Total rent in Houston fell for the second straight year in 2016, declining 4.4% to $43.68 per square foot. Weak leasing and a spike in sublet space forced landlords to cut rents across the city, with the sharpest drops seen in West Houston and the Energy Corridor. Concessions increased by 20.1% as landlords offered more tenant improvement allowances and free rent to attract tenants. Tenant effective rent declined 20.3% while landlord effective rent dropped 36.3% and now sits just above 2011 levels. Rents are expected to decrease further in 2017 as oil and gas prices remain low, limiting growth in the energy industry.

1. SERI2017 Houston 1
Rent TrendsMarket Review & Outlook
Review: Energy Correction Hits Rents Hard
Deal volume in the region plummeted to 8.8 msf in
2016, well below the long-term average of 12.2 msf.
Weak leasing, coupled with a spike in sublet supply,
forced landlords to make marketwide adjustments
to rent. West Houston and the Energy Corridor
posted the sharpest declines, but rents pulled back
Downtown as well.
Outlook: Additional Decrease Likely in 2017
Oil and gas prices stabilized and then pushed a
bit higher in the second half of the year. Barring
a major geopolitical crisis, prices are not likely
to recover to levels that will support drilling and
production on the scale last seen in 2013. Leasing
volume may bounce back slightly, but not to pre-
correction levels.
2016
%
Change
Net Rent $27.65 -7.1
Operating Expenses 6.68 -1.0
Real Estate Taxes 7.05 2.2
Tenant Electricity 2.30 0.0
Total Rent 43.68 -4.4
Amortized Concessions -11.29 20.1
Tenant Effective Rent 32.39 -20.3
Landlord Effective Rent 14.47 -36.3
Average Annual Change
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
2015-
2016
2011-
2016
2006-
2016
Total Rent $25.37 $31.32 $36.83 $34.45 $32.48 $34.37 $37.96 $44.18 $49.04 $45.70 $43.68 -4.4% 4.9% 5.6%
Tenant Effective Rent $21.23 $27.51 $31.93 $26.97 $25.33 $27.51 $31.43 $35.71 $40.42 $40.64 $32.39 -20.3% 3.3% 4.3%
Landlord Effective Rent $10.62 $14.68 $18.53 $14.20 $12.36 $14.17 $17.02 $19.25 $22.50 $22.71 $14.47 -36.3% 0.4% 3.1%
Average Annual Change
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
2015-
2016
2011-
2016
2006-
2016
Concessions $31.67 $29.17 $37.50 $57.23 $54.75 $52.55 $50.00 $64.81 $66.00 $72.00 $86.47 20.1% 10.5% 10.6%
Concessions/Rent Ratio* 17.2% 12.9% 14.1% 22.9% 23.3% 21.1% 18.2% 20.2% 18.6% 21.7% 27.3%
$0
$10
$20
$30
$40
$50
$60
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
$0
$20
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$80
$100
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Total Rent Tenant Effective Rent Landlord Effective Rent
* Equals amortized concessions as a percentage of total rent.
Concessions

2. SERI20172
$0
$10
$20
$30
$40
$50
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Total rent fell for the second straight year, declining by 4.4% to $43.68. Net rent dropped by 7.1% to $27.65. Operating expenses fell by 1.0% but real estate taxes
rose by 2.2%. The value of concession packages pushed higher, spiking by 20.1% to $86.47. Tenant effective rent declined by 20.3% to $32.39, while landlord
effective rent dropped sharply by 36.3% to $14.47, placing it just above 2011 levels.
Net Rent Operating Expenses Real Estate Taxes Electricity
Average Annual Change
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
2015-
2016
2011-
2016
2006-
2016
Net Rent $15.82 $19.82 $25.00 $23.15 $20.90 $22.50 $25.18 $29.62 $33.25 $29.75 $27.65 -7.1% 4.2% 5.7%
Operating Expenses $4.45 $4.97 $5.43 $5.79 $6.10 $6.22 $6.35 $6.50 $6.68 $6.75 $6.68 -1.0% 1.4% 4.1%
Real Estate Taxes $3.16 $4.48 $4.03 $3.45 $3.37 $3.47 $4.18 $5.76 $6.81 $6.90 $7.05 2.2% 15.2% 8.4%
Electricity $1.94 $2.05 $2.37 $2.06 $2.11 $2.18 $2.25 $2.30 $2.30 $2.30 $2.30 0.0% 1.5% 1.9%
Total Rent $25.37 $31.32 $36.83 $34.45 $32.48 $34.37 $37.96 $44.18 $49.04 $45.70 $43.68 -4.4% 4.9% 5.6%

3. Savills Effective Rent Index 2017 I Houston 3
Lease Terms/Concessions
Review: Concessions Continue Ascent
Anemic leasing kept companies negotiating deals in the
driver’s seat during 2016. Extended free rent periods
and generous improvement allowances were the norm
for businesses willing to commit to term.
Leases Under 50,000 sf
Average Term: 7 years
Free Rent: 3 months
Tenant Improvements: $35.00/sf
Parking: 3 months
Refurbish Allowance: $3.00-$5.00/sf
Leases Over 50,000 sf
Average Term: 10 years
Free Rent: 7 months
Tenant Improvements: $45.00/sf
Parking: 5-7 months
Refurbish Allowance: $5.00-$7.00/sf
Outlook: Concessions to Stabilize
Demand is not likely to rebound in the short-term
and companies have multiple space options to
consider. In turn, tenants can expect concession
packages to stay aloft. Larger companies opting
for a renewal may also be able to obtain some
incentives.
Total Rent^
Tenant Effective Rent
Landlord Effective Rent
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Houston $25.37 $31.32 $36.83 $34.45 $32.48 $34.37 $37.96 $44.18 $49.04 $45.70 $43.68
U.S Median $37.59 $40.20 $39.34 $35.60 $35.46 $36.79 $37.93 $37.85 $40.24 $42.32 $42.84
U.S Average $39.99 $45.13 $44.57 $38.74 $38.40 $40.45 $40.93 $42.06 $45.61 $47.41 $49.42
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Houston $21.23 $27.51 $31.93 $26.97 $25.33 $27.51 $31.43 $35.71 $40.42 $40.64 $32.39
U.S Median $29.36 $32.36 $32.93 $26.55 $25.63 $26.99 $27.77 $28.20 $29.39 $30.91 $30.73
U.S Average $33.12 $37.93 $36.24 $28.48 $28.52 $30.01 $30.61 $31.60 $34.11 $36.34 $37.55
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Houston $10.62 $14.68 $18.53 $14.20 $12.36 $14.17 $17.02 $19.25 $22.50 $22.71 $14.47
U.S Median $14.17 $16.54 $18.54 $9.81 $9.08 $8.77 $10.53 $11.82 $12.04 $13.36 $14.59
U.S Average $16.78 $20.57 $18.35 $10.60 $10.61 $11.70 $12.23 $13.05 $15.09 $16.99 $17.82
$0 $10 $20 $30 $40 $50
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2007
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$0 $5 $10 $15 $20 $25
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
^ All rents are unweighted. See National SERI for weighted averages.
Houston Total Rent Houston Tenant Effective Rent Houston Landlord Effective Rent
U.S. AverageU.S. Median
Local & U.S. Historical Rent Trends

4. 4 Savills Effective Rent Index 2017
Research Contacts
Keith DeCoster
Director, U.S. Analytics
kdecoster@savills-studley.com
(212) 326-1023
Tim Wingfield
Research Manager
twingfield@savills-studley.com
(713) 237-5515
Since 1995, the Savills Effective Rent Index (SERI) has been providing the real
estate industry’s only comprehensive, in-depth study of effective rental rate trends
for prime Class A office properties in the nation’s major Central Business Districts
(CBDs) and selected suburban markets. Using actual completed transaction data
as its source, the SERI report offers “real world” numbers that reflect negotiated
terms, including lease concessions and operating expense information. All numbers
in this report are based on larger long-term direct leases signed in higher-caliber
Class A properties located in the Houston CBD during 2016.
*Updates to discount rate and building inventory have created revisions to historical data.
Entire contents copyright © 2017 Savills Studley
Glossary
Concessions: Includes the tenant improvement allowance plus the value of the
rental rate abatement. Amortized concessions are amortized over the average
market lease term, using beginning-of-period payments.
Landlord Effective Rent: An estimate of rent received from a tenant less related
expenses.
Net Rent: The gross rental rate exclusive of the tenant’s proportionate share of real
estate taxes, operating expenses and tenant electricity.
Operating Expenses: Includes (1) heating, ventilation and air conditioning (HVAC);
(2) maintenance; (3) common area utilities and electricity; (4) cleaning; and (5) all
other non-capital costs associated with the operation of a building.
Real Estate Taxes: Local real estate taxes exclusive of special assessments and
other one-time charges.
Tenant Effective Rent: An estimate of the actual cost of occupancy for the tenant.
The calculation is the total rent minus amortized lease concessions.
Tenant Electricity: Payments made by the tenant, whether to the landlord or public
utility, or by the landlord as a general building expense, for the electrical power
utilized within a tenant’s premises, exclusive of building HVAC.
Total Rent: The sum of the four rental rate components: net rent, operating
expenses, real estate taxes and electricity.Manhattan (MT)
San Francisco
Washington DC
West LA
Manhattan (DT)
Chicago
Silicon Valley
Miami
Houston
Northern Virginia
Downtown LA
Fort Lauderdale
Denver
Atlanta
New Jersey
Orange County
Dallas
Philadelphia
San Diego
Tampa Bay
$0 $5 $10 $15 $20 $25 $30 $35 $40 $45 $50 $55 $60 $65 $70 $75 $80 $85 $90 $95 $100 $105
Houston Contact Information
333 Clay Street
Suite 3700
Houston, TX 77002
(713) 522-5300
Rent Components
Net Rent Operating Expenses Real Estate Taxes Electricity