Q4 2012 Houston Industrial Market Research Report

166 views

Published on

Published in: Real Estate
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
166
On SlideShare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
3
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Q4 2012 Houston Industrial Market Research Report

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

×