 14.0% Class-B rates were $19.24, and Class-C rates were $15.59. 12.0% The average quoted asking rental rate in Houston’s CBD was $29.79 at the end of the second quarter 2010, and $21.79 in Vacancy Rate 10.0% 8.0% the suburban markets. In the first quarter 2010, quoted rates were $30.38 in the CBD and $21.90 in the suburbs. 6.0% Deliveries and Construction 4.0% During the second quarter 2010, five buildings totaling 2.0% 78,828 square feet were completed in the Houston market area. 0.0% This compares to eight buildings totaling 138,049 square feet 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q that were completed in the first quarter 2010, 10 buildings total- Source: CoStar Property• ing 623,027 square feet completed in the fourth quarter 2009, 2 THE COSTAR OFFICE REPORT ©2010 COSTAR GROUP, INC.
  • 4% 2% MID-YEAR 2010 – HOUSTON 0% Houston Office Market 1999 1999 2000 2000 2001 2001 2002 2002 2003 2003 2004 20 1q 3q 1q 3q 1q 3q 1q 3q 1q 3q 1q 3 OVERVIEW Source: CoStar Property® and 2,397,305 square feet in 23 buildings completed in the third quarter 2009. Absorption & Deliveries Past 8 Quarters There were 2,334,122 square feet of office space under con- Net Absorption Deliveries struction at the end of the second quarter 2010. 3.0 Some of the notable 2010 deliveries include: 1111 Medical 2.40 Plaza Dr, a 30,000-square-foot facility that delivered in first quar- 2.5 2.13 ter 2010 and is now 85% occupied, and 1235 Lake Pointe Pky, 2.0 1.88 1.57 a 26,594-square-foot building that delivered in first quarter 2010 1.5 1.41 Millions SF and is now 8% occupied. 1.12 1.0 The largest projects underway at the end of second quarter 0.62 0.51 0.46 2010 were MainPlace, a 972,474-square-foot building with 10% 0.5 0.11 0.14 0.03 0.08 0.08 of its space pre-leased, and Hess Tower, an 844,763-square-foot 0.0 facility that is 100% pre-leased. (0.5) (0.31) Inventory (1.0) (0.56) Total office inventory in the Houston market area amounted 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q to 260,394,918 square feet in 4,924 buildings as of the end of Source: CoStar Property• the second quarter 2010. The Class-A office sector consisted of 108,155,936 square feet in 351 projects. There were 2,120 Class- office sales transactions with a total volume of $112,350,000. B buildings totaling 111,567,709 square feet, and the Class-C The price per square foot averaged $147.43. In the same first sector consisted of 40,671,273 square feet in 2,453 buildings. three months of 2009, the market posted two transactions with a Within the Office market there were 415 owner-occupied build- total volume of $5,500,000. The price per square foot averaged ings accounting for 24,279,700 square feet of office space. $49.08. 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 Anadarko Houston office sales figures fell during the first quarter 2010 in Tower in The Woodlands. This 807,586-square-foot office build- terms of dollar volume compared to the fourth quarter of 2009. ing sold for $166,000,000, or $205.55 per square foot. The prop- In the first quarter, five office transactions closed with a erty sold on 12/28/2009. total volume of $63,350,000. The five buildings totaled 518,596 square feet and the average price per square foot equated to Reports compiled by: Alfredo Negron CoStar Research Manager, $114,63 per square foot. That compares to five transactions Meghan Drennan, Leslie Kon and Elizabeth Wilkinson, CoStar Research totaling $63,950,000 in the fourth quarter 2009. The total square Associates. footage in the fourth quarter was 548,912 square feet for an aver- age price per square foot of $96.90. Total office building sales activity in 2010 was up compared to 2009. In the first three months of 2010, the market saw six ©2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 3
  • HOUSTON – MID-YEAR 2010 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 Austin County Austin County 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 Greenspoint/IAH Greenspoint/N Belt West Northeast Near Northeast Near Northwest North Loop West Northwest Far Northwest Near Richmond/Fountainview Richmond/Fountainview San Felipe/Voss San Felipe/Voss San Jacinto County San Jacinto County 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 ©2010 COSTAR GROUP, INC.
  • MID-YEAR 2010 – 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 7% Natural Resources & Houston U.S. Average 4% 9% Mining 5.0% Construction 4.0% Manufacturing 15% 3.0% Trade, Transportation & Utilities 2.0% 20% Information Percent Growth 1.0% Financial Activities 4% 0.0% Professional & Business Services -1.0% Education & Health 1% Services -2.0% 9% Leisure & Hospitality -3.0% 5% Other Services -4.0% Government 12% -5.0% 14% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 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 -9.80% 5.80% -15.60% 5.0% 4.0% Boston -3.50% 2.30% -5.80% 3.0% Chicago -10.50% 3.30% -13.80% 2.0% Percent Growth Dallas/Ft Worth -0.80% 6.10% -6.90% 1.0% 0.0% Denver -3.70% 4.30% -8.00% -1.0% Los Angeles -10.00% 2.60% -12.60% -2.0% New York City -3.00% 1.30% -4.30% -3.0% -4.0% Seattle/Puget Sound -2.40% 8.10% -10.50% -5.0% Tampa/St Petersburg -12.70% 6.00% -18.70% -6.0% Washington -2.60% 6.80% -9.40% -7.0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Houston -1.70% 6.90% -8.60% 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 12.0% 10.0% Percent Unemployment 8.0% 6.0% 4.0% 2.0% 0.0% 2000 2000 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 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. ©2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 5
  • HOUSTON – MID-YEAR 2010 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% 2016 3.9% 50,000-74,999 SF 1.4% 2015 11.1% 25,000-49,999 SF 3.7% 2014 11.4% 10,000-24,999 SF 11.4% 2013 12.5% 5,000-9,999 SF 13.9% 2012 12.0% 2,500-4,999 SF 20.4% Up to 2,499 SF 46.8% 2011 13.6% 0% 10% 20% 30% 40% 50% 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 19.9% Law Firms 426.6 Finance/Ins/RE 15.8% Retailers/Wholes 363.8 Manufacturing 9.1% Services 333.1 Retailers/Wholes 8.9% Agri/Mining/Util 330.0 Business-Service 8.5% Transportation 301.6 Law Firms 8.4% Finance/Ins/RE 285.6 Services 7.9% Business-Service 263.7 Engineers/Archit 7.2% Communications 254.4 Medical 6.6% Engineers/Archit 254.3 Government 2.2% Government 253.0 Transportation 2.1% Accountants 245.6 Communications 1.9% Manufacturing 244.9 Accountants 1.5% Medical 175.7 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 ©2010 COSTAR GROUP, INC.
  • MID-YEAR 2010 – 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® ©2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 7
  • HOUSTON – MID-YEAR 2010 Houston Office Market INVENTORY & DEVELOPMENT Historical Deliveries 1982 - 2010 Deliveries Average Delivered SF 30.0 24.8 25.0 23.2 20.0 Millions of SF 14.1 15.0 10.0 6.2 6.7 5.7 5.7 4.7 4.7 5.0 3.9 3.4 3.4 3.8 3.0 3.0 2.7 1.4 1.7 2.0 1.5 1.7 0.9 1.0 1.1 0.9 1.3 0.6 0.4 0.6 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 2010 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 2 1,817,237 942,010 51.8% 106,879 908,618 FM 1960 2 179,000 23,000 12.8% 26,494 89,500 E Fort Bend Co/Sugar Land 1 152,619 0 0.0% 29,939 152,619 Katy Freeway 1 80,977 29,961 37.0% 68,846 80,977 Woodlands 2 75,011 0 0.0% 32,630 37,505 NASA/Clear Lake 2 19,632 0 0.0% 30,485 9,816 South Main/Medical Center 1 9,646 5,402 56.0% 56,081 9,646 San Jacinto County 0 0 0 0.0% 2,882 0 Bellaire 0 0 0 0.0% 74,610 0 Greenway Plaza 0 0 0 0.0% 56,814 0 All Other 0 0 0 0.0% 50,847 0 Totals 11 2,334,122 1,000,373 42.9% 52,883 212,193 Source: CoStar Property® Recent Deliveries Future Deliveries Leased & Un-Leased SF in Deliveries Since 2006 Preleased & Un-Leased SF in Properties Scheduled to Deliver Leased Un-Leased Preleased Un-Leased 8.0 1,200 7.0 1,000 6.0 800 T Thousands of SF Millions of SF 5.0 4.0 600 3.0 400 2.0 200 1.0 0.0 0 2006 2007 2008 2009 2010 2010 3q 2010 4q 2011 1q 2011 2q Source: CoStar Property® Source: CoStar Property® 8 THE COSTAR OFFICE REPORT ©2010 COSTAR GROUP, INC.
  • MID-YEAR 2010 – HOUSTON Houston Office Market INVENTORY & DEVELOPMENT Historical Construction Starts & Deliveries Square Footage Per Quarter Starting and Completing Construction Construction Starts Deliveries 3.0 2.5 2.40 2.09 2.09 2.11 2.07 2.13 2.0 1.88 1.74 1.75 Millions of SF 1.51 1.57 1.49 1.40 1.41 1.5 1.17 0.95 1.0 0.70 0.70 0.62 0.5 0.34 0.26 0.20 0.16 0.14 0.16 0.11 0.08 0.04 0.0 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 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 13 216,877 108,117 49.9% $26.17 0 216,877 50,000 SF - 99,999 SF 0 0 0 0.0% $0.00 0 0 100,000 SF - 249,999 SF 0 0 0 0.0% $0.00 0 0 250,000 SF - 499,999 SF 0 0 0 0.0% $0.00 0 0 >= 500,000 SF 0 0 0 0.0% $0.00 0 0 Source: CoStar Property® Recent Development by Tenancy Existing Inventory Comparison Based on RBA Developed for Single & Multi Tenant Use Based on Total RBA 2010 Deliveries Currently Under Construction By Class By Space Type 16% 18% 0% 36% 42% 64% 42% 100% 82% Class A Class B Class C Multi Single Multi Single Multi Single Source: CoStar Property® Source: CoStar Property® ©2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 9
  • HOUSTON – MID-YEAR 2010 Houston Office Market INVENTORY & DEVELOPMENT ������������������������������ ������������������������������� ���� ��������������������� ���� �������������������� ���� �������������� ����������� ��������� ����������� ������������������������� ����������� ��������������������� ����� ������ ����� ������ ����� ������ ���������� � ���������� � ���������� � ������� � ������� � ������� � ���������� ��� ���������� �� ���������� ��� ������������� ������ ������������� ������ ������������� ������ ���������������������������������� ���������������������������������� ��������������������������������� ������������ ������������������ ������������ ������������������ ������������ ������������������� ������������ �������������������� ������������ ����������������������� ������������ ������������������������ ����������� ��� ����������� ����������� ��� ����������� ��� ����������� ��� ����������� ��� � ����������� ��� � � ���� ���������������� ���� �������������������������� ���� �������������������������� ����������� ������������������������� ����������� ������������������������� ����������� ������������������������� ����� ������ ����� ������ ����� ������ ���������� � ���������� � ���������� � ������� � ������� � ������� � ���������� ��� ���������� ��� ���������� ��� ������������� ������ ������������� ������ ������������� ���������� ���������������������������������� ���������������������������������� ���������������������������������� ������������ ������������������ ������������ ������������������� ������������ ������������������ ������������ ��������������� ������������ ��������������������� ������������ ��������������������� ����������� ��� ����������� ��� ����������� ��� ����������� ��� ����������� ��� ����������� ��� � � � ���� �������������������������������� ���� ������������������� ���� ������������������ ����������� ��������������� ����������� ������������������������� ����������� ������������������������� ����� ������ ����� ����� ����� ����� ���������� � ���������� � ���������� � ������� � ������� � ������� � ���������� �� ���������� ��� ���������� �� ������������� ������ ������������� ������ ������������� ���������� ��������������������������������� ��������������������������������� ���������������������������������� ������������ ������������������� ������������ ������������������� ������������ ������������������ ������������ ������������������ ������������ ������������ ������������ ��� ����������� ��� ����������� ��� ����������� ��� ����������� ��� ����������� ��� ����������� ��� � � � ����� ������������������� ����������� ������������ ����� ����� ���������� � ������� � ���������� ��� ������������� ������ ���������������������������������� ������������ ������������������ ������������ ���������������������� ����������� ��� ����������� ��� � ������������������������ 10 THE COSTAR OFFICE REPORT ©2010 COSTAR GROUP, INC.
  • MID-YEAR 2010 – HOUSTON Houston Office Market INVENTORY & DEVELOPMENT ���������������������������������������� ������������������������������� ���� ��������� ���� ���������� ���� ��������������������� ����������� �������� ����������� �������� ����������� ������� ����� ������� ����� ������� ����� ������� ���������� �� ���������� �� ���������� � ������� � ������� � ������� � ����������� ��� ����������� ���� ����������� �� ������������� ���������� ������������� ��� ������������� ���������� ��������������������������������� ���������������������������������� ���������������������������������� ������������ ������������������ ������������ ������������������ ������������ ������������������� ������������ ������������������� ������������ ���������������� ������������ ����������������������������� ����������� ������������������� ����������� ��������������� ������ ����������� �������������������������� ����������� ������� ����������� ��� � � ����������� ��� � ���� ������������������������� ���� ������������������������������� ���� ����������������������� ����������� ������������������������� ����������� ������������ ����������� ��������� ����� ������� ����� ������ ����� ������ ���������� � ���������� � ���������� � ������� � ������� � ������� � ����������� �� ����������� ��� ����������� �� ������������� ������ ������������� ������ ������������� ���������� ���������������������������������� ��������������������������������� ��������������������������������� ������������ ������������������ ������������ ������������������ ������������ ������������������� ������������ ������������������������ ������������ ���������������������� ������������ ����������������������� ����������� ���������������� ����������� ��������������������������� ����������� ��� ����������� ������������������������� ����������� ���������������������� ����������� ��� � ������������� � � ���� �������������������������� ���� ������������ ���� �������������������������� ����������� ��������������� ����������� ��������� ����������� ��������������� ����� ������ ����� ������ ����� ����� ���������� � ���������� � ���������� � ������� � ������� � ������� � ����������� �� ����������� �� ����������� �� ������������� ������ ������������� ������ ������������� ������ ��������������������������������� ��������������������������������� ��������������������������������� ������������ ������������������ ������������ ������������������� ������������ ������������������ ������������ �������������������������������� ������������ ���������������������������� ������������ �������������������������������� ��� ����������� ��� ��� ����������� ��� ����������� ��� ����������� ��� ����������� ��� � ����������� ��� � � ������������������������ ©2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 11
  • HOUSTON – MID-YEAR 2010 Houston Office Market FIGURES AT A GLANCE Class A Market Statistics Mid-Year 2010 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Austin County 0 0 0 0 0.0% 0 0 0 $0.00 Bellaire 11 1,489,020 119,689 139,808 9.4% (2,060) 0 0 $24.09 Downtown 34 30,755,086 2,310,634 2,827,003 9.2% (223,841) 0 1,817,237 $34.47 E Fort Bend Co/Sugar Land 22 3,917,805 1,289,884 1,303,553 33.3% (483,946) 0 152,619 $27.93 FM 1960 18 3,920,273 1,954,379 1,967,004 50.2% 33,464 0 156,000 $26.14 Greenway Plaza 17 6,276,698 987,506 1,134,828 18.1% (67,415) 0 0 $27.65 Gulf Freeway/Pasadena 1 52,362 16,829 16,829 32.1% 0 0 0 $28.14 I-10 East 0 0 0 0 0.0% 0 0 0 $0.00 Katy Freeway 74 15,844,079 2,687,257 2,734,199 17.3% 124,359 0 80,977 $28.02 Kingwood/Humble 2 134,000 25,904 25,904 19.3% 0 0 0 $27.50 NASA/Clear Lake 12 1,228,136 167,547 173,761 14.1% 2,437 0 0 $22.88 North Belt 21 5,074,057 245,088 315,308 6.2% 29,208 0 0 $19.08 Northeast Near 0 0 0 0 0.0% 0 0 0 $0.00 Northwest 25 4,185,106 1,353,378 1,354,782 32.4% 52,852 0 0 $25.38 Richmond/Fountainview 0 0 0 0 0.0% 0 0 0 $0.00 San Felipe/Voss 3 1,720,222 235,921 279,277 16.2% (30,188) 0 0 $28.63 San Jacinto County 0 0 0 0 0.0% 0 0 0 $0.00 South 3 188,500 92,600 92,600 49.1% 5,500 0 0 $26.63 South Hwy 35 0 0 0 0 0.0% 0 0 0 $0.00 South Main/Medical Center 14 3,916,733 362,141 362,141 9.2% (11,113) 0 0 $30.71 Southwest 8 1,849,149 467,107 519,163 28.1% (17,089) 0 0 $15.97 West Loop 43 16,608,001 1,449,183 1,692,838 10.2% 87,118 0 0 $29.30 Westchase 26 7,622,238 1,333,388 1,393,485 18.3% 81,243 0 0 $30.32 Woodlands 17 3,374,471 498,657 539,308 16.0% 12,993 0 0 $29.14 Totals 351 108,155,936 15,597,092 16,871,791 15.6% (406,478) 0 2,206,833 $29.06 Source: CoStar Property® Class B Market Statistics Mid-Year 2010 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Austin County 3 16,460 0 0 0.0% 0 0 0 $0.00 Bellaire 21 2,579,916 67,315 68,457 2.7% 9,806 0 0 $18.39 Downtown 136 17,998,431 2,310,688 2,415,446 13.4% (88,308) 0 0 $23.97 E Fort Bend Co/Sugar Land 190 3,971,409 499,491 503,424 12.7% 99,956 101,954 0 $21.71 FM 1960 287 7,680,191 1,437,379 1,496,396 19.5% 102,764 6,296 23,000 $17.11 Greenway Plaza 45 4,132,200 296,063 297,373 7.2% (21,264) 0 0 $21.15 Gulf Freeway/Pasadena 132 3,352,621 444,908 469,397 14.0% 82,067 24,831 0 $20.95 I-10 East 28 852,088 123,874 133,134 15.6% 14,182 0 0 $14.37 Katy Freeway 195 11,213,282 980,372 1,064,393 9.5% 317,934 3,500 0 $18.59 Kingwood/Humble 57 1,790,133 168,356 172,097 9.6% 51,166 22,929 0 $20.03 NASA/Clear Lake 140 5,257,383 401,013 426,929 8.1% 31,011 27,367 19,632 $20.45 North Belt 71 6,559,080 1,133,744 1,288,780 19.6% (55,459) 0 0 $16.13 Northeast Near 24 667,123 88,369 88,369 13.2% 25,473 0 0 $17.75 Northwest 153 9,296,176 1,676,569 1,710,377 18.4% (112,307) 0 0 $15.13 Richmond/Fountainview 22 920,100 102,307 102,307 11.1% 4,599 0 0 $14.95 San Felipe/Voss 37 3,585,757 284,045 308,384 8.6% 33,623 0 0 $19.16 San Jacinto County 1 2,882 0 0 0.0% 0 0 0 $0.00 South 49 994,913 146,054 162,709 16.4% 9,395 0 0 $22.48 South Hwy 35 17 188,024 5,030 5,030 2.7% 895 0 0 $78.38 South Main/Medical Center 55 3,904,671 367,803 372,603 9.5% (106,550) 0 9,646 $21.44 Southwest 121 7,608,295 1,390,789 1,553,582 20.4% 12,552 0 0 $15.57 West Loop 65 5,976,107 1,212,346 1,237,389 20.7% 98,970 0 0 $19.89 Westchase 64 7,069,179 1,000,884 1,076,741 15.2% (98,033) 0 0 $19.53 Woodlands 207 5,951,288 594,888 699,866 11.8% 32,907 30,000 75,011 $21.61 Totals 2,120 111,567,709 14,732,287 15,653,183 14.0% 445,379 216,877 127,289 $19.04 Source: CoStar Property® 12 THE COSTAR OFFICE REPORT ©2010 COSTAR GROUP, INC.
  • MID-YEAR 2010 – HOUSTON Houston Office Market FIGURES AT A GLANCE Class C Market Statistics Mid-Year 2010 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Austin County 6 22,630 0 0 0.0% 0 0 0 $0.00 Bellaire 35 929,936 134,957 134,957 14.5% (5,840) 0 0 $16.88 Downtown 346 6,396,110 1,540,482 1,540,482 24.1% 37,614 0 0 $16.76 E Fort Bend Co/Sugar Land 86 1,032,689 68,736 68,736 6.7% (1,283) 0 0 $21.18 FM 1960 231 2,600,063 243,252 245,715 9.5% 44,617 0 0 $15.22 Greenway Plaza 157 2,033,330 312,990 312,990 15.4% (14,253) 0 0 $17.81 Gulf Freeway/Pasadena 225 2,774,366 290,276 300,430 10.8% (25,488) 0 0 $14.28 I-10 East 56 484,916 27,748 27,748 5.7% (2,083) 0 0 $11.35 Katy Freeway 175 3,510,400 294,014 296,614 8.4% (4,051) 0 0 $14.76 Kingwood/Humble 64 660,358 26,163 26,163 4.0% 1,095 0 0 $16.09 NASA/Clear Lake 134 2,233,206 198,585 211,632 9.5% (581) 0 0 $16.71 North Belt 62 1,964,030 263,028 267,714 13.6% (20,205) 0 0 $13.06 Northeast Near 77 801,599 52,941 52,941 6.6% (15,606) 0 0 $13.96 Northwest 213 2,961,217 109,179 109,179 3.7% 70,509 0 0 $13.63 Richmond/Fountainview 66 1,257,020 104,694 104,694 8.3% 22,223 0 0 $14.49 San Felipe/Voss 11 234,509 21,668 21,668 9.2% 232 0 0 $15.87 San Jacinto County 0 0 0 0 0.0% 0 0 0 $0.00 South 70 620,236 63,044 63,044 10.2% 13,506 0 0 $14.41 South Hwy 35 23 132,726 4,176 4,176 3.1% 500 0 0 $0.00 South Main/Medical Center 130 3,338,736 138,485 138,485 4.1% 43,004 0 0 $18.82 Southwest 148 4,022,223 352,407 352,407 8.8% 10,004 0 0 $12.22 West Loop 21 755,047 9,874 9,874 1.3% 13,520 0 0 $0.00 Westchase 30 1,083,769 68,104 68,104 6.3% (4,511) 0 0 $15.11 Woodlands 87 822,157 59,359 59,359 7.2% (8,755) 0 0 $17.69 Totals 2,453 40,671,273 4,384,162 4,417,112 10.9% 154,168 0 0 $15.40 Source: CoStar Property® Total Office Market Statistics Mid-Year 2010 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Austin County 9 39,090 0 0 0.0% 0 0 0 $0.00 Bellaire 67 4,998,872 321,961 343,222 6.9% 1,906 0 0 $21.06 Downtown 516 55,149,627 6,161,804 6,782,931 12.3% (274,535) 0 1,817,237 $28.97 E Fort Bend Co/Sugar Land 298 8,921,903 1,858,111 1,875,713 21.0% (385,273) 101,954 152,619 $25.12 FM 1960 536 14,200,527 3,635,010 3,709,115 26.1% 180,845 6,296 179,000 $19.66 Greenway Plaza 219 12,442,228 1,596,559 1,745,191 14.0% (102,932) 0 0 $25.10 Gulf Freeway/Pasadena 358 6,179,349 752,013 786,656 12.7% 56,579 24,831 0 $18.54 I-10 East 84 1,337,004 151,622 160,882 12.0% 12,099 0 0 $13.84 Katy Freeway 444 30,567,761 3,961,643 4,095,206 13.4% 438,242 3,500 80,977 $23.10 Kingwood/Humble 123 2,584,491 220,423 224,164 8.7% 52,261 22,929 0 $20.31 NASA/Clear Lake 286 8,718,725 767,145 812,322 9.3% 32,867 27,367 19,632 $20.20 North Belt 154 13,597,167 1,641,860 1,871,802 13.8% (46,456) 0 0 $16.23 Northeast Near 101 1,468,722 141,310 141,310 9.6% 9,867 0 0 $16.51 Northwest 391 16,442,499 3,139,126 3,174,338 19.3% 11,054 0 0 $19.19 Richmond/Fountainview 88 2,177,120 207,001 207,001 9.5% 26,822 0 0 $14.77 San Felipe/Voss 51 5,540,488 541,634 609,329 11.0% 3,667 0 0 $22.56 San Jacinto County 1 2,882 0 0 0.0% 0 0 0 $0.00 South 122 1,803,649 301,698 318,353 17.7% 28,401 0 0 $21.24 South Hwy 35 40 320,750 9,206 9,206 2.9% 1,395 0 0 $78.38 South Main/Medical Center 199 11,160,140 868,429 873,229 7.8% (74,659) 0 9,646 $24.08 Southwest 277 13,479,667 2,210,303 2,425,152 18.0% 5,467 0 0 $15.10 West Loop 129 23,339,155 2,671,403 2,940,101 12.6% 199,608 0 0 $26.05 Westchase 120 15,775,186 2,402,376 2,538,330 16.1% (21,301) 0 0 $25.93 Woodlands 311 10,147,916 1,152,904 1,298,533 12.8% 37,145 30,000 75,011 $24.32 Totals 4,924 260,394,918 34,713,541 36,942,086 14.2% 193,069 216,877 2,334,122 $23.07 Source: CoStar Property® ©2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 13
  • HOUSTON – MID-YEAR 2010 Houston Office Market FIGURES AT A GLANCE Class A Submarket Statistics Mid-Year 2010 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Austin County 0 0 0 0 0.0% 0 0 0 $0.00 Bellaire 11 1,489,020 119,689 139,808 9.4% (2,060) 0 0 $24.09 CBD 30 29,260,087 2,099,935 2,495,427 8.5% (241,856) 0 1,817,237 $35.11 E Fort Bend Co/Sugar Land 22 3,917,805 1,289,884 1,303,553 33.3% (483,946) 0 152,619 $27.93 FM 1960/Champions 1 150,000 0 0 0.0% 0 0 0 $0.00 FM 1960/Hwy 249 15 3,423,258 1,903,183 1,903,183 55.6% 39,417 0 156,000 $26.63 FM 1960/I-45 North 2 347,015 51,196 63,821 18.4% (5,953) 0 0 $19.96 Galleria/Uptown 29 12,202,363 1,207,215 1,366,992 11.2% 15,766 0 0 $29.85 Greenspoint/IAH 4 680,397 72,850 72,850 10.7% 8,537 0 0 $20.96 Greenspoint/N Belt West 17 4,393,660 172,238 242,458 5.5% 20,671 0 0 $18.67 Greenway Plaza 17 6,276,698 987,506 1,134,828 18.1% (67,415) 0 0 $27.65 Gulf Freeway/Pasadena 1 52,362 16,829 16,829 32.1% 0 0 0 $28.14 I-10 East 0 0 0 0 0.0% 0 0 0 $0.00 Katy Freeway East 14 3,555,614 556,567 579,794 16.3% 66,450 0 0 $34.02 Katy Freeway West 60 12,288,465 2,130,690 2,154,405 17.5% 57,909 0 80,977 $26.81 Kingwood/Humble 2 134,000 25,904 25,904 19.3% 0 0 0 $27.50 Midtown 4 1,494,999 210,699 331,576 22.2% 18,015 0 0 $26.93 NASA/Clear Lake 12 1,228,136 167,547 173,761 14.1% 2,437 0 0 $22.88 North Loop West 5 1,054,673 297,517 298,921 28.3% 14,486 0 0 $24.45 Northeast Near 0 0 0 0 0.0% 0 0 0 $0.00 Northwest Far 19 2,893,049 1,055,861 1,055,861 36.5% 38,366 0 0 $25.64 Northwest Near 1 237,384 0 0 0.0% 0 0 0 $0.00 Post Oak Park 9 2,522,601 106,108 148,143 5.9% 17,604 0 0 $29.53 Richmond/Fountainview 0 0 0 0 0.0% 0 0 0 $0.00 Riverway 5 1,883,037 135,860 177,703 9.4% 53,748 0 0 $25.34 San Felipe/Voss 3 1,720,222 235,921 279,277 16.2% (30,188) 0 0 $28.63 San Jacinto County 0 0 0 0 0.0% 0 0 0 $0.00 South 3 188,500 92,600 92,600 49.1% 5,500 0 0 $26.63 South Hwy 35 0 0 0 0 0.0% 0 0 0 $0.00 South Main/Medical Center 14 3,916,733 362,141 362,141 9.2% (11,113) 0 0 $30.71 Southwest Beltway 8 3 573,152 160,028 180,747 31.5% (10,768) 0 0 $20.40 Southwest/Hillcroft 5 1,275,997 307,079 338,416 26.5% (6,321) 0 0 $14.72 Westchase 26 7,622,238 1,333,388 1,393,485 18.3% 81,243 0 0 $30.32 Woodlands 17 3,374,471 498,657 539,308 16.0% 12,993 0 0 $29.14 Totals 351 108,155,936 15,597,092 16,871,791 15.6% (406,478) 0 2,206,833 $29.06 Source: CoStar Property® 14 THE COSTAR OFFICE REPORT ©2010 COSTAR GROUP, INC.
  • MID-YEAR 2010 – HOUSTON Houston Office Market FIGURES AT A GLANCE Class B Submarket Statistics Mid-Year 2010 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Austin County 3 16,460 0 0 0.0% 0 0 0 $0.00 Bellaire 21 2,579,916 67,315 68,457 2.7% 9,806 0 0 $18.39 CBD 48 13,867,118 1,928,839 2,026,848 14.6% (51,952) 0 0 $24.06 E Fort Bend Co/Sugar Land 190 3,971,409 499,491 503,424 12.7% 99,956 101,954 0 $21.71 FM 1960/Champions 79 2,651,241 629,799 634,553 23.9% 17,449 0 0 $14.43 FM 1960/Hwy 249 145 3,318,582 544,883 573,523 17.3% 70,218 6,296 0 $20.48 FM 1960/I-45 North 63 1,710,368 262,697 288,320 16.9% 15,097 0 23,000 $16.39 Galleria/Uptown 27 2,880,590 689,843 698,257 24.2% 55,264 0 0 $19.55 Greenspoint/IAH 25 1,880,570 180,777 180,777 9.6% (46,991) 0 0 $17.78 Greenspoint/N Belt West 46 4,678,510 952,967 1,108,003 23.7% (8,468) 0 0 $15.73 Greenway Plaza 45 4,132,200 296,063 297,373 7.2% (21,264) 0 0 $21.15 Gulf Freeway/Pasadena 132 3,352,621 444,908 469,397 14.0% 82,067 24,831 0 $20.95 I-10 East 28 852,088 123,874 133,134 15.6% 14,182 0 0 $14.37 Katy Freeway East 66 3,215,286 275,135 282,496 8.8% 29,882 0 0 $19.11 Katy Freeway West 129 7,997,996 705,237 781,897 9.8% 288,052 3,500 0 $18.45 Kingwood/Humble 57 1,790,133 168,356 172,097 9.6% 51,166 22,929 0 $20.03 Midtown 88 4,131,313 381,849 388,598 9.4% (36,356) 0 0 $23.49 NASA/Clear Lake 140 5,257,383 401,013 426,929 8.1% 31,011 27,367 19,632 $20.45 North Loop West 63 3,706,482 909,080 932,016 25.1% (50,318) 0 0 $15.45 Northeast Near 24 667,123 88,369 88,369 13.2% 25,473 0 0 $17.75 Northwest Far 70 4,674,272 611,015 621,887 13.3% (52,527) 0 0 $14.78 Northwest Near 20 915,422 156,474 156,474 17.1% (9,462) 0 0 $15.04 Post Oak Park 24 2,055,286 419,865 427,829 20.8% 18,373 0 0 $20.05 Richmond/Fountainview 22 920,100 102,307 102,307 11.1% 4,599 0 0 $14.95 Riverway 14 1,040,231 102,638 111,303 10.7% 25,333 0 0 $20.79 San Felipe/Voss 37 3,585,757 284,045 308,384 8.6% 33,623 0 0 $19.16 San Jacinto County 1 2,882 0 0 0.0% 0 0 0 $0.00 South 49 994,913 146,054 162,709 16.4% 9,395 0 0 $22.48 South Hwy 35 17 188,024 5,030 5,030 2.7% 895 0 0 $78.38 South Main/Medical Center 55 3,904,671 367,803 372,603 9.5% (106,550) 0 9,646 $21.44 Southwest Beltway 8 95 5,830,120 974,048 1,136,841 19.5% (2,568) 0 0 $15.45 Southwest/Hillcroft 26 1,778,175 416,741 416,741 23.4% 15,120 0 0 $15.97 Westchase 64 7,069,179 1,000,884 1,076,741 15.2% (98,033) 0 0 $19.53 Woodlands 207 5,951,288 594,888 699,866 11.8% 32,907 30,000 75,011 $21.61 Totals 2,120 111,567,709 14,732,287 15,653,183 14.0% 445,379 216,877 127,289 $19.04 Source: CoStar Property® ©2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 15
  • HOUSTON – MID-YEAR 2010 Houston Office Market FIGURES AT A GLANCE Class C Submarket Statistics Mid-Year 2010 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Austin County 6 22,630 0 0 0.0% 0 0 0 $0.00 Bellaire 35 929,936 134,957 134,957 14.5% (5,840) 0 0 $16.88 CBD 66 3,247,863 843,116 843,116 26.0% 39,188 0 0 $16.22 E Fort Bend Co/Sugar Land 86 1,032,689 68,736 68,736 6.7% (1,283) 0 0 $21.18 FM 1960/Champions 91 1,003,147 68,581 68,581 6.8% 28,492 0 0 $13.66 FM 1960/Hwy 249 106 1,052,812 87,612 90,075 8.6% 4,287 0 0 $15.23 FM 1960/I-45 North 34 544,104 87,059 87,059 16.0% 11,838 0 0 $17.84 Galleria/Uptown 6 311,749 0 0 0.0% 0 0 0 $0.00 Greenspoint/IAH 18 295,979 53,973 53,973 18.2% 270 0 0 $14.35 Greenspoint/N Belt West 44 1,668,051 209,055 213,741 12.8% (20,475) 0 0 $12.81 Greenway Plaza 157 2,033,330 312,990 312,990 15.4% (14,253) 0 0 $17.81 Gulf Freeway/Pasadena 225 2,774,366 290,276 300,430 10.8% (25,488) 0 0 $14.28 I-10 East 56 484,916 27,748 27,748 5.7% (2,083) 0 0 $11.35 Katy Freeway East 124 2,688,657 203,607 206,207 7.7% 7,112 0 0 $14.60 Katy Freeway West 51 821,743 90,407 90,407 11.0% (11,163) 0 0 $15.16 Kingwood/Humble 64 660,358 26,163 26,163 4.0% 1,095 0 0 $16.09 Midtown 280 3,148,247 697,366 697,366 22.2% (1,574) 0 0 $17.82 NASA/Clear Lake 134 2,233,206 198,585 211,632 9.5% (581) 0 0 $16.71 North Loop West 111 1,297,352 27,480 27,480 2.1% 6,906 0 0 $15.28 Northeast Near 77 801,599 52,941 52,941 6.6% (15,606) 0 0 $13.96 Northwest Far 75 1,087,484 47,271 47,271 4.3% 53,720 0 0 $13.63 Northwest Near 27 576,381 34,428 34,428 6.0% 9,883 0 0 $12.25 Post Oak Park 11 283,933 0 0 0.0% 0 0 0 $0.00 Richmond/Fountainview 66 1,257,020 104,694 104,694 8.3% 22,223 0 0 $14.49 Riverway 4 159,365 9,874 9,874 6.2% 13,520 0 0 $0.00 San Felipe/Voss 11 234,509 21,668 21,668 9.2% 232 0 0 $15.87 San Jacinto County 0 0 0 0 0.0% 0 0 0 $0.00 South 70 620,236 63,044 63,044 10.2% 13,506 0 0 $14.41 South Hwy 35 23 132,726 4,176 4,176 3.1% 500 0 0 $0.00 South Main/Medical Center 130 3,338,736 138,485 138,485 4.1% 43,004 0 0 $18.82 Southwest Beltway 8 78 1,793,848 109,504 109,504 6.1% (13,393) 0 0 $12.80 Southwest/Hillcroft 70 2,228,375 242,903 242,903 10.9% 23,397 0 0 $11.88 Westchase 30 1,083,769 68,104 68,104 6.3% (4,511) 0 0 $15.11 Woodlands 87 822,157 59,359 59,359 7.2% (8,755) 0 0 $17.69 Totals 2,453 40,671,273 4,384,162 4,417,112 10.9% 154,168 0 0 $15.40 Source: CoStar Property® 16 THE COSTAR OFFICE REPORT ©2010 COSTAR GROUP, INC.
  • MID-YEAR 2010 – HOUSTON Houston Office Market FIGURES AT A GLANCE Total Office Submarket Statistics Mid-Year 2010 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Austin County 9 39,090 0 0 0.0% 0 0 0 $0.00 Bellaire 67 4,998,872 321,961 343,222 6.9% 1,906 0 0 $21.06 CBD 144 46,375,068 4,871,890 5,365,391 11.6% (254,620) 0 1,817,237 $29.79 E Fort Bend Co/Sugar Land 298 8,921,903 1,858,111 1,875,713 21.0% (385,273) 101,954 152,619 $25.12 FM 1960/Champions 171 3,804,388 698,380 703,134 18.5% 45,941 0 0 $14.32 FM 1960/Hwy 249 266 7,794,652 2,535,678 2,566,781 32.9% 113,922 6,296 156,000 $23.35 FM 1960/I-45 North 99 2,601,487 400,952 439,200 16.9% 20,982 0 23,000 $17.02 Galleria/Uptown 62 15,394,702 1,897,058 2,065,249 13.4% 71,030 0 0 $27.20 Greenspoint/IAH 47 2,856,946 307,600 307,600 10.8% (38,184) 0 0 $17.92 Greenspoint/N Belt West 107 10,740,221 1,334,260 1,564,202 14.6% (8,272) 0 0 $15.84 Greenway Plaza 219 12,442,228 1,596,559 1,745,191 14.0% (102,932) 0 0 $25.10 Gulf Freeway/Pasadena 358 6,179,349 752,013 786,656 12.7% 56,579 24,831 0 $18.54 I-10 East 84 1,337,004 151,622 160,882 12.0% 12,099 0 0 $13.84 Katy Freeway East 204 9,459,557 1,035,309 1,068,497 11.3% 103,444 0 0 $23.51 Katy Freeway West 240 21,108,204 2,926,334 3,026,709 14.3% 334,798 3,500 80,977 $22.98 Kingwood/Humble 123 2,584,491 220,423 224,164 8.7% 52,261 22,929 0 $20.31 Midtown 372 8,774,559 1,289,914 1,417,540 16.2% (19,915) 0 0 $23.27 NASA/Clear Lake 286 8,718,725 767,145 812,322 9.3% 32,867 27,367 19,632 $20.20 North Loop West 179 6,058,507 1,234,077 1,258,417 20.8% (28,926) 0 0 $17.62 Northeast Near 101 1,468,722 141,310 141,310 9.6% 9,867 0 0 $16.51 Northwest Far 164 8,654,805 1,714,147 1,725,019 19.9% 39,559 0 0 $20.78 Northwest Near 48 1,729,187 190,902 190,902 11.0% 421 0 0 $14.30 Post Oak Park 44 4,861,820 525,973 575,972 11.8% 35,977 0 0 $23.30 Richmond/Fountainview 88 2,177,120 207,001 207,001 9.5% 26,822 0 0 $14.77 Riverway 23 3,082,633 248,372 298,880 9.7% 92,601 0 0 $23.68 San Felipe/Voss 51 5,540,488 541,634 609,329 11.0% 3,667 0 0 $22.56 San Jacinto County 1 2,882 0 0 0.0% 0 0 0 $0.00 South 122 1,803,649 301,698 318,353 17.7% 28,401 0 0 $21.24 South Hwy 35 40 320,750 9,206 9,206 2.9% 1,395 0 0 $78.38 South Main/Medical Center 199 11,160,140 868,429 873,229 7.8% (74,659) 0 9,646 $24.08 Southwest Beltway 8 176 8,197,120 1,243,580 1,427,092 17.4% (26,729) 0 0 $15.50 Southwest/Hillcroft 101 5,282,547 966,723 998,060 18.9% 32,196 0 0 $14.47 Westchase 120 15,775,186 2,402,376 2,538,330 16.1% (21,301) 0 0 $25.93 Woodlands 311 10,147,916 1,152,904 1,298,533 12.8% 37,145 30,000 75,011 $24.32 Totals 4,924 260,394,918 34,713,541 36,942,086 14.2% 193,069 216,877 2,334,122 $23.07 Source: CoStar Property® ©2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 17
  • HOUSTON – MID-YEAR 2010 Houston Office Market FIGURES AT A GLANCE Class A Market Statistics Mid-Year 2010 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 30 29,260,087 2,099,935 2,495,427 8.5% (241,856) 0 1,817,237 $35.11 Suburban 321 78,895,849 13,497,157 14,376,364 18.2% (164,622) 0 389,596 $27.48 Totals 351 108,155,936 15,597,092 16,871,791 15.6% (406,478) 0 2,206,833 $29.06 Source: CoStar Property® Class B Market Statistics Mid-Year 2010 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 48 13,867,118 1,928,839 2,026,848 14.6% (51,952) 0 0 $24.06 Suburban 2,072 97,700,591 12,803,448 13,626,335 13.9% 497,331 216,877 127,289 $18.32 Totals 2,120 111,567,709 14,732,287 15,653,183 14.0% 445,379 216,877 127,289 $19.04 Source: CoStar Property® Class C Market Statistics Mid-Year 2010 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 66 3,247,863 843,116 843,116 26.0% 39,188 0 0 $16.22 Suburban 2,387 37,423,410 3,541,046 3,573,996 9.6% 114,980 0 0 $15.29 Totals 2,453 40,671,273 4,384,162 4,417,112 10.9% 154,168 0 0 $15.40 Source: CoStar Property® Class A & B Market Statistics Mid-Year 2010 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 78 43,127,205 4,028,774 4,522,275 10.5% (293,808) 0 1,817,237 $30.80 Suburban 2,393 176,596,440 26,300,605 28,002,699 15.9% 332,709 216,877 516,885 $22.54 Totals 2,471 219,723,645 30,329,379 32,524,974 14.8% 38,901 216,877 2,334,122 $23.91 Source: CoStar Property® Total Office Market Statistics Mid-Year 2010 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 144 46,375,068 4,871,890 5,365,391 11.6% (254,620) 0 1,817,237 $29.79 Suburban 4,780 214,019,850 29,841,651 31,576,695 14.8% 447,689 216,877 516,885 $21.79 Totals 4,924 260,394,918 34,713,541 36,942,086 14.2% 193,069 216,877 2,334,122 $23.07 Source: CoStar Property® 18 THE COSTAR OFFICE REPORT ©2010 COSTAR GROUP, INC.
  • MID-YEAR 2010 – HOUSTON Houston Office Market FIGURES AT A GLANCE Class A Market Statistics Mid-Year 2010 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 2010 2q 351 108,155,936 15,597,092 16,871,791 15.6% (509,301) 0 0 5 2,206,833 $29.06 2010 1q 351 108,155,936 15,093,317 16,362,490 15.1% 102,823 0 0 4 2,050,833 $29.04 2009 4q 351 108,155,936 15,200,480 16,465,313 15.2% (120,270) 4 578,791 4 2,050,833 $29.00 2009 3q 347 107,577,145 14,407,301 15,766,252 14.7% (203,534) 10 2,085,171 7 2,477,005 $28.27 2009 2q 337 105,491,974 12,247,974 13,477,547 12.8% 488,192 6 1,155,781 16 4,481,199 $28.64 2009 1q 331 104,336,193 11,624,124 12,809,958 12.3% 393,504 6 1,809,572 21 5,616,605 $29.04 2008 325 102,526,621 10,441,723 11,393,890 11.1% 2,215,793 24 4,559,906 26 7,268,558 $29.18 2007 301 97,966,715 8,194,277 9,049,777 9.2% 4,033,262 11 1,739,789 35 7,387,257 $27.04 2006 290 96,226,926 10,177,714 11,343,250 11.8% 5,164,538 10 1,627,657 16 3,060,436 $23.54 2005 280 94,599,269 13,345,128 14,880,131 15.7% 2,298,255 10 1,192,378 10 2,015,551 $20.53 2004 270 93,406,891 14,236,211 15,986,008 17.1% 27,533 4 511,000 12 1,984,387 $20.86 2003 266 92,895,891 13,353,389 15,502,541 16.7% 135,015 7 2,118,892 6 936,505 $20.61 2002 259 90,776,999 10,808,239 13,518,664 14.9% (622,625) 4 2,746,151 7 2,118,892 $21.05 2001 255 88,030,848 7,815,734 10,149,888 11.5% 741,688 6 1,557,886 8 4,548,332 $22.36 2000 249 86,472,962 7,894,152 9,333,690 10.8% 135,678 9 2,068,484 9 4,104,037 $21.69 1999 240 84,404,478 5,891,164 7,400,884 8.8% 994,333 17 3,294,102 13 5,054,086 $21.21 Source: CoStar Property® Class B Market Statistics Mid-Year 2010 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 2010 2q 2,120 111,567,709 14,732,287 15,653,183 14.0% 170,010 5 78,828 6 127,289 $19.04 2010 1q 2,115 111,488,881 14,799,738 15,744,365 14.1% 275,369 8 138,049 11 206,117 $19.24 2009 4q 2,107 111,350,832 14,901,856 15,881,685 14.3% 140,779 6 44,236 15 301,523 $19.00 2009 3q 2,101 111,306,596 15,106,517 15,978,228 14.4% 156,105 13 312,134 20 336,113 $19.21 2009 2q 2,088 110,994,462 14,986,980 15,822,199 14.3% 79,672 19 412,645 28 531,549 $19.28 2009 1q 2,069 110,581,817 14,683,341 15,489,226 14.0% (910,161) 17 322,618 41 851,798 $19.45 2008 2,053 110,382,199 13,555,933 14,379,447 13.0% 535,806 81 1,631,357 47 995,545 $19.66 2007 1,972 108,750,842 12,742,551 13,283,896 12.2% 2,783,055 85 1,994,335 71 1,494,837 $19.21 2006 1,890 106,983,011 13,708,234 14,299,120 13.4% 2,516,359 61 1,776,423 78 1,755,789 $17.23 2005 1,831 105,273,263 14,173,671 15,105,731 14.3% 2,175,919 61 1,485,268 58 1,905,675 $16.22 2004 1,770 103,787,995 14,498,823 15,796,382 15.2% 1,669,600 49 1,060,848 56 1,813,229 $15.86 2003 1,722 102,823,863 14,841,583 16,501,850 16.0% (118,580) 45 1,221,657 39 1,133,360 $15.70 2002 1,677 101,602,206 13,645,800 15,161,613 14.9% 917,797 50 1,865,879 34 994,075 $16.54 2001 1,627 99,736,327 12,306,046 14,213,531 14.3% (675,364) 38 1,329,133 45 1,814,059 $17.15 2000 1,589 98,407,194 10,738,022 12,209,034 12.4% 1,344,687 45 3,259,338 34 1,301,112 $16.39 1999 1,544 95,147,856 9,241,506 10,294,383 10.8% (1,046,436) 33 1,259,174 35 2,876,800 $15.95 Source: CoStar Property® Total Office Market Statistics Mid-Year 2010 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 2010 2q 4,924 260,394,918 34,713,541 36,942,086 14.2% (311,935) 5 78,828 11 2,334,122 $23.07 2010 1q 4,919 260,316,090 34,291,281 36,551,323 14.0% 505,004 8 138,049 15 2,256,950 $23.23 2009 4q 4,911 260,178,041 34,646,238 36,918,278 14.2% 105,274 10 623,027 19 2,352,356 $23.28 2009 3q 4,901 259,555,014 34,114,832 36,400,525 14.0% 84,514 23 2,397,305 27 2,813,118 $23.09 2009 2q 4,878 257,157,709 31,973,339 34,087,734 13.3% 456,956 25 1,568,426 44 5,012,748 $23.33 2009 1q 4,853 255,589,283 30,949,763 32,976,264 12.9% (558,085) 23 2,132,190 62 6,468,403 $23.53 2008 4,831 253,580,093 28,599,542 30,408,989 12.0% 2,264,120 105 6,191,263 73 8,264,103 $23.57 2007 4,727 247,468,330 25,111,314 26,561,346 10.7% 7,239,084 99 3,753,115 106 8,882,094 $22.18 2006 4,632 243,969,061 28,515,558 30,301,161 12.4% 7,330,071 75 3,416,994 97 4,835,216 $19.66 2005 4,562 240,812,792 31,980,267 34,474,963 14.3% 4,730,896 78 2,729,701 72 3,934,140 $18.00 2004 4,487 238,215,727 33,521,462 36,608,794 15.4% 2,134,459 65 1,692,661 74 3,841,071 $17.89 2003 4,426 236,685,112 33,346,683 37,212,638 15.7% (921,400) 57 3,380,039 55 2,184,692 $17.68 2002 4,373 233,557,550 28,892,160 33,163,676 14.2% 435,215 61 4,726,594 46 3,152,457 $18.14 2001 4,314 228,890,771 24,657,688 28,932,112 12.6% (77,211) 52 3,005,403 58 6,472,661 $18.63 2000 4,264 225,979,815 22,987,207 25,943,945 11.5% 1,788,140 75 5,681,528 51 5,523,533 $17.92 1999 4,190 220,528,287 19,601,017 22,280,557 10.1% 313,999 69 4,718,440 65 8,233,199 $17.58 Source: CoStar Property® ©2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 19
  • HOUSTON – MID-YEAR 2010 Houston Office Market LEASING ACTIVITY Leasing Highlights in Select CoStar Markets Color Coded by Vacancy Rate �� ���� �������� ����� ������� ��� ���� ��� � �� ���������������� ��� ����� ������ ��� �� ����� ���� ��������� �������� ����� �������� ����� ��� ���� ���� � �� ��� ���� �� � �� ��� ����� ������ ��� ��� ����� ������ ��� ���� ������� �� �������� ����� ���� ���� ��� ��� ���� ��� � �� �������� ����� ��� ����� ������ ��� ��� ���� ��� � �� ��� ����� ������ ��� �� �� �� �� �������� �������� ����� ��� ���� ����� � �� ��� ����� �������� � ��� �� �������� ����� �������� ����� ��������� ��� ���� ����� � �� �������� ����� ��� ��� ����� ������ ��� ��� ���� ���� � �� ��� ����� ������ ��� �� ����� ������������ ������ �������� ���� ��������� ��� ���� ���� � �� ��� ����� ������ ��� �������� ����� ��� ���� � � �� ��� ����� ������ ��� ������� ����� ���� ���� �� �� �� ��� ��� �� ��� ��� �� ��� ���� ��� Source: CoStar Property® 20 THE COSTAR OFFICE REPORT ©2010 COSTAR GROUP, INC.
  • MID-YEAR 2010 – 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 1q 3q 1q 3q 1q 3q 1q 3q 1q 3q 1q 3q 1q 3q 1q 3q 1q 3q 1q 3q 1q 3q 1q 99 99 00 00 01 01 02 02 03 03 04 04 05 05 06 06 07 07 08 08 09 09 10 19 19 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 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 6% 6% 12% 15% 42% 47% 38% 46% 94% 94% 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 4.5 4.17 $25.00 4.0 $20.00 3.5 3.0 Dollars/SF/Year $15.00 2.5 Millions 2.0 $10.00 1.5 1.0 0.80 $5.00 0.69 0.5 0.28 0.00 0.06 $0.00 0.0 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q 2010 3q 2010 4q 2011 1q 2011 2q 2011 3q 2011 4q Source: CoStar Property® * Includes Under Construction Spaces Source: CoStar Property® ©2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 21
  • HOUSTON – MID-YEAR 2010 Houston Office Market LEASING ACTIVITY Select Top Office Leases Based on Leased Square Footage For Deals Signed in 2010 Building Submarket SF Qtr Tenant Name Tenant Rep Company Landlord Rep Company 1 KBR Tower* CBD 695,800 1st Kellogg Brown & Root Llc Jones Lang LaSalle Americas, Inc. Brookfield Properties Management, L 2 500 Jefferson Bldg* CBD 291,536 1st Kellogg Brown & Root Jones Lang LaSalle Americas, Inc. Brookfield Properties Management, L 3 KBR Tower CBD 182,687 1st Kellogg Brown & Root Llc Jones Lang LaSalle Americas, Inc. Brookfield Properties Management, L 4 Post Oak Central Three* Galleria/Uptown 130,846 2nd SUEZ Energy Newmark Knight Frank CAPSTAR Commercial Real Estate Svcs 5 Wells Fargo Plaza CBD 122,896 1st U.S. General Services Administration Jones Lang LaSalle Americas, Inc. CB Richard Ellis 6 5150 Westway Park Blvd Northwest Far 92,420 1st CyrusOne Direct Deal Stan Johnson Company 7 The Lake Corporate Center E Fort Bend Co/Sugar Land 60,693 2nd N/A N/A Colvill Office Properties 8 Thirty Forty Post Oak* Galleria/Uptown 57,549 2nd Bechtel Palermo REI, LP CB Richard Ellis 9 Beltway Lakes Phase I Northwest Far 55,520 2nd N/A N/A Colliers International 10 Westwood Plaza I Southwest Beltway 8 50,789 2nd N/A N/A Moody Rambin Interests 11 Marathon Oil Tower Galleria/Uptown 46,796 2nd Aon Corporation Jones Lang LaSalle Americas, Inc. CB Richard Ellis 12 First City Tower CBD 41,410 1st Sutherland Asbill & Brennan, LLP Cushman & Wakefield, Inc. Colvill Office Properties 13 16001 Lexington Blvd E Fort Bend Co/Sugar Land 40,000 2nd N/A N/A Signature Companies 14 FM 1960 MEDICAL CENTER - Building 1 FM 1960/I-45 North 38,513 2nd 1960 Family Practice N/A N/A 15 The Reserve at Sierra Pines Woodlands 32,984 2nd Praxair N/A Stream Realty Partners, L.P. 16 Brooktree Bldg North Loop West 32,960 1st Houston Area Community Services B.K. Witt & Associates Colliers International 17 Bank of America Center CBD 30,188 1st N/A N/A PM Realty Group 18 Enclave Parkway Katy Freeway West 29,976 1st N/A N/A CB Richard Ellis 19 One Oak Park Westchase 27,522 2nd N/A N/A Colvill Office Properties 20 Marathon Oil Tower* Galleria/Uptown 26,407 1st WEUS Holdings CB Richard Ellis CB Richard Ellis 21 Wells Fargo Plaza CBD 25,259 2nd N/A N/A CB Richard Ellis 22 Wells Fargo Plaza CBD 24,727 1st Petrohawk Energy Corporation N/A CB Richard Ellis 23 Energy Tower I Katy Freeway West 23,608 1st N/A N/A Mac Haik Management LLC 24 Three Memorial City Plaza Katy Freeway East 23,427 2nd N/A N/A MetroNational Corporation 25 9 Greenway Plaza Greenway Plaza 23,394 2nd N/A N/A Studley 26 15109 Heathrow Forest Pky Greenspoint/IAH 22,469 2nd U.S. Government N/A Transwestern Commercial Services 27 919 Milam CBD 22,138 2nd Valerus Compression Services N/A Transwestern 28 9800 Richmond Ave Westchase 22,023 2nd Express Energy N/A CB Richard Ellis 29 Intellicenter-Houston Northwest Far 22,000 2nd N/A N/A Jones Lang LaSalle Americas, Inc. 30 Brookhollow Central II* North Loop West 21,263 1st Lorance & Thompson, P.C. NAI Houston Colvill Office Properties 31 West Loop II* Bellaire 21,000 1st Bridgeway Software, Inc. N/A N/A 32 Two Park Ten Place Katy Freeway West 20,717 2nd Ensco Offshore Company Studley PM Realty Group 33 363 North Belt Greenspoint/N Belt West 20,345 1st Newfield N/A N/A 34 Paragon Center One Greenspoint/N Belt West 20,151 2nd N/A N/A Caldwell Companies 35 North Belt Office Center II Greenspoint/N Belt West 20,006 2nd The Industrial Company N/A Studley 36 The Lake Corporate Center E Fort Bend Co/Sugar Land 19,982 2nd N/A N/A Colvill Office Properties 37 One Riverway Riverway 19,815 2nd Texas Capital Bank N/A CB Richard Ellis 38 One Westway Northwest Far 19,500 2nd Devry N/A Stream Realty Partners, L.P. 39 Chase Tower* CBD 19,412 1st Purvin & Gertz Inc. Studley Hines Holdings Inc. 40 HCC Building Midtown 18,000 1st Houston; City Of N/A Yancey-Hausman, Inc. Source: CoStar Property® * Renewal 22 THE COSTAR OFFICE REPORT ©2010 COSTAR GROUP, INC.
  • MID-YEAR 2010 – 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 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 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 2009 - March 2010 Sales Volume Price/SF Bldg Size # RBA $ Volume Price/SF Cap Rate $1,200 $250 < 50,000 SF 17 174,504 $ 18,578,612 $ 106.47 7.82% $1,000 Millions of Sales Volume Dollars $200 $800 $150 Price/SF 50K-249K SF 17 2,277,834 $ 227,000,000 $ 99.66 10.37% $600 $100 $400 250K-499K SF 1 449,909 $ 52,873,000 $ 117.52 - $50 $200 $0 $0 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 >500K SF 1 807,586 $ 166,000,000 $ 205.55 - 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% 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 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® ©2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 23
  • HOUSTON – MID-YEAR 2010 Houston Office Market SALES ACTIVITY ���������������� ������������������������������������������������ ������������������ ��������������������������������������� ���������������� ������������� ������� ������� ������ ������������ ������ ����������� ������ ����������� ��������� ������� ��������� ������� ��������� ������� ��������� ��� ��������� ���� ��������� ��� ���� ������� ���� ������� ���� ������� ����� ���������� ����� ��������� ����� ��������� ����������� ���� ����������� ���� ����������� ���� ������ ������������������������������ ������ ��������������������������������������� ������ ���������������������� ������� �������������������� ������� ���� ������� ������������������� ��������������������� ���������������������� ������������������ ������������������������ ������������� ������� ������� ������ ����������� ������ ����������� ������ ����������� ��������� ������� ��������� ������� ��������� ������ ��������� ��� ��������� ��� ��������� ��� ���� ������� ���� ������� ���� ������� ����� �������� ����� �������� ����� �������� ����������� ���� ����������� ���� ����������� ���� ������ ������������������������������ ������ ������������������� ������ ������������������������������������� ������� �������������������� ������� ����������������������� ������� ����������������������� ��������������������� ���������������������� ��������������������������� ������� ���� ���������� ������ ����������� ������ ����������� ������ ����������� ��������� ������ ��������� ������� ��������� ������� ��������� ������ ��������� ���� ��������� �� ���� ������� ���� ������ ���� ������ ����� ��������� ����� ��������� ����� ��������� ����������� ���� ����������� ���� ����������� ���� ������ ��������������������������������� ������ ����������������������� ������ ��������������������������������� ������� ������������������������ ������� ����������������������� ������� ����������������������������� ��������������������� 24 THE COSTAR OFFICE REPORT ©2010 COSTAR GROUP, INC.
  • MID-YEAR 2010 – HOUSTON Houston Office Market SALES ACTIVITY �������������������������� ����������������������������������������������������� ��������������� ���������������� ������������������������������ �������� ������������ ������ ������������ ������ ������������ ����� ������� ��������� ������� ��������� ������� ���� ������� ��������� ��� ��������� ��� ����������� ���� ����� ��������� ����� ���������� ������������� ����������� ������ ���������������������������� ������ ���������������������������� ������������� ��� ������� ���������������������������� ������� �������������� ����������� �� �������� ��� �������� ��� ������������ �� ��������� ���������������� ������������������������������ �������� ������������ ������ ������������ ������ ����������� ����� ������� ��������� ������� ��������� ������ ���� ������� ��������� ��� ��������� ��� ����������� ���� ����� ��������� ����� ���������� ������������� ����������� ������ ���������������������������� ������ ����� ������������� ���� ������� ����� ������� ���������������������������� ����������� ��� �������� ��� �������� ��� ������������ �� ������������������ ���������������� ������������������������������ �������� ���������������������� ������ ����������� ������ ����������� ����� ������� ��������� ������� ��������� ������� ���� ������� ��������� ���� ��������� ��� ����������� ���� ����� ���������� ����� ��������� ������������� ���������� ������ ���������������������������� ������ ���������������������������� ������������� ��� ������� ���������������������������� ������� ��������������������������� ����������� ��� �������� ������������ �������� ��� ������������ �� �������������������� ���������������� ������������������������������ �������� ��������������� ������ ����������� ������ ����������� ����� ������� ��������� ������ ��������� ������ ���� ������� ��������� �� ��������� ����� ����������� ���� ����� ���������� ����� ��������� ������������� ���������� ������ ����������������� ������ ���������������������������� ������������� ��� ������� ���������������������������� ������� ������������������ ����������� �� �������� ������������� �������� ���������������� ������������ �� ���������������� ��������������������� Select Land Sales Based on Commercially Zoned Land Sales Occurring From April 2009 - June 2010 7611 Bellaire Blvd, Houston 14214 East Fwy, Houston 800 W 34th St, Houston Sale Price: $5,000,000 Sale Price: $4,055,000 Sale Price: $2,442,180 Acres: 18.76 Acres: 40.00 Acres: 5.75 Price/SF: $6.12 Price/SF: $2.33 Price/SF: $9.75 Closing Date: 10/06/2009 Closing Date: 04/08/2010 Closing Date: 03/04/2010 Zoning: none Zoning: none Zoning: None Intended Use: Office Intended Use: Warehouse Intended Use: Restaurant Buyer: Kennedy Funding Inc. Buyer: N/A Buyer: Covenant Community Capital Corpora Seller: Carnaval Night Club Seller: Ritchie Bros Properties Seller: Label Products Houston, Inc. 11019 Shadow Creek Pky, Pearland 13826 Furman Rd, Houston Sale Price: $2,300,000 Sale Price: $1,266,055 Acres: 1.71 Acres: 25.00 Price/SF: $30.86 Price/SF: $1.16 Closing Date: 06/18/2009 Closing Date: 10/15/2009 Zoning: PUD Zoning: None Intended Use: Office Intended Use: Industrial Buyer: CB PTX, LLC Buyer: OCB PROPERTIES, LTD Seller: Gulf Coast Commercial Group Seller: McDonald Robert L Source: CoStar COMPS® ©2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 25
  • HOUSTON – MID-YEAR 2010 Houston Office Market A U S T I N C O U N T 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 0.000 100.0% 0.000 90.0% 0.000 80.0% 0.000 70.0% Percent Vacant Millions SF 0.000 60.0% 0.000 50.0% 0.000 40.0% 0.000 30.0% 0.000 20.0% 0.000 10.0% 0.000 0.0% 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $1.00 0.00 $0.90 0.00 $0.80 0.00 $0.70 0.00 Dollars/SF/Year $0.60 Millions SF 0.00 $0.50 0.00 0.00 $0.40 0.00 $0.30 0.00 $0.20 0.00 $0.10 0.00 $0.00 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 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 2010 2q 9 39,090 0 0.0% 0 0 0 0 0 $0.00 2010 1q 9 39,090 0 0.0% 0 0 0 0 0 $0.00 2009 4q 9 39,090 0 0.0% 0 0 0 0 0 $0.00 2009 3q 9 39,090 0 0.0% 0 0 0 0 0 $0.00 2009 2q 9 39,090 0 0.0% 0 0 0 0 0 $0.00 2009 1q 9 39,090 0 0.0% 0 0 0 0 0 $0.00 2008 4q 9 39,090 0 0.0% 0 0 0 0 0 $0.00 2008 3q 9 39,090 0 0.0% 0 0 0 0 0 $0.00 2008 2q 9 39,090 0 0.0% 0 0 0 0 0 $0.00 2008 1q 9 39,090 0 0.0% 0 0 0 0 0 $0.00 2007 4q 9 39,090 0 0.0% 0 0 0 0 0 $0.00 2007 3q 9 39,090 0 0.0% 0 0 0 0 0 $0.00 2007 2q 9 39,090 0 0.0% 0 0 0 0 0 $0.00 2007 1q 9 39,090 0 0.0% 0 0 0 0 0 $0.00 2006 4q 9 39,090 0 0.0% 0 0 0 0 0 $0.00 2006 3q 9 39,090 0 0.0% 0 0 0 0 0 $0.00 Source: CoStar Property® 26 THE COSTAR OFFICE REPORT ©2010 COSTAR GROUP, INC.
  • MID-YEAR 2010 – HOUSTON 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% 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $22.20 0.45 $22.00 0.40 $21.80 0.35 $21.60 Dollars/SF/Year 0.30 Millions SF $21.40 0.25 $21.20 0.20 0.15 $21.00 0.10 $20.80 0.05 $20.60 0.00 $20.40 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 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 2010 2q 67 4,998,872 343,222 6.9% 6,452 0 0 0 0 $21.06 2010 1q 67 4,998,872 349,674 7.0% (4,546) 0 0 0 0 $21.77 2009 4q 67 4,998,872 345,128 6.9% 33,546 0 0 0 0 $22.02 2009 3q 67 4,998,872 378,674 7.6% 31,564 0 0 0 0 $21.02 2009 2q 67 4,998,872 410,238 8.2% (9,996) 0 0 0 0 $21.02 2009 1q 67 4,998,872 400,242 8.0% (61,898) 0 0 0 0 $21.86 2008 4q 67 4,998,872 338,344 6.8% 176,064 0 0 0 0 $23.24 2008 3q 67 4,998,872 514,408 10.3% 88,720 0 0 0 0 $22.99 2008 2q 67 4,998,872 603,128 12.1% 23,960 0 0 0 0 $22.89 2008 1q 67 4,998,872 627,088 12.5% (153,825) 1 27,716 0 0 $21.85 2007 4q 66 4,971,156 445,547 9.0% (56,664) 0 0 1 27,716 $21.32 2007 3q 66 4,971,156 388,883 7.8% 82,743 0 0 1 27,716 $20.82 2007 2q 66 4,971,156 471,626 9.5% 77,887 0 0 1 27,716 $18.54 2007 1q 66 4,971,156 549,513 11.1% 61,319 0 0 0 0 $18.26 2006 4q 66 4,971,156 610,832 12.3% 22,315 0 0 0 0 $17.72 2006 3q 66 4,971,156 633,147 12.7% (81,160) 0 0 0 0 $17.16 Source: CoStar Property® ©2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 27
  • HOUSTON – MID-YEAR 2010 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 1.600 16.0% 1.400 14.0% 1.200 12.0% 1.000 Percent Vacant 10.0% Millions SF 0.800 0.600 8.0% 0.400 6.0% 0.200 4.0% 0.000 2.0% (0.200) (0.400) 0.0% 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $30.00 7.00 6.80 $29.50 6.60 6.40 $29.00 Dollars/SF/Year Millions SF 6.20 $28.50 6.00 5.80 $28.00 5.60 5.40 $27.50 5.20 5.00 $27.00 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 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 2010 2q 516 55,149,627 6,782,931 12.3% (24,566) 0 0 2 1,817,237 $28.97 2010 1q 516 55,149,627 6,758,365 12.3% (249,969) 0 0 2 1,817,237 $29.36 2009 4q 516 55,149,627 6,508,396 11.8% 126,143 1 20,375 2 1,817,237 $29.78 2009 3q 515 55,129,252 6,614,164 12.0% (199,539) 0 0 3 1,837,612 $28.20 2009 2q 515 55,129,252 6,414,625 11.6% (202,092) 0 0 3 1,837,612 $29.03 2009 1q 515 55,129,252 6,212,533 11.3% (243,762) 2 59,462 2 1,817,237 $29.84 2008 4q 513 55,069,790 5,909,309 10.7% 369,561 1 560,000 4 1,876,699 $30.94 2008 3q 512 54,509,790 5,718,870 10.5% (226,526) 0 0 4 2,424,699 $30.76 2008 2q 512 54,509,790 5,492,344 10.1% 50,073 0 0 3 1,452,225 $30.86 2008 1q 512 54,509,790 5,542,417 10.2% 92,604 0 0 2 607,462 $28.54 2007 4q 512 54,509,790 5,635,021 10.3% 151,297 0 0 1 560,000 $27.87 2007 3q 512 54,509,790 5,786,318 10.6% 561,921 1 55,000 1 560,000 $25.19 2007 2q 511 54,454,790 6,293,239 11.6% 1,323,065 0 0 2 615,000 $25.74 2007 1q 511 54,454,790 7,616,304 14.0% (62,600) 1 7,374 2 615,000 $24.25 2006 4q 510 54,447,416 7,546,330 13.9% 480,458 0 0 2 62,374 $23.08 2006 3q 510 54,447,416 8,026,788 14.7% 542,828 0 0 2 62,374 $21.63 Source: CoStar Property® 28 THE COSTAR OFFICE REPORT ©2010 COSTAR GROUP, INC.
  • MID-YEAR 2010 – HOUSTON 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 0.500 25.0% 0.400 0.300 20.0% 0.200 Percent Vacant 0.100 Millions SF 15.0% 0.000 (0.100) 10.0% (0.200) (0.300) (0.400) 5.0% (0.500) (0.600) 0.0% 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $27.00 2.00 1.80 $26.50 1.60 1.40 $26.00 Dollars/SF/Year Millions SF 1.20 $25.50 1.00 0.80 $25.00 0.60 0.40 $24.50 0.20 0.00 $24.00 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 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 2010 2q 298 8,921,903 1,875,713 21.0% (502,601) 2 26,630 1 152,619 $25.12 2010 1q 296 8,895,273 1,346,482 15.1% 117,328 4 75,324 3 179,249 $26.78 2009 4q 292 8,819,949 1,388,486 15.7% 7,863 3 172,739 7 254,573 $26.55 2009 3q 289 8,647,210 1,223,610 14.2% 79,168 7 91,044 9 274,693 $26.22 2009 2q 282 8,556,166 1,211,734 14.2% 127,076 1 2,400 15 358,237 $26.40 2009 1q 281 8,553,766 1,336,410 15.6% 67,726 1 6,000 14 331,037 $26.51 2008 4q 280 8,547,766 1,398,136 16.4% 224,149 4 228,680 13 170,418 $24.88 2008 3q 276 8,319,086 1,393,605 16.8% (45,255) 5 376,887 10 318,440 $24.46 2008 2q 271 7,942,199 971,463 12.2% (72,571) 0 0 14 692,927 $24.82 2008 1q 271 7,942,199 898,892 11.3% 5,099 2 24,340 13 686,927 $23.85 2007 4q 269 7,917,859 879,651 11.1% 146,444 3 30,346 12 692,247 $24.00 2007 3q 266 7,887,513 995,749 12.6% 71,508 0 0 12 640,102 $23.48 2007 2q 266 7,887,513 1,067,257 13.5% 299,560 2 159,645 10 250,312 $22.22 2007 1q 264 7,727,868 1,207,172 15.6% (125,433) 2 196,452 9 386,877 $21.92 2006 4q 262 7,531,416 885,287 11.8% 99,144 0 0 8 443,487 $20.17 2006 3q 262 7,531,416 984,431 13.1% 281,006 4 68,560 7 412,707 $19.77 Source: CoStar Property® ©2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 29
  • HOUSTON – MID-YEAR 2010 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 0.300 35.0% 0.200 30.0% 0.100 0.000 25.0% Percent Vacant Millions SF (0.100) 20.0% (0.200) 15.0% (0.300) (0.400) 10.0% (0.500) 5.0% (0.600) (0.700) 0.0% 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $22.50 4.10 $22.00 4.00 $21.50 3.90 $21.00 Dollars/SF/Year Millions SF 3.80 $20.50 $20.00 3.70 $19.50 3.60 $19.00 3.50 $18.50 3.40 $18.00 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 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 2010 2q 536 14,200,527 3,709,115 26.1% 134,419 0 0 2 179,000 $19.66 2010 1q 536 14,200,527 3,843,534 27.1% 46,426 1 6,296 1 23,000 $19.77 2009 4q 535 14,194,231 3,883,664 27.4% 128,046 1 3,766 2 29,296 $21.44 2009 3q 534 14,190,465 4,007,944 28.2% 105,715 1 55,468 3 33,062 $21.77 2009 2q 533 14,134,997 4,058,191 28.7% 9,117 2 13,525 4 88,530 $22.08 2009 1q 531 14,121,472 4,053,783 28.7% (16,092) 4 76,671 4 72,759 $22.03 2008 4q 527 14,044,801 3,961,020 28.2% 82,608 8 208,895 7 145,664 $22.52 2008 3q 519 13,835,906 3,834,733 27.7% (584,773) 6 153,312 14 344,559 $22.63 2008 2q 513 13,682,594 3,096,648 22.6% (7,975) 3 212,624 18 438,878 $23.07 2008 1q 510 13,469,970 2,876,049 21.4% (294,463) 6 67,159 18 638,216 $23.03 2007 4q 504 13,402,811 2,514,427 18.8% (366,869) 3 79,400 17 580,654 $20.97 2007 3q 501 13,323,411 2,068,158 15.5% (56,896) 14 62,404 16 636,115 $20.18 2007 2q 487 13,261,007 1,948,858 14.7% (24,660) 6 62,101 29 657,594 $18.86 2007 1q 481 13,198,906 1,862,097 14.1% 225,834 11 214,073 25 296,313 $18.01 2006 4q 470 12,984,833 1,873,858 14.4% (84,556) 3 117,632 34 433,386 $18.04 2006 3q 467 12,867,201 1,671,670 13.0% 204,938 6 216,622 30 494,124 $17.71 Source: CoStar Property® 30 THE COSTAR OFFICE REPORT ©2010 COSTAR GROUP, INC.
  • MID-YEAR 2010 – HOUSTON 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% 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $27.00 2.00 1.80 $26.50 1.60 $26.00 1.40 Dollars/SF/Year Millions SF 1.20 $25.50 1.00 $25.00 0.80 0.60 $24.50 0.40 $24.00 0.20 0.00 $23.50 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 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 2010 2q 219 12,442,228 1,745,191 14.0% (94,155) 0 0 0 0 $25.10 2010 1q 219 12,442,228 1,651,036 13.3% (8,777) 0 0 0 0 $24.85 2009 4q 219 12,442,228 1,642,259 13.2% 50,423 0 0 0 0 $25.78 2009 3q 219 12,442,228 1,692,682 13.6% (87,094) 0 0 0 0 $25.92 2009 2q 219 12,442,228 1,605,588 12.9% 9,955 0 0 0 0 $26.44 2009 1q 219 12,442,228 1,615,543 13.0% (115,069) 0 0 0 0 $26.57 2008 4q 219 12,442,228 1,500,474 12.1% (101,738) 0 0 0 0 $26.86 2008 3q 219 12,442,228 1,398,736 11.2% (63,074) 0 0 0 0 $26.64 2008 2q 219 12,442,228 1,335,662 10.7% 22,431 1 20,000 0 0 $26.83 2008 1q 218 12,422,228 1,338,093 10.8% (204,207) 1 104,671 1 20,000 $25.72 2007 4q 217 12,317,557 1,029,215 8.4% 288,240 0 0 2 124,671 $24.43 2007 3q 217 12,317,557 1,317,455 10.7% 119,920 0 0 2 124,671 $22.62 2007 2q 217 12,317,557 1,437,375 11.7% 56,277 0 0 2 124,671 $21.04 2007 1q 217 12,317,557 1,493,652 12.1% (39,136) 0 0 2 124,671 $20.63 2006 4q 217 12,317,557 1,454,516 11.8% (31,577) 0 0 0 0 $21.04 2006 3q 217 12,317,557 1,422,939 11.6% 255,099 0 0 0 0 $19.16 Source: CoStar Property® ©2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 31
  • HOUSTON – MID-YEAR 2010 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 0.200 15.0% 14.5% 0.150 14.0% 0.100 Percent Vacant 13.5% Millions SF 0.050 13.0% 12.5% 0.000 12.0% (0.050) 11.5% (0.100) 11.0% 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $19.00 1.00 0.90 $18.50 0.80 0.70 $18.00 Dollars/SF/Year Millions SF 0.60 $17.50 0.50 0.40 $17.00 0.30 0.20 $16.50 0.10 0.00 $16.00 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 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 2010 2q 358 6,179,349 786,656 12.7% (3,647) 1 24,831 0 0 $18.54 2010 1q 357 6,154,518 758,178 12.3% 60,226 0 0 1 24,831 $18.61 2009 4q 357 6,154,518 818,404 13.3% 58,492 0 0 1 24,831 $16.99 2009 3q 357 6,154,518 876,896 14.2% 48,759 1 88,000 1 24,831 $16.98 2009 2q 356 6,066,518 837,655 13.8% 48,920 0 0 1 88,000 $17.21 2009 1q 356 6,066,518 886,575 14.6% (3,386) 0 0 1 88,000 $17.75 2008 4q 356 6,066,518 883,189 14.6% (49,941) 1 28,800 0 0 $18.21 2008 3q 355 6,037,718 804,448 13.3% 12,692 0 0 1 28,800 $18.70 2008 2q 355 6,037,718 817,140 13.5% (48,352) 0 0 1 28,800 $18.91 2008 1q 355 6,037,718 768,788 12.7% 56,987 2 73,362 1 28,800 $18.06 2007 4q 353 5,964,356 752,413 12.6% 80,734 0 0 3 102,162 $17.09 2007 3q 353 5,964,356 833,147 14.0% 17,412 1 11,280 3 102,162 $17.18 2007 2q 352 5,953,076 839,279 14.1% 42,198 1 58,371 4 113,442 $17.44 2007 1q 351 5,894,705 823,106 14.0% 183,704 3 87,162 2 69,651 $16.95 2006 4q 348 5,807,543 919,648 15.8% (76,763) 0 0 5 156,813 $16.42 2006 3q 348 5,807,543 842,885 14.5% 26,516 0 0 3 87,162 $15.24 Source: CoStar Property® 32 THE COSTAR OFFICE REPORT ©2010 COSTAR GROUP, INC.
  • MID-YEAR 2010 – HOUSTON 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% 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $15.00 0.18 $14.80 0.17 $14.60 0.17 $14.40 Dollars/SF/Year Millions SF 0.16 $14.20 0.16 $14.00 0.15 $13.80 0.15 $13.60 0.14 $13.40 0.14 $13.20 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 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 2010 2q 84 1,337,004 160,882 12.0% (1,695) 0 0 0 0 $13.84 2010 1q 84 1,337,004 159,187 11.9% 13,794 0 0 0 0 $14.41 2009 4q 84 1,337,004 172,981 12.9% (9,576) 0 0 0 0 $14.50 2009 3q 84 1,337,004 163,405 12.2% (13,580) 0 0 0 0 $14.83 2009 2q 84 1,337,004 149,825 11.2% 19,392 0 0 0 0 $14.20 2009 1q 84 1,337,004 169,217 12.7% (9,983) 0 0 0 0 $14.43 2008 4q 84 1,337,004 159,234 11.9% 43,216 0 0 0 0 $14.98 2008 3q 84 1,337,004 202,450 15.1% (3,307) 0 0 0 0 $14.98 2008 2q 84 1,337,004 199,143 14.9% (14,440) 0 0 0 0 $14.87 2008 1q 84 1,337,004 184,703 13.8% 387 0 0 0 0 $15.33 2007 4q 84 1,337,004 185,090 13.8% 68,761 0 0 0 0 $14.65 2007 3q 85 1,397,784 314,631 22.5% (40,667) 0 0 0 0 $14.46 2007 2q 85 1,397,784 273,964 19.6% (25,069) 1 25,000 0 0 $13.68 2007 1q 84 1,372,784 223,895 16.3% (69,581) 2 12,873 1 25,000 $13.69 2006 4q 82 1,359,911 141,441 10.4% 3,283 0 0 3 37,873 $13.69 2006 3q 82 1,359,911 144,724 10.6% 40,008 0 0 3 37,873 $13.81 Source: CoStar Property® ©2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 33
  • HOUSTON – MID-YEAR 2010 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 1.400 16.0% 1.200 14.0% 1.000 12.0% Percent Vacant 0.800 10.0% Millions SF 0.600 8.0% 0.400 6.0% 0.200 4.0% 0.000 2.0% (0.200) 0.0% 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $23.50 5.00 4.50 $23.40 4.00 $23.30 3.50 Dollars/SF/Year Millions SF 3.00 $23.20 2.50 $23.10 2.00 1.50 $23.00 1.00 $22.90 0.50 0.00 $22.80 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 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 2010 2q 444 30,567,761 4,095,206 13.4% 93,288 0 0 1 80,977 $23.10 2010 1q 444 30,567,761 4,188,494 13.7% 344,954 1 3,500 1 80,977 $23.36 2009 4q 443 30,564,261 4,529,948 14.8% (20,649) 2 310,528 2 84,477 $23.43 2009 3q 441 30,253,733 4,198,771 13.9% 29,876 4 1,240,430 4 395,005 $23.30 2009 2q 437 29,013,303 2,988,217 10.3% 620,883 6 741,718 6 1,549,458 $23.03 2009 1q 431 28,271,585 2,867,382 10.1% 542,135 5 1,296,691 11 2,287,676 $23.18 2008 4q 426 26,974,894 2,112,826 7.8% 131,482 1 101,300 15 3,569,043 $23.37 2008 3q 425 26,873,594 2,143,008 8.0% 651,890 2 582,655 14 3,620,271 $23.58 2008 2q 423 26,290,939 2,212,243 8.4% 197,401 7 51,810 15 4,183,532 $23.19 2008 1q 416 26,239,129 2,357,834 9.0% 327,671 4 665,900 20 3,859,342 $23.73 2007 4q 412 25,573,229 2,019,605 7.9% 247,026 1 170,000 20 3,603,083 $22.98 2007 3q 411 25,403,229 2,096,631 8.3% 94,955 1 174,521 18 3,014,769 $21.26 2007 2q 410 25,228,708 2,017,065 8.0% 226,114 4 79,944 15 2,196,164 $19.85 2007 1q 406 25,148,764 2,163,235 8.6% (78,670) 2 13,711 10 1,283,364 $19.52 2006 4q 406 25,289,665 2,225,466 8.8% 646,910 3 557,183 9 900,176 $20.07 2006 3q 403 24,732,482 2,315,193 9.4% 127,294 3 169,400 10 950,838 $18.29 Source: CoStar Property® 34 THE COSTAR OFFICE REPORT ©2010 COSTAR GROUP, INC.
  • MID-YEAR 2010 – HOUSTON 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 12.0% 0.070 10.0% 0.060 0.050 8.0% Percent Vacant Millions SF 0.040 0.030 6.0% 0.020 4.0% 0.010 0.000 2.0% (0.010) (0.020) 0.0% 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $21.60 0.27 $21.40 0.26 $21.20 0.25 $21.00 Dollars/SF/Year $20.80 Millions SF 0.24 $20.60 0.23 $20.40 0.22 $20.20 0.21 $20.00 0.20 $19.80 0.19 $19.60 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 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 2010 2q 123 2,584,491 224,164 8.7% 37,331 0 0 0 0 $20.31 2010 1q 123 2,584,491 261,495 10.1% 14,930 1 22,929 0 0 $20.33 2009 4q 122 2,561,562 253,496 9.9% (7,714) 0 0 1 22,929 $20.32 2009 3q 122 2,561,562 245,782 9.6% 14,556 0 0 1 22,929 $20.33 2009 2q 122 2,561,562 260,338 10.2% 5,607 6 26,400 1 22,929 $21.01 2009 1q 116 2,535,162 239,545 9.4% (13,528) 0 0 7 49,329 $21.50 2008 4q 116 2,535,162 226,017 8.9% (5,311) 0 0 2 26,529 $21.76 2008 3q 116 2,535,162 220,706 8.7% (3,357) 0 0 1 22,929 $20.89 2008 2q 116 2,535,162 217,349 8.6% 15,364 0 0 0 0 $21.58 2008 1q 116 2,535,162 232,713 9.2% 18,089 1 16,100 0 0 $21.92 2007 4q 115 2,519,062 234,702 9.3% (14,251) 1 2,620 1 16,100 $21.95 2007 3q 114 2,516,442 217,831 8.7% 42,986 2 67,688 2 18,720 $21.69 2007 2q 112 2,448,754 193,129 7.9% 15,284 0 0 4 86,408 $21.82 2007 1q 112 2,448,754 208,413 8.5% (11,261) 1 44,000 2 67,688 $21.64 2006 4q 111 2,404,754 153,152 6.4% (1,662) 0 0 3 111,688 $21.83 2006 3q 111 2,404,754 151,490 6.3% 5,567 1 27,518 3 111,688 $21.57 Source: CoStar Property® ©2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 35
  • HOUSTON – MID-YEAR 2010 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 10.4% 10.2% 0.150 10.0% 9.8% 0.100 Percent Vacant Millions SF 9.6% 0.050 9.4% 9.2% 0.000 9.0% 8.8% (0.050) 8.6% (0.100) 8.4% 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $20.70 0.90 $20.60 0.88 0.86 $20.50 0.84 $20.40 Dollars/SF/Year Millions SF 0.82 $20.30 0.80 $20.20 0.78 $20.10 0.76 $20.00 0.74 $19.90 0.72 0.70 $19.80 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 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 2010 2q 286 8,718,725 812,322 9.3% 27,952 2 27,367 2 19,632 $20.20 2010 1q 284 8,691,358 812,907 9.4% 4,915 0 0 4 46,999 $20.51 2009 4q 284 8,691,358 817,822 9.4% 44,041 2 20,350 1 15,367 $20.62 2009 3q 282 8,671,008 841,513 9.7% 75,841 2 51,240 3 35,717 $20.24 2009 2q 280 8,619,768 866,114 10.0% 21,982 0 0 4 71,590 $20.61 2009 1q 280 8,619,768 888,096 10.3% (54,573) 1 10,000 4 71,590 $20.12 2008 4q 279 8,609,768 823,523 9.6% 82,712 2 138,407 5 81,590 $20.07 2008 3q 277 8,471,361 767,828 9.1% 98,397 1 1,800 6 216,757 $19.79 2008 2q 276 8,469,561 864,425 10.2% 8,258 1 4,800 5 159,207 $19.58 2008 1q 275 8,464,761 867,883 10.3% (8,819) 3 44,420 5 154,007 $19.08 2007 4q 272 8,420,341 814,644 9.7% 17,901 4 46,118 6 161,020 $18.00 2007 3q 269 8,412,677 824,881 9.8% (2,998) 3 65,600 9 205,338 $17.08 2007 2q 266 8,347,077 756,283 9.1% 185,642 3 96,084 10 156,138 $16.64 2007 1q 263 8,250,993 845,841 10.3% 88,638 2 16,005 11 220,822 $15.76 2006 4q 261 8,234,988 918,474 11.2% 152,125 2 122,537 8 140,609 $14.96 2006 3q 259 8,112,451 948,062 11.7% 93,522 1 8,000 8 247,646 $15.43 Source: CoStar Property® 36 THE COSTAR OFFICE REPORT ©2010 COSTAR GROUP, INC.
  • MID-YEAR 2010 – HOUSTON 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 0.200 16.0% 0.150 14.0% 0.100 12.0% 0.050 Percent Vacant 10.0% Millions SF 0.000 (0.050) 8.0% (0.100) 6.0% (0.150) 4.0% (0.200) 2.0% (0.250) (0.300) 0.0% 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $17.60 2.50 $17.40 $17.20 2.00 $17.00 Dollars/SF/Year $16.80 Millions SF 1.50 $16.60 1.00 $16.40 $16.20 0.50 $16.00 $15.80 0.00 $15.60 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 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 2010 2q 154 13,597,167 1,871,802 13.8% 38,806 0 0 0 0 $16.23 2010 1q 154 13,597,167 1,910,608 14.1% (85,262) 0 0 0 0 $16.69 2009 4q 154 13,597,167 1,825,346 13.4% 92,250 0 0 0 0 $16.88 2009 3q 154 13,597,167 1,917,596 14.1% (266,600) 0 0 0 0 $17.42 2009 2q 154 13,597,167 1,650,996 12.1% (47,039) 1 63,621 0 0 $17.41 2009 1q 153 13,533,546 1,540,336 11.4% 6,559 0 0 1 63,621 $17.39 2008 4q 153 13,533,546 1,546,895 11.4% (25,451) 1 84,125 1 63,621 $16.96 2008 3q 152 13,449,421 1,437,319 10.7% 155,598 0 0 2 147,746 $16.61 2008 2q 152 13,449,421 1,592,917 11.8% (76,107) 0 0 2 147,746 $16.97 2008 1q 152 13,449,421 1,516,810 11.3% 35,682 0 0 1 84,125 $16.99 2007 4q 152 13,449,421 1,552,492 11.5% 107,415 0 0 1 84,125 $16.84 2007 3q 152 13,449,421 1,659,907 12.3% 62,072 1 135,030 1 84,125 $16.65 2007 2q 151 13,314,391 1,586,949 11.9% 10,530 0 0 2 219,155 $16.09 2007 1q 151 13,314,391 1,597,479 12.0% 120,437 0 0 1 135,030 $15.67 2006 4q 151 13,314,391 1,717,916 12.9% 86,791 0 0 1 135,030 $15.91 2006 3q 151 13,314,391 1,804,707 13.6% 90,360 0 0 0 0 $15.46 Source: CoStar Property® ©2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 37
  • HOUSTON – MID-YEAR 2010 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 0.050 25.0% 0.040 20.0% 0.030 Percent Vacant 0.020 Millions SF 15.0% 0.010 10.0% 0.000 (0.010) 5.0% (0.020) (0.030) 0.0% 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $18.00 0.25 $17.50 0.20 $17.00 Dollars/SF/Year Millions SF 0.15 $16.50 0.10 $16.00 0.05 $15.50 0.00 $15.00 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 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 2010 2q 101 1,468,722 141,310 9.6% (23,094) 0 0 0 0 $16.51 2010 1q 101 1,468,722 118,216 8.0% 32,961 0 0 0 0 $16.11 2009 4q 101 1,468,722 151,177 10.3% 1,996 0 0 0 0 $16.21 2009 3q 101 1,468,722 153,173 10.4% 40,667 0 0 0 0 $16.25 2009 2q 101 1,468,722 193,840 13.2% 30,877 1 8,000 0 0 $16.27 2009 1q 100 1,460,722 216,717 14.8% (8,620) 0 0 1 8,000 $17.64 2008 4q 100 1,460,722 208,097 14.2% 21,141 0 0 1 8,000 $17.67 2008 3q 100 1,460,722 229,238 15.7% 20,863 0 0 1 8,000 $17.20 2008 2q 100 1,460,722 250,101 17.1% 36,664 0 0 0 0 $15.93 2008 1q 100 1,460,722 286,765 19.6% (19,479) 1 9,682 0 0 $15.23 2007 4q 99 1,451,040 257,604 17.8% (3,032) 0 0 1 9,682 $16.33 2007 3q 99 1,451,040 254,572 17.5% 12,154 0 0 1 9,682 $16.12 2007 2q 99 1,451,040 266,726 18.4% (11,292) 0 0 1 9,682 $16.04 2007 1q 99 1,451,040 255,434 17.6% (18,142) 0 0 0 0 $17.64 2006 4q 99 1,451,040 237,292 16.4% 11,169 0 0 0 0 $16.35 2006 3q 99 1,451,040 248,461 17.1% (23,842) 0 0 0 0 $15.86 Source: CoStar Property® 38 THE COSTAR OFFICE REPORT ©2010 COSTAR GROUP, INC.
  • MID-YEAR 2010 – HOUSTON 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 0.500 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% 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $19.50 3.30 $19.40 3.20 $19.30 3.10 Dollars/SF/Year $19.20 Millions SF 3.00 $19.10 2.90 2.80 $19.00 2.70 $18.90 2.60 $18.80 2.50 $18.70 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 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 2010 2q 391 16,442,499 3,174,338 19.3% (74,396) 0 0 0 0 $19.19 2010 1q 391 16,442,499 3,099,942 18.9% 85,450 0 0 0 0 $19.42 2009 4q 391 16,442,499 3,185,392 19.4% (105,748) 1 95,269 0 0 $19.00 2009 3q 390 16,347,230 2,984,375 18.3% 119,439 1 92,420 1 95,269 $19.25 2009 2q 389 16,254,810 3,011,394 18.5% 224,634 3 405,639 2 187,689 $19.23 2009 1q 386 15,849,171 2,830,389 17.9% (20,517) 1 250,000 5 593,328 $19.20 2008 4q 385 15,599,171 2,559,872 16.4% 144,494 3 373,629 6 843,328 $18.92 2008 3q 382 15,225,542 2,330,737 15.3% 162,570 1 48,139 9 1,216,957 $19.03 2008 2q 381 15,177,403 2,445,168 16.1% 59,258 1 163,436 9 1,172,676 $19.83 2008 1q 380 15,013,967 2,340,990 15.6% 137,716 1 6,500 8 1,002,873 $20.08 2007 4q 379 15,007,467 2,472,206 16.5% 138,402 3 308,857 7 841,704 $19.23 2007 3q 376 14,698,610 2,301,751 15.7% 225,269 1 158,518 8 718,747 $18.55 2007 2q 375 14,540,092 2,368,502 16.3% 255,564 1 130,000 6 522,014 $17.38 2007 1q 374 14,410,092 2,494,066 17.3% 7,791 2 65,837 5 597,375 $17.01 2006 4q 372 14,344,255 2,436,020 17.0% 63,992 2 103,373 6 657,491 $16.55 2006 3q 370 14,240,882 2,396,639 16.8% (4,064) 1 36,183 5 327,728 $16.51 Source: CoStar Property® ©2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 39
  • HOUSTON – MID-YEAR 2010 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 20.0% 0.040 18.0% 0.020 16.0% 14.0% 0.000 Percent Vacant Millions SF 12.0% (0.020) 10.0% (0.040) 8.0% (0.060) 6.0% (0.080) 4.0% (0.100) 2.0% (0.120) 0.0% 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $14.80 0.30 $14.70 0.25 $14.60 Dollars/SF/Year 0.20 Millions SF $14.50 0.15 $14.40 0.10 $14.30 0.05 $14.20 0.00 $14.10 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 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 2010 2q 88 2,177,120 207,001 9.5% 7,952 0 0 0 0 $14.77 2010 1q 88 2,177,120 214,953 9.9% 18,870 0 0 0 0 $14.52 2009 4q 88 2,177,120 233,823 10.7% 10,673 0 0 0 0 $14.43 2009 3q 88 2,177,120 244,496 11.2% 16,002 0 0 0 0 $14.61 2009 2q 88 2,177,120 260,498 12.0% 13,142 0 0 0 0 $14.73 2009 1q 88 2,177,120 273,640 12.6% 1,707 0 0 0 0 $14.33 2008 4q 88 2,177,120 275,347 12.6% 36,675 0 0 0 0 $14.41 2008 3q 88 2,177,120 312,022 14.3% 45,588 0 0 0 0 $13.65 2008 2q 88 2,177,120 357,610 16.4% 14,458 0 0 0 0 $13.98 2008 1q 88 2,177,120 372,068 17.1% 6,454 0 0 0 0 $13.64 2007 4q 88 2,177,120 378,522 17.4% 33,024 0 0 0 0 $13.48 2007 3q 88 2,177,120 411,546 18.9% (30,473) 0 0 0 0 $13.31 2007 2q 88 2,177,120 381,073 17.5% (31,787) 0 0 0 0 $14.59 2007 1q 88 2,177,120 349,286 16.0% (94,785) 0 0 0 0 $14.23 2006 4q 88 2,177,120 254,501 11.7% (33) 0 0 0 0 $13.85 2006 3q 88 2,177,120 254,468 11.7% (57,546) 0 0 0 0 $13.59 Source: CoStar Property® 40 THE COSTAR OFFICE REPORT ©2010 COSTAR GROUP, INC.
  • MID-YEAR 2010 – HOUSTON 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 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% 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $25.00 0.70 $24.50 0.60 $24.00 0.50 Dollars/SF/Year Millions SF $23.50 0.40 $23.00 0.30 0.20 $22.50 0.10 $22.00 0.00 $21.50 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 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 2010 2q 51 5,540,488 609,329 11.0% 28,093 0 0 0 0 $22.56 2010 1q 51 5,540,488 637,422 11.5% (24,426) 0 0 0 0 $22.60 2009 4q 51 5,540,488 612,996 11.1% 10,540 0 0 0 0 $22.63 2009 3q 51 5,540,488 623,536 11.3% (80,075) 0 0 0 0 $23.12 2009 2q 51 5,540,488 543,461 9.8% 12,606 0 0 0 0 $23.51 2009 1q 51 5,540,488 556,067 10.0% (74,449) 0 0 0 0 $24.47 2008 4q 51 5,540,488 481,618 8.7% (48,159) 0 0 0 0 $23.61 2008 3q 51 5,540,488 433,459 7.8% 4,412 0 0 0 0 $24.41 2008 2q 51 5,540,488 437,871 7.9% (34,535) 0 0 0 0 $23.94 2008 1q 52 5,619,988 482,836 8.6% 63,122 0 0 0 0 $21.94 2007 4q 52 5,619,988 545,958 9.7% 101,798 0 0 0 0 $20.30 2007 3q 52 5,619,988 647,756 11.5% 100,761 0 0 0 0 $19.83 2007 2q 52 5,619,988 748,517 13.3% 131,539 0 0 0 0 $19.78 2007 1q 52 5,619,988 880,056 15.7% 74,244 1 8,333 0 0 $19.55 2006 4q 51 5,611,655 945,967 16.9% 13,674 0 0 1 8,333 $19.09 2006 3q 51 5,611,655 959,641 17.1% 26,874 0 0 1 8,333 $18.66 Source: CoStar Property® ©2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 41
  • HOUSTON – MID-YEAR 2010 Houston Office Market S A N J A C I N T O C O U N T 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 0.000 100.0% 0.000 90.0% 0.000 80.0% 0.000 70.0% Percent Vacant Millions SF 0.000 60.0% 0.000 50.0% 0.000 40.0% 0.000 30.0% 0.000 20.0% 0.000 10.0% 0.000 0.0% 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $1.00 0.00 $0.90 0.00 $0.80 0.00 $0.70 0.00 Dollars/SF/Year $0.60 Millions SF 0.00 $0.50 0.00 0.00 $0.40 0.00 $0.30 0.00 $0.20 0.00 $0.10 0.00 $0.00 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 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 2010 2q 1 2,882 0 0.0% 0 0 0 0 0 $0.00 2010 1q 1 2,882 0 0.0% 0 0 0 0 0 $0.00 2009 4q 1 2,882 0 0.0% 0 0 0 0 0 $0.00 2009 3q 1 2,882 0 0.0% 0 0 0 0 0 $0.00 2009 2q 1 2,882 0 0.0% 0 0 0 0 0 $0.00 2009 1q 1 2,882 0 0.0% 0 0 0 0 0 $0.00 2008 4q 1 2,882 0 0.0% 0 0 0 0 0 $0.00 2008 3q 1 2,882 0 0.0% 0 0 0 0 0 $0.00 2008 2q 1 2,882 0 0.0% 0 0 0 0 0 $0.00 2008 1q 1 2,882 0 0.0% 0 0 0 0 0 $0.00 2007 4q 1 2,882 0 0.0% 0 0 0 0 0 $0.00 2007 3q 1 2,882 0 0.0% 0 0 0 0 0 $0.00 2007 2q 1 2,882 0 0.0% 0 0 0 0 0 $0.00 2007 1q 1 2,882 0 0.0% 0 0 0 0 0 $0.00 2006 4q 1 2,882 0 0.0% 0 0 0 0 0 $0.00 2006 3q 1 2,882 0 0.0% 0 0 0 0 0 $0.00 Source: CoStar Property® 42 THE COSTAR OFFICE REPORT ©2010 COSTAR GROUP, INC.
  • MID-YEAR 2010 – 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 0.100 25.0% 0.080 0.060 20.0% 0.040 Percent Vacant Millions SF 15.0% 0.020 0.000 10.0% (0.020) (0.040) 5.0% (0.060) (0.080) 0.0% 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $22.60 0.45 $22.40 0.40 $22.20 0.35 $22.00 Dollars/SF/Year 0.30 $21.80 Millions SF 0.25 $21.60 $21.40 0.20 $21.20 0.15 $21.00 0.10 $20.80 0.05 $20.60 0.00 $20.40 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 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 2010 2q 122 1,803,649 318,353 17.7% 31,935 0 0 0 0 $21.24 2010 1q 122 1,803,649 350,288 19.4% (3,534) 0 0 0 0 $21.09 2009 4q 122 1,803,649 346,754 19.2% 41,444 0 0 0 0 $21.99 2009 3q 122 1,803,649 388,198 21.5% 53,332 1 80,000 0 0 $22.32 2009 2q 121 1,723,649 361,530 21.0% (63,133) 0 0 1 80,000 $21.99 2009 1q 121 1,723,649 298,397 17.3% 12,180 1 20,000 1 80,000 $22.00 2008 4q 120 1,703,649 290,577 17.1% 37,512 1 25,000 2 100,000 $21.62 2008 3q 119 1,678,649 303,089 18.1% 12,317 1 72,000 2 45,000 $19.88 2008 2q 118 1,606,649 243,406 15.1% (12,984) 0 0 3 117,000 $17.22 2008 1q 118 1,606,649 230,422 14.3% (36,677) 1 30,000 3 117,000 $18.66 2007 4q 117 1,576,649 163,745 10.4% 4,226 0 0 2 55,000 $18.05 2007 3q 117 1,576,649 167,971 10.7% 29,916 0 0 2 55,000 $15.49 2007 2q 117 1,576,649 197,887 12.6% 4,334 0 0 2 55,000 $15.84 2007 1q 117 1,576,649 202,221 12.8% (32,351) 1 37,714 2 55,000 $15.12 2006 4q 116 1,538,935 132,156 8.6% 34,760 3 64,738 1 37,714 $13.05 2006 3q 113 1,474,197 102,178 6.9% 25,052 1 10,500 4 102,452 $12.53 Source: CoStar Property® ©2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 43
  • HOUSTON – MID-YEAR 2010 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 12.0% 0.020 10.0% 0.010 8.0% Percent Vacant Millions SF 0.000 6.0% (0.010) 4.0% (0.020) 2.0% (0.030) (0.040) 0.0% 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $90.00 0.01 $80.00 0.01 $70.00 $60.00 Dollars/SF/Year 0.01 Millions SF $50.00 0.01 $40.00 0.00 $30.00 $20.00 0.00 $10.00 0.00 $0.00 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 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 2010 2q 40 320,750 9,206 2.9% 395 0 0 0 0 $78.38 2010 1q 40 320,750 9,601 3.0% 1,000 0 0 0 0 $15.91 2009 4q 40 320,750 10,601 3.3% (725) 0 0 0 0 $17.05 2009 3q 40 320,750 9,876 3.1% (2,851) 0 0 0 0 $11.50 2009 2q 40 320,750 7,025 2.2% (400) 0 0 0 0 $10.25 2009 1q 40 320,750 6,625 2.1% 4,900 0 0 0 0 $10.25 2008 4q 40 320,750 11,525 3.6% 7,380 0 0 0 0 $10.25 2008 3q 40 320,750 18,905 5.9% 8,775 0 0 0 0 $11.97 2008 2q 40 320,750 27,680 8.6% (23,780) 0 0 0 0 $13.28 2008 1q 40 320,750 3,900 1.2% 0 0 0 0 0 $10.02 2007 4q 40 320,750 3,900 1.2% 3,800 0 0 0 0 $10.02 2007 3q 40 320,750 7,700 2.4% 5,800 0 0 0 0 $19.75 2007 2q 40 320,750 13,500 4.2% 22,254 0 0 0 0 $19.75 2007 1q 40 320,750 35,754 11.1% (27,854) 0 0 0 0 $19.75 2006 4q 40 320,750 7,900 2.5% (500) 0 0 0 0 $23.76 2006 3q 40 320,750 7,400 2.3% 0 0 0 0 0 $23.76 Source: CoStar Property® 44 THE COSTAR OFFICE REPORT ©2010 COSTAR GROUP, INC.
  • MID-YEAR 2010 – 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 0.600 12.0% 0.500 10.0% 0.400 0.300 8.0% Percent Vacant Millions SF 0.200 6.0% 0.100 0.000 4.0% (0.100) 2.0% (0.200) (0.300) 0.0% 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $24.15 1.20 $24.10 1.00 $24.05 $24.00 Dollars/SF/Year 0.80 $23.95 Millions SF $23.90 0.60 $23.85 $23.80 0.40 $23.75 $23.70 0.20 $23.65 0.00 $23.60 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 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 2010 2q 199 11,160,140 873,229 7.8% (10,142) 0 0 1 9,646 $24.08 2010 1q 199 11,160,140 863,087 7.7% (64,517) 0 0 1 9,646 $23.83 2009 4q 199 11,160,140 798,570 7.2% 67,847 0 0 1 9,646 $23.99 2009 3q 199 11,160,140 866,417 7.8% 70,249 0 0 0 0 $24.09 2009 2q 199 11,160,140 936,666 8.4% 31,841 0 0 0 0 $23.78 2009 1q 199 11,160,140 968,507 8.7% 37,014 0 0 0 0 $23.79 2008 4q 199 11,160,140 1,005,521 9.0% 235,666 0 0 0 0 $25.65 2008 3q 199 11,160,140 1,241,187 11.1% (188,789) 1 23,000 0 0 $25.24 2008 2q 198 11,137,140 1,029,398 9.2% 137,064 1 300,000 1 23,000 $25.19 2008 1q 197 10,837,140 866,462 8.0% (5,926) 1 5,745 2 323,000 $24.38 2007 4q 196 10,831,395 854,791 7.9% (9,821) 0 0 3 328,745 $24.21 2007 3q 196 10,831,395 844,970 7.8% 88,616 1 12,000 2 305,745 $24.05 2007 2q 195 10,819,395 921,586 8.5% (50,362) 0 0 3 317,745 $22.76 2007 1q 195 10,819,395 871,224 8.1% 175,379 2 514,441 2 312,000 $21.17 2006 4q 193 10,304,954 532,162 5.2% 213,590 0 0 4 826,441 $21.31 2006 3q 193 10,304,954 745,752 7.2% (40,087) 0 0 3 814,441 $21.03 Source: CoStar Property® ©2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 45
  • HOUSTON – MID-YEAR 2010 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 0.200 Millions SF 15.0% 0.100 10.0% 0.000 (0.100) 5.0% (0.200) (0.300) 0.0% 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $15.50 2.50 2.45 $15.40 2.40 $15.30 Dollars/SF/Year 2.35 Millions SF 2.30 $15.20 2.25 2.20 $15.10 2.15 $15.00 2.10 2.05 $14.90 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 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 2010 2q 277 13,479,667 2,425,152 18.0% 26,450 0 0 0 0 $15.10 2010 1q 277 13,479,667 2,451,602 18.2% (20,983) 0 0 0 0 $15.26 2009 4q 277 13,479,667 2,430,619 18.0% (58,297) 0 0 0 0 $15.43 2009 3q 277 13,479,667 2,372,322 17.6% (41,307) 0 0 0 0 $15.31 2009 2q 277 13,479,667 2,331,015 17.3% 78,526 0 0 0 0 $15.33 2009 1q 277 13,479,667 2,409,541 17.9% (105,976) 1 20,500 0 0 $15.21 2008 4q 276 13,459,167 2,283,065 17.0% 34,876 0 0 1 20,500 $15.41 2008 3q 276 13,459,167 2,317,941 17.2% (213,594) 0 0 1 20,500 $15.61 2008 2q 276 13,459,167 2,104,347 15.6% (44,747) 1 37,884 0 0 $15.55 2008 1q 275 13,421,283 2,021,716 15.1% 20,655 1 1,239 1 37,884 $15.35 2007 4q 274 13,420,044 2,041,132 15.2% 109,240 1 4,750 2 39,123 $15.12 2007 3q 273 13,415,294 2,145,622 16.0% 431,479 1 211,587 3 43,873 $14.97 2007 2q 272 13,203,707 2,365,514 17.9% 258,691 3 59,196 3 217,576 $14.93 2007 1q 269 13,144,511 2,565,009 19.5% (85,081) 2 154,958 5 275,533 $14.84 2006 4q 267 12,989,553 2,324,970 17.9% 346,162 0 0 6 425,741 $14.82 2006 3q 267 12,989,553 2,671,132 20.6% (127,249) 0 0 5 214,154 $14.75 Source: CoStar Property® 46 THE COSTAR OFFICE REPORT ©2010 COSTAR GROUP, INC.
  • MID-YEAR 2010 – 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 0.400 16.0% 0.300 14.0% 0.200 12.0% 0.100 Percent Vacant 10.0% Millions SF 0.000 8.0% (0.100) 6.0% (0.200) 4.0% (0.300) (0.400) 2.0% (0.500) 0.0% 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $27.50 3.50 3.00 $27.00 2.50 $26.50 Dollars/SF/Year Millions SF 2.00 $26.00 1.50 $25.50 1.00 $25.00 0.50 0.00 $24.50 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 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 2010 2q 129 23,339,155 2,940,101 12.6% 12,104 0 0 0 0 $26.05 2010 1q 129 23,339,155 2,952,205 12.6% 187,504 0 0 0 0 $26.56 2009 4q 129 23,339,155 3,139,709 13.5% (95,263) 0 0 0 0 $25.55 2009 3q 129 23,339,155 3,044,446 13.0% (9,878) 0 0 0 0 $26.63 2009 2q 129 23,339,155 3,034,568 13.0% (383,125) 0 0 0 0 $27.34 2009 1q 129 23,339,155 2,651,443 11.4% (412,338) 1 70,131 0 0 $27.25 2008 4q 129 23,392,024 2,291,974 9.8% (71,780) 0 0 1 70,131 $27.14 2008 3q 129 23,392,024 2,220,194 9.5% (45,102) 0 0 1 70,131 $26.68 2008 2q 129 23,392,024 2,175,092 9.3% 73,706 0 0 1 70,131 $26.17 2008 1q 129 23,392,024 2,248,798 9.6% 36,905 0 0 1 70,131 $24.73 2007 4q 129 23,392,024 2,285,703 9.8% 114,628 0 0 1 70,131 $24.54 2007 3q 129 23,392,024 2,400,331 10.3% 360,195 0 0 0 0 $23.09 2007 2q 129 23,392,024 2,760,526 11.8% 9,464 0 0 0 0 $22.69 2007 1q 129 23,392,024 2,769,990 11.8% 201,037 0 0 0 0 $21.88 2006 4q 129 23,392,024 2,971,027 12.7% 411,481 0 0 0 0 $20.54 2006 3q 129 23,392,024 3,382,508 14.5% 167,959 0 0 0 0 $19.63 Source: CoStar Property® ©2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 47
  • HOUSTON – MID-YEAR 2010 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 18.0% 0.500 16.0% 0.400 14.0% 0.300 12.0% Percent Vacant Millions SF 0.200 10.0% 0.100 8.0% 0.000 6.0% (0.100) (0.200) 4.0% (0.300) 2.0% (0.400) 0.0% 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q Source: CoStar Property® Vacant Space Quoted Rental Rates Historical Analysis, All Classes Historical Analysis, All Classes Direct SF Sublet SF $26.50 3.00 $26.00 2.50 $25.50 Dollars/SF/Year 2.00 $25.00 Millions SF $24.50 1.50 $24.00 1.00 $23.50 0.50 $23.00 0.00 $22.50 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 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 2010 2q 120 15,775,186 2,538,330 16.1% 20,827 0 0 0 0 $25.93 2010 1q 120 15,775,186 2,559,157 16.2% (42,128) 0 0 0 0 $24.86 2009 4q 120 15,775,186 2,517,029 16.0% (301,694) 0 0 0 0 $23.68 2009 3q 120 15,775,186 2,215,335 14.0% 35,046 1 272,361 0 0 $23.95 2009 2q 119 15,502,825 1,978,020 12.8% (160,840) 2 222,142 1 272,361 $23.85 2009 1q 117 15,280,683 1,595,038 10.4% (225,297) 1 20,000 3 494,503 $24.08 2008 4q 116 15,260,683 1,349,741 8.8% (136,154) 1 24,000 4 514,503 $23.31 2008 3q 115 15,236,683 1,189,587 7.8% 122,988 0 0 5 538,503 $23.36 2008 2q 115 15,236,683 1,312,575 8.6% 482,049 2 371,458 5 538,503 $24.20 2008 1q 113 14,865,225 1,423,166 9.6% (57,184) 2 309,200 6 841,161 $24.14 2007 4q 111 14,556,025 1,056,782 7.3% 115,211 0 0 6 724,658 $22.71 2007 3q 111 14,556,025 1,171,993 8.1% 76,641 0 0 4 680,658 $22.82 2007 2q 111 14,556,025 1,248,634 8.6% 46,938 0 0 3 627,751 $22.10 2007 1q 111 14,556,025 1,295,572 8.9% 90,815 0 0 3 627,751 $21.32 2006 4q 111 14,556,025 1,386,387 9.5% 267,641 0 0 0 0 $20.39 2006 3q 111 14,556,025 1,654,028 11.4% (41,189) 1 206,362 0 0 $19.51 Source: CoStar Property® 48 THE COSTAR OFFICE REPORT ©2010 COSTAR GROUP, INC.
  • MID-YEAR 2010 – 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 14.0% 12.0% 0.400 10.0% 0.300 Percent Vacant Millions SF 8.0% 0.200 6.0% 0.100 4.0% 0.000 2.0% (0.100) 0.0% 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 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 0.60 $24.00 0.40 $23.50 0.20 0.00 $23.00 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 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 2010 2q 311 10,147,916 1,298,533 12.8% (43,643) 0 0 2 75,011 $24.32 2010 1q 311 10,147,916 1,254,890 12.4% 80,788 1 30,000 2 75,011 $24.63 2009 4q 310 10,117,916 1,305,678 12.9% 31,636 0 0 2 94,000 $23.82 2009 3q 310 10,117,916 1,337,314 13.2% 65,224 5 426,342 2 94,000 $24.29 2009 2q 305 9,691,574 976,196 10.1% 69,023 3 84,981 6 456,342 $24.91 2009 1q 302 9,606,593 960,238 10.0% 135,182 5 302,735 8 511,323 $25.43 2008 4q 297 9,303,858 792,685 8.5% (72,485) 5 105,137 11 774,077 $25.34 2008 3q 292 9,198,721 615,063 6.7% 23,252 11 149,181 13 857,163 $25.71 2008 2q 281 9,049,540 489,134 5.4% 90,852 1 4,500 20 777,308 $25.54 2008 1q 280 9,045,040 575,486 6.4% 216,480 4 353,770 18 745,504 $27.15 2007 4q 276 8,691,270 438,196 5.0% 80,815 1 60,000 20 861,273 $25.25 2007 3q 275 8,631,270 459,011 5.3% 79,021 0 0 19 845,742 $25.12 2007 2q 275 8,631,270 538,032 6.2% 21,344 1 25,000 7 715,742 $24.77 2007 1q 274 8,606,270 534,376 6.2% 120,605 2 29,122 4 428,938 $23.56 2006 4q 272 8,577,148 625,859 7.3% 238,261 3 76,804 6 458,060 $23.42 2006 3q 269 8,500,344 787,316 9.3% (20,304) 1 20,444 9 534,864 $23.43 Source: CoStar Property® ©2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 49