Take a look into the first quarter of 2018 market highlights in the Houston area regarding Industrial Insight and Market Statistics

1. © 2018 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
Q1 2018
Houston
Industrial Insight
Houston’s top industrial submarkets, the Northwest, Southeast, and North,
together accounted for over 77% of leasing activity and over 90% of
construction activity to kick off the new year. UNIS Company was the largest
deal signed by far, with the 3PL provider taking down 257,835 square feet in
the newly constructed Bayport South Business Park in the Southeast for its
first Houston area location. Nine of the top 10 projects under construction
currently fall into one of these three submarkets, the only outlier being Best
Buy’s 554,000-square-foot distribution center in the Southwest submarket.
With vacancy sub-5% for the third consecutive quarter, tenants have a healthy
appetite for new development and are seeking quality locations with modern
features and amenities as existing leases roll.
With Best Buy’s groundbreaking, the metro’s five largest construction projects
are now all over 500,000 square feet and include a mix of build-to-suit and
speculative developments. As space constraints continue to challenge end-
user growth, Houston has become a playing field for local developers and
national investors alike with competition for land sites intensifying. The last
two quarters have seen speculative construction activity hovering at around
70% of new development, up from 45% in 2016 and early 2017.
Outlook
With recent stability in the price of oil and strong job creation forecasted in
the regional economy, further growth is expected for the Houston industrial
market. Fundamentals remain strong, and tenants from a broad swath of
industry types are actively in the market for space. The lack of existing options
in some submarkets will provide opportunities for developers who can secure
land and get quality product out of the ground quickly. Looking ahead, the
construction pipeline will continue ramping up over the course of 2018 to
capture tenant demand.
Fundamentals Forecast
YTD net absorption 1,036,881 s.f. ▲
QTD net absorption 1,036,881 s.f. ▲
Under construction 6,665,102 s.f. ▲
Total vacancy 4.8% ▶
Average asking rent (NNN) $6.10 p.s.f. ▶
Tenant improvements Stable ▶
0
5,000,000
10,000,000
15,000,000
2014 2015 2016 2017 Q1
2018
Supply and demand (s.f.) Net absorption
Deliveries
Further big-box spec development expected for 2018
4.5%
4.7%
5.1%
4.8% 4.8%
2014 2015 2016 2017 Q1 2018
Total vacancy
For more information, contact: Rachel Alexander | rachel.alexander@am.jll.com
• Houston’s ‘big three’ submarkets dominated first quarter leasing and
construction activity
• Continued tight vacancy, coupled with a flight to quality, are driving
many tenants to new development
• Opportunistic and bullish landlords are increasingly breaking ground on
speculative product to capture pent up demand
$2.00
$4.00
$6.00
$8.00
2014 2015 2016 2017 Q1 2018
Average asking rents ($/s.f.)
W&D Manufacturing

2. Houston
Q1 2018
Industrial Statistics
Inventory
(s.f.)
Quarterly
total net
absorption
(s.f.)
YTD
total net
absorption
(s.f.)
YTD
total net
absorption
(% of stock)
Total
vacancy
(%)
Total
availability
(%)
Average
direct asking
rent
($ p.s.f.)
Quarterly
completions
(s.f.)
YTD
completions
(s.f.)
Under
construction
(s.f.)
Houston Totals
Warehouse & Distribution 344,591,291 1,436,482 1,436,482 0.4% 5.1% 8.8% $6.02 1,774,563 1,774,563 6,665,102
Manufacturing 85,492,009 -399,601 -399,601 -0.5% 3.7% 7.2% $6.55 38,420 38,420 0
Totals 430,083,300 1,036,881 1,036,881 0.2% 4.8% 8.5% $6.10 1,812,983 1,812,983 6,665,102
Submarkets
CBD
Warehouse & Distribution 34,425,497 -129,983 -129,983 -0.4% 5.4% 10.0% $4.21 0 0 0
Manufacturing 10,521,837 -16,788 -16,788 -0.2% 2.8% 10.2% $7.02 0 0 0
Totals 44,947,334 -146,771 -146,771 -0.3% 4.8% 10.1% $4.38 0 0 0
Northwest
Warehouse & Distribution 97,961,357 981,304 981,304 1.0% 5.5% 10.3% $6.48 1,170,661 1,170,661 1,899,744
Manufacturing 22,487,407 -19,039 -19,039 -0.1% 3.7% 8.3% $6.32 38,420 38,420 0
Totals 120,448,764 962,265 962,265 0.8% 5.1% 9.9% $6.45 1,209,081 1,209,081 1,899,744
North
Warehouse & Distribution 56,662,706 419,182 419,182 0.7% 6.8% 10.3% $6.63 0 0 1,272,406
Manufacturing 14,086,604 -29,533 -29,533 -0.2% 4.4% 5.8% $5.86 0 0 0
Totals 70,749,310 389,649 389,649 0.6% 6.4% 9.4% $6.49 0 0 1,272,406
Northeast
Warehouse & Distribution 24,065,776 71,854 71,854 0.3% 2.9% 5.5% $5.13 143,500 143,500 0
Manufacturing 6,514,961 -54,220 -54,220 -0.8% 2.8% 3.7% $6.00 0 0 0
Totals 30,580,737 17,634 17,634 0.1% 2.9% 5.1% $5.27 143,500 143,500 0
Southeast
Warehouse & Distribution 63,239,766 12,549 12,549 0.0% 4.7% 9.1% $5.75 460,402 460,402 2,867,359
Manufacturing 16,783,307 -138,921 -138,921 -0.8% 4.3% 5.3% $9.12 0 0 0
Totals 80,023,073 -126,372 -126,372 -0.2% 4.6% 8.3% $6.32 460,402 460,402 2,867,359
South
Warehouse & Distribution 28,131,465 -64,110 -64,110 -0.2% 2.7% 5.2% $4.65 0 0 71,593
Manufacturing 8,102,485 0 0 0.0% 0.4% 5.1% $4.42 0 0 0
Totals 36,233,950 -64,110 -64,110 -0.2% 2.2% 5.2% $4.60 0 0 71,593
Southwest
Warehouse & Distribution 40,104,724 145,686 145,686 0.4% 4.8% 6.1% $6.66 0 0 554,000
Manufacturing 6,995,408 -141,100 -141,100 -2.0% 7.0% 12.0% $7.47 0 0 0
Totals 47,100,132 4,586 4,586 0.0% 5.1% 7.0% $6.84 0 0 554,000
Rachel Alexander | Research Manager
1400 Post Oak Blvd., Suite 1100, Houston, TX 77056 | tel +1 713 888 4044 | rachel.alexander@am.jll.com
2018 Jones Lang LaSalle IP, Inc. All rights reserved.

3. Houston
Q1 2018
Industrial leasing activity
This report analyzes all closed industrial leases > 20,000 s.f.
49
2,589,382
2,251,264
338,118
-
49
2,589,382
Avg. building
construction date
10%
7%
23%
20%
15%
12%
Top 10 lease transactions during the quarter
Size Building status Year built
257,835 Existing 2018
170,017 Existing 1980
138,921 Existing 1976
124,385 Existing 2015
112,000 Existing 2016
107,600 Existing 1980
94,000 Existing 1970
92,000 Existing 1988
90,864 Existing 2014
89,440
Under
Construction
2018
Palmer Logistics
8575 Volta Dr North
Richardson Steel
DirectNorthMcLane Global 1902 Cypress Station Dr
Leader Gasket 850 Sens Rd Southeast Direct
Undisclosed 11220 Ella Blvd North Direct
WeldFit 11800 Charles Rd Northwest Direct
Undisclosed 3000 Brittmoore Rd Northwest
Flexo Converters USA
Direct
Balflex USA 6000 S Loop Frwy E South Direct
Direct
Lease type
10535 Red Bluff Rd Southeast Direct
2333 Clinton Dr Southeast
Northeast9033-9055 Spikewood Dr Direct
Direct
UNIS Company
Tenant Address Submarket
Avg. lease size (in s.f.)
Expansion in market
Expansion in building
Renewal
Extension (< 36-month term)
Relocation within market
New to market
Leasing activity by submarket QTD
At a glance
Total leases QTD
Total s.f. leased QTD
Leasing activity by size QTD
Total s.f. leased QTD:
Warehouse/Distribution
Leasing activity QTD
1994
Total s.f. leased QTD:
Manufacturing
Leasing activity (s.f.) by transaction type QTD
Total s.f. leased QTD:
Special Purpose
Total leases YTD
52,845
Total s.f. leased YTD
1
5 9 34
-
200,000
400,000
600,000
800,000
1,000,000
1,200,000
250,000-499,999 100,000-249,999 50,000-99,999 10,000-49,999
Total leased Number of leases
27.7%
25.3%
24.4%
6.6%
5.9%
5.4% 4.7%
Southeast
North
Northwest
Northeast
Southwest
South
CBD
-
2,000,000
4,000,000
6,000,000
8,000,000
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018
Historical leasing activity
Source: JLL Research 2017 Jones Lang LaSalle IP, Inc. All rights reserved.

4. Q1 2018
Industrial development
This report analyzes all industrial developments under construction & new deliveries > 30,000 s.f.
Total leased at delivery (%) 86.3%
Total speculative at delivery (s.f.) 653,483
Total BTS at delivery (s.f.) 1,159,500
Total Owner-User at delivery (s.f.) -
Total # of properties delivered 7
Asking rental rate (low - high) Withheld
Top 5 projects delivered to date
Building RBA (s.f.) Delivery date
Leased at
delivery (%)
31819 Highway 90 E 1,016,000 Q1 2018 100%
Bayport South Business Park 257,835 Q1 2018 100%
Independence Logistics Park Bldg 10 167,867 Q1 2018 44%
6410 Langfield Rd 154,661 Q1 2018 0%
13300 Lockwood Rd 143,500 Q1 2018 100%
Total pre-leased (%) 41.5%
Total speculative under construction (s.f.) 4,599,915
Total BTS under construction (s.f.) 2,065,187
Total Owner-user under construction (s.f.) -
Total # of properties UC 26
Asking rental rate (low - high) Withheld
Top 5 projects currently under construction
Building RBA (s.f.) Delivery date Pre-leased (%)
525 Cane Island Pkwy 673,785 Q3 2018 0%
Emser Tile 601,426 Q2 2018 100%
Port Crossing Commerce Center Bldg 2 600,360 Q2 2018 0%
Best Buy Distribution Center 554,000 Q4 2018 100%
Vinmar International 500,006 Q3 2018 100%
Speculative
Speculative
BTS
Submarket
Under construction
6,665,102
Under construction (s.f.)
Under construction in-depth
Upcoming deliveries by year (s.f., excludes YTD completions)
New deliveries
Completions in-depth
1,812,983
Total delivered YTD (s.f.)
Historical deliveries (s.f.)
Construction typeOwnerSubmarket
Northeast
Northwest
Southeast
Southeast
Northwest
McCord Development
Carson Companies
Hines
Johnson Development
Duke Realty
BTS
Speculative
Southeast
Southwest
Southeast
North
Northwest
BTS
BTS
Owner Construction type
Speculative
Avera Companies
Seefried Industrial Properties
Liberty Property Trust
Hines
Oakmont Industrial
BTS
Speculative
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
2011 2012 2013 2014 2015 2016 2017 Q1 2018
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
2018
BTS Speculative
Source: JLL Research 2017 Jones Lang LaSalle IP, Inc. All rights reserved.

5. Houston
Q1 2018
Industrial sales activity
This report analyzes all industrial sales > 30,000 s.f.
$103,080,720
15
$87
Not available
96%
4.1%
4.75-5.25% 0 0 $0
6.75-7.25% 0 15 $103,080,720
Top 10 sales transactions this year
Size (s.f.) $ p.s.f. Sale date
700,644 Undisclosed Feb-18
601,426 Undisclosed Jan-18
262,630 $139 Jan-18
232,950 $96 Feb-18
208,750 $105 Feb-18
129,600 $59 Feb-18
124,900 Undisclosed Feb-18
105,300 $40 Jan-18
94,250 Undisclosed Feb-18
89,375 Undisclosed Feb-18
14310 & 14320 Interdrive E Schroeder Partnership, Ltd Interbelt Truck Terminal Undisclosed
9301-9307 Harwin Dr Undisclosed Undislcosed Undisclosed
8807 Liberty Rd Plateplus Inc Cargill Inc Undisclosed
12200 Parc Crest Dr Matthew Davis Titan RE Investment Group $4,260,000
5737 & 5747 Brittmoore Rd Prologis Triten Real Estate Partners $21,918,750
5650 & 5670 Guhn Rd Trien Real Estate Partners Prologis $7,646,400
8844, 8846, 8848 & 8850 N Sam
Houston Pkwy W
Sealy & Company The Levey Group $36,505,570
Multiple STAG Industrial AIV, Inc. $22,400,000
10700 Telge Rd Crow Holdings Albertsons Companies Undisclosed
10433 Ella Blvd Coca-Cola TIAA-CREF Undisclosed
Building address Buyer company Seller company Sales price $
Core Class A Flex
Average partial interest
acquired
Number of domestic
buyers
Domestic capital $
Sales volume $ by submarket Top buyers (s.f.) Top sellers (s.f.)
Cap rate range Transactions details
Core Class A Ind.
Number of partial interest
transactions
Number of foreign
buyers
Foreign capital $
At a glance Sales activity by building type
Total volume YTD
Number of transactions YTD
Average Class A price p.s.f. YTD
Average Class A cap rate YTD
Warehouse/Dist. sales volume
as % of total YTD
Manufacturing sales volume as
% of total YTD
29%
24%
11%
9%
9%
5%
5%
4% 4%
Crow Holdings
Coca-Cola
Sealy & Company
STAG Industrial
Prologis
Trien Real Estate Partners
Plateplus Inc
Matthew Davis
Schroeder Partnership, Ltd
29%
24%
11%
9%
9%
5%
5%
4%
4%
Albertsons Companies
TIAA-CREF
The Levey Group
AIV, Inc.
Triten Real Estate Partners
Prologis
Cargill Inc
Titan RE Investment Group
Interbelt Truck Terminal
$98,820,720
$4,260,000
2,775,561
105,300
0 s.f.
500,000 s.f.
1,000,000 s.f.
1,500,000 s.f.
2,000,000 s.f.
2,500,000 s.f.
3,000,000 s.f.
$0
$20,000,000
$40,000,000
$60,000,000
$80,000,000
$100,000,000
$120,000,000
Warehouse / Distribution Manufacturing
$4,260,000
$7,100,000
$91,720,720
Southwest
South
Northwest
Source: JLL Research 2017 Jones Lang LaSalle IP, Inc. All rights reserved.

6. Q1 2018
Warehouse/Distribution large blocks
This report analyzes all existing and under construction contiguous warehouse/distribution blocks > 100,000 s.f.
Address Submarket Block size Year built
10700 Telge Rd Northwest 700,644 1983
525 Cane Island Pkwy Northwest 673,785 2018
4906 Broadway St Southeast 605,879 1954
1302 Wharton Weems Blvd Southeast 600,360 2018
600 Fallbrook Dr North 500,400 2016
9835A Genard Rd Northwest 417,350 1980
6751 N Eldridge Pkwy Northwest 411,442 2018
7500 Volta Dr North 337,700 2018
I-10 East & Thompson Rd Southeast 294,323 2018
11833 Cutten Rd North 293,280 2018
Houston
Largest block by submarket
Top 10 largest contiguous blocks
Northeast
Quick stats
700,644
605,879
500,400
237,879
217,440
179,900
162,178
Submarket s.f.
Total market availability
Total number of blocks
Total s.f. of blocks
Largest block
61
12,600,686
700,644
Northwest
Southeast
North
CBD
Southwest
South
206,569Average block
Blocks by size
Submarket concentrations
11
8
15
27
0
5
10
15
20
25
30
250,000 + 200,000 - 249,999 150,000 - 199,999 100,000 - 149,999
7.0%
7.5%
8.0%
8.5%
9.0%
9.5%
10.0%
Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18
Northwest,
4,872,317
North,
1,890,172 Northeast,
526,479
Southeast,
3,727,056
South,
412,900
Southwest,
217,440
CBD, 954,322
JLL Research 2017 Jones Lang LaSalle IP, Inc. All rights reserved.