tenant advisor - houston office market review 4q-10
Post on 09-Apr-2018
222 Views
Preview:
TRANSCRIPT
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
1/38
Houston Office Market ReviewHouston Office Market Review
Year End 2010Year End 2010
The Tenant AdvisorThe Tenant Advisor
CCOYOY DDAVIDSONAVIDSONSSENIORENIOR VVICEICE PPRESIDENTRESIDENT
CCOLLIERSOLLIERS IINTERNATIONALNTERNATIONAL | H| HOUSTONOUSTON
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
2/38
The Tenant Advisor
Table of Contents
Market Highlights
Market Summary Market Indicators
- Rental Rates
- Vacancy
- Net Absorption
Submarket Profiles Sales Activity
Development Pipeline
Houston Office Market Review | 4Q 2010
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
3/38
Market Highlights
On average Houston office building owners saw posit ive absorption in the 4th quarter of2010 with suburban markets outperforming the CBD. As a result of the year-endpush, vacancy rates decreased slightly with the year - over - year occupancy rate increasingfrom 83.5% to 84.0% citywide.
Houston registered 548,000 square feet of positive net absorption in 2010 as a result of thestrong 4th quarter when 618,000 square feet of positive absorption occurred.
Despite the overall net absorption gain, tenants were still able to take advantage of declining rents. Class A buildings in the CBD experienced a 7.9% drop in average quotedrents to $34.60/SF from $37.30/SF a year ago. During the same period, Suburban Class Arates decreased by 0.6% to $27.11.
Houston Office Market
Houstons office leasing activity reached 3.0 million square feet in the 4th quarter, compared to 3.6 million square feet in the samequarter last year. Leasing activity is still below levels prior to the economic downturn, and an increasing number of office tenants arerenewing lease commitments with better concession packages or relocating to buildings/submarkets offering more attractive terms.
The most significant new office lease signed in the fourth quarter in the CBD was the British Gas lease of 354,000 SF in Hines newpre-certified Platinum LEED development, MainPlace. The new lease includes naming rights to the building, BG Place, which willbe ready for occupancy in February 2011. BG Group will be relocating from their existing Galleria area space in mid to late 2011.
The largest off ice lease renewal signed in fourth quarter was Invescos renewal of 400,000 square feet in 11 Greenway Plazalocated in the Greenway submarket.
Brookfield Properties acquisition of the 1.2M-square-foot Heritage Plaza from Goddard Investment Group for $322 million ($280 persquare foot) in the CBD submarket was completed in December in what was the second highest sales price paid for an officebuilding in Houston history.
4th Quarter Highlights
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
4/38
Market Summary
Class TotalInventory
Sq. Ft.
DirectVacantSq. Ft.
DirectVacancy
Rate
SubleaseVacantSq. Ft.
TotalVacantSq. Ft.
Q4Vacancy
Rate
Q4 NetAbsorption
Sq. Ft.
2010 NetAbsorption
Sq. Ft.
WeightedAvg. QuotedGross Rate
Central Business District
A 26,670,173 2,190,951 8.2% 591,284 2,782,235 10.4% (123,616) (559,488) $34.61
B 9,426,890 1,996,855 21.2% 31,850 2,028,705 21.5% 6,997 (54,218) $23.95
C 1,416,525 772,229 54.5% 0 772,229 54.5% 9,718 20,839 $18.07
Total 37,513,588 4,960,035 13.2% 623,134 5,583,169 14.9% (106,901) (592,867) $30.01
Suburban
A 69,047,289 11,451,671 16.6% 668,537 12,120,308 17.6% 664,035 748,190 $27.11
B 69,063,451 10,650,454 15.4% 624,500 11,274,954 16.3% 12,433 191,253 $17.71
C 19,281,248 2,137,111 11.1% 23,568 2,160,679 11.2% 48,296 129,203 $14.69
Total 157,391,988 24,239,236 15.4% 1,316,605 25,555,941 16.2% 724,764 1,068,646 $21.74
Citywide
A 95,717,462 13,642,622 14.3% 1,259,821 14,902,543 15.6% 540,419 188,702 $28.63
B 78,490,341 12,647,309 16.1% 656,350 13,303,659 16.9% 19,430 137,035 $18.50
C 20,697,773 2,909,340 14.1% 23,568 2,932,908 14.2% 58,014 150,042 $15.07
Total 194,905,576 29,199,271 15.0% 1,939,739 31,139,110 16.0% 617,863 475,779 $23.08
CBD | Suburban | Citywide
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
5/38
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
6/38
Rental Rates
Rental Rates
Citywide rental rates have declined throughout the year.
On a year-over-year basis, CBD Class A average quoted rental rates dropped by 7.9 % to $34.61 per square foot (from$37.36), while suburban Class A rates decreased 0.6 % to $27.11 per square foot. CBD Class B rates increased by 0.2 % to$23.95 per square foot (from $23.91), while suburban Class B rates fell 5.7 % to $17.11 per square foot on a full-servicebasis.
$38.41 $37.36$34.61
$27.88 $27.26 $27.11
$-
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
$40.00
$45.00
4Q 08 4Q 09 4Q 10
CBD
Suburban
Class A Rental RatesIs the market improving?
There is a natural sequence of events in a marketrecovery. The first sign of a recovery will be pushback from Landlords in terms of the incentives or concessions packages (tenant improvementallowance, free rent, abated parking charges) offeredto attract new tenants and even more so to retainexisting tenants. We are seeing early signs of this in
specific submarket where demand has been stronger.The second sequence will be compression in terms ofthe initial quoted rental rates and where dealsactually get signed.
Finally as the market continues recovery and thesetwo phases occur, then we will begin to see upwardmovement in quoted rental rates. Until demandoutpaces supply, the current office tenants market isexpected to continue through the end of the year.
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
7/38
Rental Rates
$-
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
$40.00
$45.00
1Q
06
2Q
06
3Q
06
4Q
06
1Q
07
2Q
07
3Q
07
4Q
07
1Q
08
2Q
08
3Q
08
4Q
08
1Q
09
2Q
09
3Q
09
4Q
09
1Q
10
2Q
10
3Q
10
4Q
10
CBD
Suburban
Period CBD Suburban
1Q 06 $ 20.15 $ 20.00
2Q 06 $ 20.89 $ 20.45
3Q 06 $ 22.68 $ 20.24
4Q 06 $ 23.90 $ 22.381Q 07 $ 27.70 $ 23.13
2Q 07 $ 32.50 $ 24.41
3Q 07 $ 35.76 $ 25.08
4Q 07 $ 36.42 $ 26.61
1Q 08 $ 38.51 $ 27.33
2Q 08 $ 38.18 $ 27.76
3Q 08 $ 38.35 $ 28.70
4Q 08 $ 38.41 $ 27.88
1Q 09 $ 38.87 $ 28.85
2Q 09 $ 38.78 $ 27.59
3Q 09 $ 37.45 $ 27.31
4Q 09 $ 37.36 $ 27.36
1Q 10 $ 35.57 $ 27.88
2Q 10 $ 35.86 $ 27.35
3Q 10 $ 35.16 $ 27.30
4Q 10 $ 34.61 $ 27.11
5 Year Trend | Class A
AVERAGEASKING RENTAL RATE
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
8/38
Rental Rates
$34.61
$29.82 $29.50 $29.48 $29.21 $29.13 $29.06$27.95 $27.78 $27.49 $27.00 $26.17 $26.14 $25.33
$22.97 $22.65
$19.61
$15.05
$-
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
$40.00
4Q 2010 | Average Asking Rental Rate
Rental Rates | Class A
By: Submarket
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
9/38
Rental Rates
Rental Rates | Class B
By: Submarket
$23.95 $23.36
$21.24 $21.24$20.14 $20.07 $19.67 $19.49 $19.32 $19.15 $18.93 $18.56 $18.49
$17.54$15.94 $15.45 $15.30 $15.17
$-
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
4Q 2010 | Average Asking Rental Rate
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
10/38
Vacancy
Vacancy & Availability
Vacancy levels were down overall for suburbanproperties and up slightly overall for CBD properties.Houstons citywide office vacancy for all propertyclasses averaged 16.0% in the fourth quarter, comparedto 16.6% this time last year.
In the CBD, top-tier properties resilience wanedbetween quarters, staying in the double-digits, withClass A vacancy at 10.4%, compared to 8.4% one yearago. CBD Class B properties posted 21.5%vacancy, down from 22.8% 12 months earlier.
While the overall suburban vacancy rate remained indouble-digits, Class A suburban vacancy actuallydropped between quarters to 17.6% from 19.3%. By
comparison, suburban Class B vacancy remainedunchanged at 16.3%.
Citywide, a total of 53 office properties had a minimum of 100,000 square feet available for lease in both direct andsublease space16 of those properties have over 200,000 square feet availableat the end of the fourth quarter.Sublease space totaled 4.3 million square feet, including 2.0 million square feet of vacant space and 2.3 million squarefeet of subleases available for occupancy over the next 12 months. The largest sublease space being marketed is DevonEnergys space, 281,755 square feet in Two Allen Center and 120,551 square feet in Three Allen Center (available foroccupancy 4/2011) in the CBD. In Westchase, 3600 Briarpark has the largest suburban sublease spaceavailable, 160,000 square feet.
15
33
73
119
-
20
40
60
80
100
120
140
< 200,000 SF < 100,000 SF < 50,000 SF < 20,000 SF
Available Contiguous Blocks by Size
Class A Office Space
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
11/38
Vacancy
Vacancy Rate | All ClassesCitywide
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
OVERALL VACANCY RATE
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
12/38
Vacancy
Vacancy Rate | Class ACBD & Suburban
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
CBD
Suburban
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
13/38
Vacancy
Vacancy Rate | All ClassesCBD & Suburban
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
CBD
Suburban
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
14/38
Vacancy
14,902,54313,303,659
2,932,908
163,766,466
Class A
Class B
Class C
Occupied
A aila le pace y Class
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
15/38
Absorption
Net Absorption
5,734,3676,089,042
2,159,016
(2,263,025)
475,779
(3,000,000)
(2,000,000)
(1,000,000)
-
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
Y 2006 Y 2007 Y 2008 Y 2009 Y 2010
Houston recorded positive net absorption of 617,863 square feet in the fourth quarter, compared to 45,967 square feetnegative net absorption at the same time last year. City-wide year-end net absorption was positive 475,779 square feetwith suburban Class A space contributing most of that total with year-end positive net absorption of 748,190 squarefeet, followed by suburban Class B space with positive net absorption at 191,253 square feet. In contrast, CBD Class Aand Class B space both reported negative net year-end absorption of 559,488 and 54,218 square feet, respectively.
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
16/38
Absorption
Net Absorption | Quarterly
(1,500,000)
(1,000,000)
(500,000)
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
17/38
Absorption
700,549
271,470
154,869127,801 127,784
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
Katy Freeway Westchase Woodlands Galleria Northwest
Top Performing Submarkets
Net Absorption 2010
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
18/38
Submarket Profiles1. Central Business District
2. Galleria | West Loop3. Bellaire
4. Greenway Plaza
5. Allen Parkway | Midtown
6. San Felipe | Voss
7. Katy Freeway | Energy Corridor
8. Westchase
9. Southwest
10. Sugar Land | East Fort Bend County
11. Northwest
12. Greenspoint | North Belt
13. FM 1960
14. The Woodlands
15. South Main | Medical Center
16. Gulf Freeway | Pasadena
17. NASA | Clear Lake
18. Kingwood | Humble
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
19/38
Submarket Profile
Central Business District
Class TotalInventory
Sq. Ft.
DirectVacantSq. Ft.
DirectVacancy
Rate
SubleaseVacantSq. Ft.
TotalVacantSq. Ft.
Q4Vacancy
Rate
Q4 NetAbsorption
Sq. Ft.
2010Absorption
Sq. Ft.
WeightedAvg. QuotedGross Rate
A 26,670,173 2,190,951 8.2% 591,284 2,782,235 10.4% (123,616) (543,318) $34.61
B 9,426,890 1,996,855 21.2% 31,580 2,028,705 21.5% 6,997 138,921 $23.95
C 1,416,525 722,229 54.5% 0 772,229 54.5% 9,718 20,839 $18.07Total 37,513,588 4,960,035 13.2% 623,134 5.583,169 14.9% (106,901) (383,558) $30.01
WEIGHTED AVERAGE QUOTED GROSS RENTAL RATE
$34.61
$23.95
$18.07
$30.01
$-
$5.00
$10.00
$15.00
$20.00
$25.00$30.00
$35.00
$40.00
Class A Class B Class C Total
Q4 09 Q4 10
Class A Rent $37.36 $34.61
Class B Rent $23.91 $23.95
Class A Vacancy 8.4% 10.4%
Class B Vacancy 22.8% 21.5%
Total Vacancy 12.8% 14.9%
YEAR OVERYEAR TREND
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
20/38
Submarket Profile
Galleria | West Loop
Class TotalInventory
Sq. Ft.
DirectVacantSq. Ft.
DirectVacancy
Rate
SubleaseVacantSq. Ft.
TotalVacantSq. Ft.
Q4Vacancy
Rate
Q4 NetAbsorption
Sq. Ft.
2010Absorption
Sq. Ft.
WeightedAvg. QuotedGross Rate
A 16,194,891 1,551,172 9.6% 129,635 1,680,807 10.4% 39,833 86,637 $29.06
B 5,546,693 1,275,999 23.0% 13,517 1,289,476 23.2% (56,899) 18,710 $20.30
C 426,332 940 0.2% 0 940 0.2% 1,504 22,454 $16.50Total 22,167,916 2,828,071 12.8% 143,152 2,971,223 13.4% (15,562) 127,801 $26.26
WEIGHTED AVERAGE QUOTED GROSS RENTAL RATE
Q4 09 Q4 10
Class A Rent $28.91 $29.06
Class B Rent $22.09 $20.30
Class A Vacancy 11.2% 10.4%
Class B Vacancy 22.5% 23.2%
Total Vacancy 14.1% 13.4%
YEAR OVERYEAR TREND
$29.06
$20.30
$16.50
$26.26
$-
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
Class A Class B Class C Total
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
21/38
Submarket Profile
Bellaire
Class TotalInventory
Sq. Ft.
DirectVacantSq. Ft.
DirectVacancy
Rate
SubleaseVacantSq. Ft.
TotalVacantSq. Ft.
Q4Vacancy
Rate
Q4 NetAbsorption
Sq. Ft.
2010Absorption
Sq. Ft.
WeightedAvg. QuotedGross Rate
A 1,389,252 133,752 9.6% 8,169 141,921 10.2% 1,137 (26,787) $22.97
B 952,823 49,499 5.2% 0 49,499 5.2% (5,439) (59,063) $17.54
C 545,303 41,100 7.5% 0 41,100 7.5% 6,492 (8,899) $15.07Total 2,887,378 224,351 7.8% 8,169 232,520 8.1% 2,190 (94,749) $20.59
WEIGHTED AVERAGE QUOTED GROSS RENTAL RATE
Q4 09 Q4 10
Class A Rent $23.19 $22.97Class B Rent $17.66 $17.54
Class A Vacancy 8.3% 10.2%
Class B Vacancy 5.3% 5.2%
Total Vacancy 6.8% 8.1%
YEAR OVERYEAR TREND
$29.06
$20.30
$16.50
$26.26
$-
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
Class A Class B Class C Total
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
22/38
Submarket Profile
Greenway Plaza
Class TotalInventory
Sq. Ft.
DirectVacantSq. Ft.
DirectVacancy
Rate
SubleaseVacantSq. Ft.
TotalVacantSq. Ft.
Q4Vacancy
Rate
Q4 NetAbsorption
Sq. Ft.
2010Absorption
Sq. Ft.
WeightedAvg. QuotedGross Rate
A 6,167,603 907,325 14.7% 136,251 1,043,576 16.9% 68,347 (26,009) $27.00
B 2,574,339 260,963 10.1% 1,459 262,422 10.2% (1,305) (8,983) $21.24
C 873,877 244,814 28.0% 0 244,814 28.0% 150 (15,065) $17.09Total 9,615,819 1,413,102 14.7% 137,710 1,550,812 16.1% 67,192 1,961 $24.71
WEIGHTED AVERAGE QUOTED GROSS RENTAL RATE YEAR OVERYEAR TREND
Q4 09 Q4 10
Class A Rent $30.38 $27.00Class B Rent $21.05 $21.24
Class A Vacancy 19.1% 16.9%
Class B Vacancy 9.0% 10.2%
Total Vacancy 15.7% 16.1%
$27.00
$21.24
$17.09
$24.71
$-
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
Class A Class B Class C Total
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
23/38
Submarket Profile
Allen Parkway | Midtown
Class TotalInventory
Sq. Ft.
DirectVacantSq. Ft.
DirectVacancy
Rate
SubleaseVacantSq. Ft.
TotalVacantSq. Ft.
Q4Vacancy
Rate
Q4 NetAbsorption
Sq. Ft.
2010Absorption
Sq. Ft.
WeightedAvg. QuotedGross Rate
A 1,217,048 211,890 17.4% 100,977 312,867 25.7% 19,900 36,724 $26.17
B 3,082,567 219,451 7.1% 1,864 221,315 7.2% (759) (36,961) $23.36
C 1,163,150 437,099 37.6% 0 437,099 37.6% 2,934 15,497 $19.48
Total 5,462,765 868,440 15.9% 102,841 977,281 17.8% 22,075 15,260 $24.45
WEIGHTED AVERAGE QUOTED GROSS RENTAL RATE
Q4 09 Q4 10
Class A Rent$24.06 $26.17
Class B Rent $20.63 $23.36
Class A Vacancy 23.1% 25.7%
Class B Vacancy 7.2% 7.2%
Total Vacancy 17.8% 17.8%
YEAR OVERYEAR TREND
$26.17$23.36
$19.48
$24.45
$-
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
Class A Class B Class C Total
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
24/38
Submarket Profile
San Felipe | Voss
Class TotalInventory
Sq. Ft.
DirectVacantSq. Ft.
DirectVacancy
Rate
SubleaseVacantSq. Ft.
TotalVacantSq. Ft.
Q4Vacancy
Rate
Q4 NetAbsorption
Sq. Ft.
2010Absorption
Sq. Ft.
WeightedAvg. QuotedGross Rate
A 1,737,712 280,354 16.1% 2,688 283,042 16.3% (7,423) (33,953) $29.21
B 3,271,828 302,753 9.3% 24,580 327,333 10.0% (828) 7,469 $19.49
C 161,393 23,588 14.6% 0 23,588 14.6% (2,185) 1,688 $17.61
Total 5,170,933 606,695 11.7% 27,268 633,963 12.3% (10,436) (28,172) $22.87
WEIGHTED AVERAGE QUOTED GROSS RENTAL RATE
Q4 09 Q4 10
Class A Rent $31.26 $29.21Class B Rent $19.51 $19.49
Class A Vacancy 14.3% 16.3%
Class B Vacancy 9.9% 10.0%
Total Vacancy 11.5% 12.3%
YEAR OVERYEAR TREND
$29.21
$19.49$17.61
$22.87
$-
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
Class A Class B Class C Total
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
25/38
Submarket Profile
Katy Freeway | Energy Corridor
Class TotalInventory
Sq. Ft.
DirectVacantSq. Ft.
DirectVacancy
Rate
SubleaseVacantSq. Ft.
TotalVacantSq. Ft.
Q4Vacancy
Rate
Q4 NetAbsorption
Sq. Ft.
2010Absorption
Sq. Ft.
WeightedAvg. QuotedGross Rate
A 11,070,152 2,336,839 21.1% 26,936 2,363,775 21.4% 105,857 377,396 $27.95
B 6,902,590 840,476 12.2% 61,175 901,651 13.1% (16,127) 285,099 $18.56
C 1,813,421 170,370 9.4% 1,522 171,892 9.5% 19,578 38,054 $14.84
Total 19,786,163 3,347,685 16.9% 89,633 3,437,318 17.4% 109,308 700,549 $23.74
WEIGHTED AVERAGE QUOTED GROSS RENTAL RATE
Q4 09 Q4 10
Class A Rent $28.30 $27.95
Class B Rent $19.07 $18.56
Class A Vacancy 23.3% 21.4%
Class B Vacancy 16.4% 13.1%
Total Vacancy 19.9% 17.4%
YEAR OVERYEAR TREND
$27.95
$18.56$14.84
$23.74
$-
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
Class A Class B Class C Total
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
26/38
Submarket Profile
Westchase
Class TotalInventory
Sq. Ft.
DirectVacantSq. Ft.
DirectVacancy
Rate
SubleaseVacantSq. Ft.
TotalVacantSq. Ft.
Q4Vacancy
Rate
Q4 NetAbsorption
Sq. Ft.
2010Absorption
Sq. Ft.
WeightedAvg. QuotedGross Rate
A 7,794,880 1,314,104 16.9% 80,598 1,394,702 17.9% 140,718 249,301 $29.82
B 5,141,521 744,868 14.5% 62,469 807,337 15.7% 31,578 21,694 $18.49
C 441,936 53,425 12.1% 0 53,425 12.1% 0 475 $15.16
Total 13,378,337 2,112,397 15.8% 143,067 2,255,464 16.9% 172,296 271,470 $25.05
WEIGHTED AVERAGE QUOTED GROSS RENTAL RATE
Q4 09 Q4 10
Class A Rent $27.56 $29.82
Class B Rent $19.70 $18.49
Class A Vacancy 17.1% 17.9%
Class B Vacancy 16.6% 15.7%
Total Vacancy 16.7% 16.9%
YEAR OVERYEAR TREND
$29.82
$18.49$15.16
$25.05
$-
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
Class A Class B Class C Total
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
27/38
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
28/38
Submarket Profile
Sugar Land | East Fort Bend County
Class TotalInventory
Sq. Ft.
DirectVacantSq. Ft.
DirectVacancy
Rate
SubleaseVacantSq. Ft.
TotalVacantSq. Ft.
Q4Vacancy
Rate
Q4 NetAbsorption
Sq. Ft.
2010Absorption
Sq. Ft.
WeightedAvg. QuotedGross Rate
A 3,535,437 994,811 28.1% 11,669 1,006,480 28.5% 42,581 (410,187) $27.49
B 1,911,468 198,611 10.4% 2,999 201,610 10.5% 29,096 34,199 $18.93
C 142,013 3,255 2.3% 0 3,255 2.3% (435) 4,837 $17.50
Total 5,588,918 1,196,677 21.4% 14,668 1,211,345 21.7% 71,242 (371,151) $24.43
WEIGHTED AVERAGE QUOTED GROSS RENTAL RATE
Q4 09 Q4 10
Class A Rent $27.88 $27.49
Class B Rent $18.74 $18.93
Class A Vacancy 15.2% 28.5%
Class B Vacancy 15.7% 10.5%
Total Vacancy 15.0% 21.7%
YEAR OVERYEAR TREND
$27.49
$18.43 $17.50
$24.43
$-
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
Class A Class B Class C Total
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
29/38
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
30/38
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
31/38
Submarket Profile
FM 1960
Class TotalInventory
Sq. Ft.
DirectVacantSq. Ft.
DirectVacancy
Rate
SubleaseVacantSq. Ft.
TotalVacantSq. Ft.
Q4Vacancy
Rate
Q4 NetAbsorption
Sq. Ft.
2010Absorption
Sq. Ft.
WeightedAvg. QuotedGross Rate
A 2,272,886 886,250 39.0% 9,474 895,824 39.4% (30,324) 3,176 $26.14
B 4,590,795 923,650 20.1% 63,522 987,172 21.5% 25,440 65,030 $15.30
C 762,145 65,506 8.6% 2,463 67,969 8.9% (2,728) 21,818 $14.36
Total 7,625,826 1,875,506 24.6% 75,459 1,950,965 25.6% (7,612) 90,024 $19.16
WEIGHTED AVERAGE QUOTED GROSS RENTAL RATE
Q4 09 Q4 10
Class A Rent $26.96 $26.14
Class B Rent $16.14 $15.30
Class A Vacancy 66.9% 39.4%
Class B Vacancy 33.4% 21.5%
Total Vacancy 40.7% 25.6%
YEAR OVERYEAR TREND
$26.14
$15.30 $14.36
$19.16
$-
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
Class A Class B Class C Total
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
32/38
Submarket Profile
The Woodlands
Class TotalInventory
Sq. Ft.
DirectVacantSq. Ft.
DirectVacancy
Rate
SubleaseVacantSq. Ft.
TotalVacantSq. Ft.
Q4Vacancy
Rate
Q4 NetAbsorption
Sq. Ft.
2010Absorption
Sq. Ft.
WeightedAvg. QuotedGross Rate
A 2,248,600 451,110 20.1% 44,531 495,641 22.0% 66,061 108,603 $29.48
B 3,002,096 402,334 13.4% 73,500 475,834 15.9% 46,538 38,020 $19.32
C 145,914 33,867 23.2% 0 33,867 23.2% 8,845 (8,790) -
Total 5,396,610 887,311 16.4% 118,031 1,005,342 18.6% 136,547 154,869 $23.86
WEIGHTED AVERAGE QUOTED GROSS RENTAL RATE
Q4 09 Q4 10
Class A Rent $28.75 $29.48
Class B Rent $20.39 $19.32
Class A Vacancy 27.3% 22.0%
Class B Vacancy 16.2% 15.9%
Total Vacancy 20.8% 18.6%
YEAR OVERYEAR TREND
$29.48
$19.32
$-
$23.86
$-
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
Class A Class B Class C Total
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
33/38
Submarket Profile
South Main | Medical Center
Class TotalInventory
Sq. Ft.
DirectVacantSq. Ft.
DirectVacancy
Rate
SubleaseVacantSq. Ft.
TotalVacantSq. Ft.
Q4Vacancy
Rate
Q4 NetAbsorption
Sq. Ft.
2010Absorption
Sq. Ft.
WeightedAvg. QuotedGross Rate
A 3,916,577 301,209 7.7% 0 301,209 7.7% 62,128 49,819 $29.13
B 3,776,316 324,283 8.6% 4,800 329,083 8.7% 4,064 (97,223) $20.14
C 2,694,296 107,757 4.0% 0 107,757 4.0% 5,159 20,523 $17.06
Total 10,387,189 733,249 7.1% 4,800 738,049 7.1% 71,351 (26,881) $23.45
WEIGHTED AVERAGE QUOTED GROSS RENTAL RATE
Q4 09 Q4 10
Class A Rent $30.98 $29.13
Class B Rent $20.45 $20.14
Class A Vacancy 8.6% 7.7%
Class B Vacancy 6.7% 8.7%
Total Vacancy 7.2% 7.1%
YEAR OVERYEAR TREND
$29.13
$20.14$17.06
$23.45
$-
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
Class A Class B Class C Total
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
34/38
Submarket Profile
Gulf Freeway | Pasadena
Class TotalInventory
Sq. Ft.
DirectVacantSq. Ft.
DirectVacancy
Rate
SubleaseVacantSq. Ft.
TotalVacantSq. Ft.
Q4Vacancy
Rate
Q4 NetAbsorption
Sq. Ft.
2010Absorption
Sq. Ft.
WeightedAvg. QuotedGross Rate
A 75,066 22,183 29.6% 6,273 28,456 37.9% 1,231 1,778 $27.78
B 1,737,860 191,571 11.0% 6,870 198,441 11.4% 10,141 12,892 $19.15
C 1,121,270 90,076 8.0% 3,590 93,666 8.4% 10,141 17,513 $14.29
Total 2,934,196 303,830 10.4% 16,733 320,563 10.9% 43,254 53,924 $18.43
WEIGHTED AVERAGE QUOTED GROSS RENTAL RATE
Q4 09 Q4 10
Class A Rent $16.50 $27.78
Class B Rent $18.48 $19.15
Class A Vacancy 50.0% 37.9%
Class B Vacancy 10.5% 11.4%
Total Vacancy 12.3% 10.9%
YEAR OVERYEAR TREND
$27.78
$19.15
$14.29
$18.43
$-
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
Class A Class B Class C Total
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
35/38
Submarket Profile
NASA | Clear Lake
Class TotalInventory
Sq. Ft.
DirectVacantSq. Ft.
DirectVacancy
Rate
SubleaseVacantSq. Ft.
TotalVacantSq. Ft.
Q4Vacancy
Rate
Q4 NetAbsorption
Sq. Ft.
2010Absorption
Sq. Ft.
WeightedAvg. QuotedGross Rate
A 809,372 89,330 11.0% 6,214 95,544 11.8% (7,512) (3,798) $22.65
B 3,083,055 225,108 7.3% 18,132 243,240 7.9% (17,813) 16,089 $19.67
C 1,228,410 165,927 13.5% 0 165,927 13.5% 16,823 10,142 $15.34
Total 5,120,837 480,365 9.4% 24,346 504,711 9.9% (8,502) 22,433 $19.15
WEIGHTED AVERAGE QUOTED GROSS RENTAL RATE
Q4 09 Q4 10
Class A Rent $24.06 $22.65
Class B Rent $20.63 $19.67
Class A Vacancy 6.0% 11.8%
Class B Vacancy 9.1% 7.9%
Total Vacancy 9.2% 9.9%
YEAR OVERYEAR TREND
$22.65
$19.67
$15.34
$19.15
$-
$5.00
$10.00
$15.00
$20.00
$25.00
Class A Class B Class C Total
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
36/38
Submarket Profile
Kingwood | Humble
Class TotalInventory
Sq. Ft.
DirectVacantSq. Ft.
DirectVacancy
Rate
SubleaseVacantSq. Ft.
TotalVacantSq. Ft.
Q4Vacancy
Rate
Q4 NetAbsorption
Sq. Ft.
2010Absorption
Sq. Ft.
WeightedAvg. QuotedGross Rate
A 158,640 25,904 16.3% 0 25,904 16.3% 0 4,800 $29.50
B 1,798,683 185,136 10.3% 1,421 186,557 10.4% 2,041 37,406 $20.07
C 669,712 28,852 4.3% 0 28,852 4.3% (1,244) (594) $15.94
Total 2,627,035 239,892 9.1% 1,421 241,313 9.2% 797 41,612 $19.68
WEIGHTED AVERAGE QUOTED GROSS RENTAL RATE
Q4 09 Q4 10
Class A Rent $27.15 $29.50
Class B Rent $19.71 $20.07
Class A Vacancy 19.3% 16.3%
Class B Vacancy 8.9% 10.4%
Total Vacancy 8.3% 9.2%
YEAR OVERYEAR TREND
$29.50
$20.07
$15.94
$19.68
$-
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
Class A Class B Class C Total
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
37/38
New Construction
Submarket Building Name Building Address SquareFeet
PercentLeased
Developer EstimatedDelivery
CBD Main Place 811 Main Street 972,474 27% Hines Holdings Feb-2010
CBD Hess Tower 1501 McKinney Street 844,763 100% TCC Development Aug-2010
FM 1960 Chasewood Crossing II 19450 State Highway 249 156,000 0 Greenwood Corporation Apr-2011
NASA / Clear Lake Nassau Bay Town Square 18050 Saturn Lane 102,000 60% Griffin Partners Nov-2011
Office Development Pipeline
Houstons development activity remained slow during the 4th quarter, with only GriffinPartners four-story 102,000 SF Nassau Bay Town Square office building being added tothe list of office buildings already under construction. Located in the NASA/Clear Lakesubmarket, this pre-certified LEED silver office building is scheduled to come on line60% pre-leased with Hamilton Sundstrand Corporation as the lead tenant. Also includedin the 2.0 million square feet under construction is Greenwoods corporations 156,000SF Chasewood Crossing II in the FM 1960-Highway 249 submarket. (scheduled forcompletion in April 2011).
Two CBD office projects-Hines 972,000 square-foot BG Group Place slated for deliveryby February 2011) and Trammell Crow Companys Hess Tower, scheduled for completion by January 2011-continue to be the sole high-profile buildings underconstruction at the end of the 4th quarter. Notably, both downtown projects beganconstruction before the economic downturn of late 2008.
-
8/8/2019 Tenant Advisor - Houston Office Market Review 4Q-10
38/38
The Tenant AdvisorThe Tenant Advisor
Colliers International | HoustonColliers International | Houston
713.830.2128713.830.2128
coy.davidson@colliers.comcoy.davidson@colliers.com
www.coydavidson.comwww.coydavidson.com
top related