CoStarGroup|1331LStreet,NW,Washington,DC20005|costargroup.com|877-498-4425|©2017CoStarRealtyInformation,Inc.

HoustonFloodingandthePotentialImpactonCommercialRealEstate• Houstonranksasthe6thlargestMSAinthecountrybytotalSFofcommercialrealestatespace,

withmorethan1.6billionSF(or232SF/capita).OnlyChicago,NewYork,LosAngeles,Dallas-FortWorth,andAtlantahavemorerentablebuildingarea(RBA).

• About27%ofHouston’sGLAmaybeunderwatertoday,representinganestimated$55billioninpropertyvalue.Therearemorethan12,000propertiescontaining433millionSFlocatedinthefloodplain.Thisincludes167,281apartmentunits,60millionSFofoffice,and73millionSFofretailspace.Inaddition,11hospitalbuildings,includinga1.1millionSFbuildingattheTexasMedicalCenterfallwithinthe100-yearfloodplain.

Figure 1: Buildings in the FEMA Designated Floodplain

• Only9millionSFofspace,including4,000apartmentsarewithinadesignatedfloodway,andprobablyinundatedwithfloodwaterstoday.However,175millionSFislocatedinthe100-yearfloodplain,including72,000apartmentunitsand20millionSFofofficespace,andarelikelyseeingsomeincursionofwatertoday.Another225millionSFsitsinthe500-yearfloodplainandisalsoatsomeriskofflooding.

CoStarGroup|1331LStreet,NW,Washington,DC20005|costargroup.com|877-498-4425|©2017CoStarRealtyInformation,Inc.

Figure 2: Exposure by Floodplain

• Ofthe$55billionatrisk,apartmentassetsaccountfor$16billion,including$6.8billioninthe100-yearfloodplain.Themostvaluableoftheseassetsarelistedbelow.

• ThesubmarketthatwillbemostimpactedislikelytobeSouthwestHouston.ThishighlydensesectionofHoustonishometomorethan66,000apartmentunits,ofwhich,nearly30%areestimatedtobeimpacted.Theinventoryismostlyworkforcehousingand1980svintagegardenstyle(2-3story)construction.WithinSouthwestHouston,theBraeburn,GreaterFondrenandSharpstownneighborhoodshavethehighestnumberofunitsthatareinthe100-yearfloodplain.EachoftheseneighborhoodsbordersBraysBayou,oneoftheriverwaysthatsnakesthroughsouthwestHoustonandhasoverflowedasaresultofthetorrentialrainlevels.

Source: FEMA; CoStar Group

0

50

100

150

200

250

Floodway 100 Year Risk ReducedDue to Levees

500 Year

RBA Exposure By Fema Floodplain Designation (Millions SF)

1 7694484 ★★★★ 7 7631335 ★★★★ 13 7408022 ★★AMLI 2121 Braeswood Place Luxor Park & Rancho Verde Apartments2121 Allen Pky, Houston 3838 N Braeswood Blvd, Houston 5801 W Sunforest Dr, Houston431 Units 340 Units 828 Units$106,955,200 Estimated value $77,626,250 Estimated value $69,155,024 Estimated value

2 8038031 ★★★★ 8 8037172 ★★ 14 7156867 ★★Artesian on Westheimer Blue Bell Village Rancho Verde Apartments13099 Westheimer Rd, Houston 9660 Veterans Memorial, Houston 6000 W Sunforest Dr, Houston660 Units 592 Units 332 Units$101,961,412 Estimated value $77,376,140 Estimated value $67,917,700 Estimated value

3 8026329 ★★★★ 9 1565518 ★★★★ 15 8317675 ★★★★★The Lanesborough Lakeside Place Archstone Toscano1819 S Braeswood Blvd, Houston 201 Wilcrest Dr, Houston 2900 N Braeswood Blvd, Houston733 Units 734 Units 474 Units

$92,303,008 Estimated value $74,857,627 Estimated value $66,056,088 Estimated value

4 966705 ★★★ 10 1150683 ★★★ 16 9250199 ★★★★Nob Hill Apartments Brompton Court Elan Med Center5410 N Braeswood Blvd, Houston 7510 Brompton Rd, Houston 7010 Staffordshire St, Houston1,326 Units 793 Units 281 Units

$85,143,661 Estimated value $74,234,473 Estimated value $63,336,001 Estimated value

5 1589316 ★★★★ 11 966715 ★★★★ 17 7770555 ★★★★Camden Vanderbilt Village at Piney Point Village on the Lake7171 Buffalo Speedway, Houston 8600 Woodway Dr, Houston 19200 Space Center Blvd, Houston894 Units 912 Units 612 Units

$82,330,219 Estimated value $70,825,528 Estimated value $61,904,576 Estimated value

6 5881247 ★★★ 12 9395438 ★★★★ 18 6358268 ★★★★Palm Beach Estates Market Square Tower The Ranch at Shadow Lake16818 City View Pl, Houston 777 Preston St, Houston 2920 Shadowbriar Dr, Houston881 Units 463 Units 624 Units

$82,201,265 Estimated value $70,706,945 Estimated value $61,398,550 Estimated value

CoStarGroup|1331LStreet,NW,Washington,DC20005|costargroup.com|877-498-4425|©2017CoStarRealtyInformation,Inc.

Figure 3: Apartment Properties by Floodplain

Figure 4: Count of Apartment Units in 100-Year Floodplain by Submarket

• Anadditional5millionSFofspaceisunderwaywithinthefloodplain,including3,144apartmentunits.Thisrepresentsaboutone-quarterofthe25millionSFofcommercialreal

Source: CoStar

0 5,000 10,000 15,000 20,000

KatySoutheast Montgomery County

Outlying Montgomery CountyWoodlands

BaytownHeights

Neartown/River OaksInner Loop East

Lake Houston AreaWestchase/Woodlake

Bear Creek/CopperfieldBriar Forest/West Memorial

Northwest HoustonBrookhollow/Inwood

Greenspoint/IAH AirportSouth Galveston County

AliefMedical Center/West University

Southeast HoustonSouthwest Houston

Apartment Units Exposed to 100-Year Floodplain

Unit Count

CoStarGroup|1331LStreet,NW,Washington,DC20005|costargroup.com|877-498-4425|©2017CoStarRealtyInformation,Inc.

estateunderconstructioninHouston(whichincludesmorethan12,000apartmentunits).Mostoftheapartmentbuildings(totaling1,170units)underwaywithinthe100-yearfloodplainareconcentratedneartheMedicalCenter.

• ThemostimpactedofficesubmarketisGreenspoint,whichhaselevatedvacanciesafterthe departureofExxonMobilinlate2015.Here,some3.5millionSFfallswithinthe100-Year floodplain.

Figure 5: Office Inventory in 100-Year Floodplain

• TheAddicksandBarkerReservoirsremainathighriskofbreaching,withreportsthatwaterisseepingoverthetopoftheAddicksdam.Thearmycorpsofengineershasbeenreleasingwatertopreventtheearthendamssupportingthesereservoirsfromfailing,sendingincreasedwaterflowsthroughtheBuffaloBayou.TheBayourunswesttoeastandcrossesthroughWoodlake,RiverOaks,theEnergyCorridor,MemorialPark,Briarforest,andUptownPark.Therearesome117buildingsthatarewithinaquarterofamilefromthebayou,totaling17millionSF.Morethan2.5millionSFisathighrisk,locatedwithinthe100-yearfloodplainandismadeupofmostlyofficepropertiesintheEnergycorridorandPostOakneighborhoods.

BaytownGreenway PlazaNorthwest OutlierLiberty County

Northwest NearSan Felipe/VossSouth

WestchaseConroeWest BeltSouthwest OutlierNortheast Outlier

WoodlandsI-10 EastCBDPost Oak ParkFM 1960/Hwy 249Northeast NearRiverway

Source: CoStar

0 1,000,000 2,000,000 3,000,000 4,000,000

Kingwood/HumbleSouthwest/Hillcroft

FM 1960/I-45 NorthWoodlands

I-10 EastCBD

Post Oak ParkFM 1960/Hwy 249

Northeast NearRiverway

NASA/Clear LakeGreenspoint/IAH

South Main/Medical CenterNorth Loop West

Gulf Freeway/PasadenaKaty Freeway West

MidtownNorthwest Far

Southwest Beltway 8Southeast Outlier

BellaireGreenspoint/N Belt West

Office Inventory Exposed to 100-Year Floodplain

SF

CoStarGroup|1331LStreet,NW,Washington,DC20005|costargroup.com|877-498-4425|©2017CoStarRealtyInformation,Inc.

Figure 6: Properties within One-Quarter Mile of the Buffalo Bayou