Greater Vancouver Realtors Statistics Package April 2024
Q3 2013 Houston Office Market Research Report
1. www.colliers.com/houston
Q3 2013 | OFFICE MARKET
HOUSTON OFFICE
MARKET INDICATORS
Q3 2012 Q3 2013
CITYWIDE NET
ABSORPTION (SF) 298K 715K
CITYWIDE AVERAGE
VACANCY 14.9% 15.4%
CITYWIDE AVERAGE
RENTAL RATE $24.31 $24.80
CITYWIDE DELIVERED
INVENTORY (SF) 165K 1.4M
CLASS A RENTAL RATE
CBD $37.00 $37.19
SUBURBAN $29.00 $29.79
CLASS A VACANCY
CBD 10.8% 10.8%
SUBURBAN 12.8% 12.5%
RESEARCH & FORECAST REPORT
HOUSTON OFFICE MARKET
Houston’s Office Market Construction Pipeline Expands to
10.5M SF
Houston’s strong job growth, spurred by growth in the energy sector,
continued to boost Houston’s office market in the third quarter. More than
1.4M SF was added to Houston’s office inventory and, at the close of Q3,
10.5M SF of new office development was under construction. Energy giants
such as Chevron, Apache, BHP, and many others have announced plans to
build new office buildings to accommodate growth. Approximately 9.9M SF
of office space is either under construction (ExxonMobil, Shell and Anadarko)
or planned over the next two to three years.
The citywide average rental rate increased 2.0% from $24.31 per SF to
$24.80 per SF over the year and 1.5% from $24.43 per SF between quarters.
However, rental rates in some of the top-performing Class A buildings
increased by as much as 11.0% between quarters.
The Houston metropolitan area added 80,700 jobs between August 2012
and August 2013, an annual increase of 3.0% over the prior year’s job
growth. Further, Houston’s unemployment fell to 6.1% from 6.9% one year
ago, and Houston area home sales increased significantly between May and
August, 2013, up 16.2%.
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.
ABSORPTION, NEW SUPPLY & VACANCY RATES
5.0%
7.0%
9.0%
11.0%
13.0%
15.0%
17.0%
-1,500,000
-1,000,000
-500,000
0
500,000
1,000,000
1,500,000
2,000,000
Net Absorption New Supply Vacancy
Houston
UNEMPLOYMENT 8/12 8/13
HOUSTON 6.9% 6.1%
TEXAS 6.9% 6.3%
U.S. 8.2% 7.3%
JOB GROWTH
ANNUAL
CHANGE
# OF JOBS
ADDED
HOUSTON 3.0% 80.7K
TEXAS 2.4% 258.5K
U.S. 1.6% 2.2M
JOB GROWTH & UNEMPLOYMENT
(Not Seasonally Adjusted)
2. RESEARCH & FORECAST REPORT | Q3 2013 | HOUSTON OFFICE MARKET
$26.00
$28.00
$30.00
$32.00
$34.00
$36.00
$38.00
$40.00
Class A Office Rents
CBD Rents Suburban Rents
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
CBD VS. Suburban
Class A Office Vacancy
CBD Vacancy Suburban Vacancy
QUOTED GROSS RENTAL RATES FOR EXISTING TOP PERFORMING OFFICE BUILDINGS
BUILDING NAME ADDRESS SUBMARKET RBA (SF)
YEAR
BUILT
LEASED
AVAIL.
SF
RENT
($/SF)
OWNER
717 Texas 717 Texas CBD 696,228 2003 100.0% 76,892 $49.50 Hines
Bank of America Center 700 Louisiana CBD 1,268,480 2001 94.3% 152550 $45.00 GE Pension Trust
Heritage Plaza 1111 Bagby CBD 1,149,635 1986 99.2% 41,923 $46.00 Brookfield Office Properties
BG Group Place 811 Main CBD 972,474 2011 96.1% 147,642 $48.70 Invesco Realty Advisors, Inc.
CityCentre Three 842 W Sam Houston Pky N Katy Freeway 120,211 2012 94.7% 6,349 $45.00 Midway T & C Land Investors
Williams Tower 2800 Post Oak Blvd West Loop/Galleria 1,476,973 1983 99.1% 44027 $47.22 Invesco Real Estate
BBVA Compass Plaza 2200 Post Oak Blvd West Loop/Galleria 312,574 2013 73.4% 83,026 $45.28 The Redstone Companies
CityWestPlace 4 2107 CityWest Blvd Westchase 518,293 2001 99.5% 71,223 $46.43 Thomas Properties Group, L.P.
One BriarLake Plaza 2000 W Sam Houston Pky Westchase 502,410 2000 97.5% 53,384 $44.50 TIER REIT, Inc.
One Hughes Landing 1800 Hughes Landing Blvd The Woodlands 197,719 2013 92.0% 16,408 $37.70 The Woodlands Development
Company, L.P.
Note: Avail. SF includes direct and sublet space.
Source: CoStar Property
2COLLIERS INTERNATIONAL | P.
VACANCY & AVAILABILITY
Houston’s citywide vacancy rate rose 30
basis points between quarters and 40 basis
points annually, increasing to 15.4% and
15.5%, respectively, from 15.1%. The
average CBD vacancy rate decreased 90
basis points to 14.2% from 15.1%. Between
quarters, the average suburban vacancy rate
increased by 50 basis points to 15.7% from
15.2% due to the addition of new inventory.
Between quarters the CBD Class A vacancy
rate decreased by 120 basis points to 10.8%
from 12.0%. The CBD Class B vacancy rate
remained at 18.9%. The suburban Class A
vacancy rate increased by 80 basis points
between quarters to 12.5% from 11.7%, and
the suburban Class B vacancy rate increased
by 40 basis points to 18.1% from 17.7%.
Of the 1,306 existing office buildings in our
survey, only 50 have 100,000 SF of
contiguous space available for lease or
sublease. Further, only 21 have 200,000 SF
of contiguous space available. Citywide,
available sublease space totals 4.3 million
SF or 2.5% of Houston’s total office
inventory, but only 1.8 million SF of this
sublease space is currently vacant.
ABSORPTION & DEMAND
Absorption increased in the third quarter as
new space was delivered and tenants
expanded. Houston’s office market posted
715,000 SF of positive net absorption in the
third quarter, more than the 298,000 SF
posted in the same quarter one year ago.
Suburban Class B space posted the largest
loss, with 391,818 SF of negative net
absorption. Suburban Class A space posted
the largest gain, with 846,497 SF of positive
net absorption.
Some of the larger tenants that moved into
new space or expanded into additional space
during the third quarter include Noble
Energy, which moved into 497,000 SF in
Noble Energy Center I in the FM 1960/Hwy
249 submarket; TransCanada, which moved
into 180,000 SF in Bank of America Center
located in the CBD submarket; Helix Energy
Solutions and Cameron International Corp.,
which leased 120,000 SF and 108,000 SF
respectively, in the newly constructed 8 West
Centre located in the Katy Freeway
submarket; and Forum Energy Technologies,
which moved into 109,000 SF in the newly
constructed Sam Houston Crossing Two
located in the Northwest Far submarket.
RENTAL RATES
The average citywide rental rate increased
2.0% from $24.31 per SF to $24.80 per SF
on an annual basis, and 1.5% from $24.43
per SF between quarters. The CBD Class A
average quoted rental rate increased 0.4%
from $37.04 per SF to $37.19 per SF
between quarters, while the suburban Class
A average quoted rental rate increased 3.4%
from $28.82 per SF to $29.79 per SF. The
average CBD Class B quoted rental rate
increased 1.4% from $24.70 per SF to
$25.04 per SF, while the average suburban
Class B quoted rental rate increased 2.0%
from $18.60 per SF to $18.97 per SF over
the quarter.
3. RESEARCH & FORECAST REPORT | Q3 2013 | HOUSTON OFFICE MARKET
Q2 2013 SIGNIFICANT SALES TRANSACTIONS – (100,000 SF or greater)
BUILDING NAME
SUB-
MARKET
RBA (SF)
YEAR
BUILT
BUYER SELLER
SALE
PRICE
$/SF
CAP
RATE
CLOSED
Greenway Plaza
Portfolio (12 bldgs.)
Greenway
Plaza
5,328,000 1968 -
1982
Crescent Real
Estate Equities
Cousins Properties
Inc.
$1.1B $208 7.4 9/2013
3009 Post Oak Blvd West Loop/
Galleria
302,536 2013 alliantgroup Skanska USA $112M $370 N/A 9/2013
2200 West Loop S West Loop/
Galleria
201,720 1974/
2000
APF Properties LLC Parmenter Realty
Partners
$38M $188 8.5 8/2013
Westwood Plaza I Southwest
Beltway 8
113,273 1980 Merlyn Holdings LLC Rosemont Realty $5.1M $45 N/A 7/2013
3COLLIERS INTERNATIONAL | P.
SALES ACTIVITY
Houston’s office investment sales activity included 28 sales transactions with a total sales volume of approximately $1.3 billion,
averaging $227 per SF. Listed below are a few significant transactions that closed during the third quarter.
LEASING ACTIVITY
Houston’s office leasing activity reached 2.6 million SF in the first quarter, bringing the year-to-date leasing activity to 8.6 million
SF. Below is a list of Q3 2013 top lease transactions, the majority of which were new.
1
Renewal
2
Expansion
3
Sublease
4
Pre-lease/proposed or under construction
Building Name/Address Submarket SF Tenant Lease Date
Newpark Drilling Fluids Katy Freeway 117,698 New Park Drilling Fluids Sep-13
Jacobs Plaza Katy Freeway 82,000 Jacobs Engineering Aug-13
Intercontinental Center North Belt/Greenspoint 67,730 INTEC Engineering1
Aug-13
1700 West Loop S West Loop/Galleria 58,341 Burns & McDonnell2
Sep-13
363 N Sam Houston Pky E North Belt/Greenspoint 33,672 Murex Petroleum Jul-13
America Tower Allen Parkway 22,754
Ware Jackson Lee &
Chambers, LLP1
Jul-13
6750 West Loop South Bellaire 22,374 Frost National Bank1
Jul-13
1300 Post Oak Blvd West Loop/Galleria 20,226 Mitsui & Co. (USA), Inc.1
Sep-13
Three Riverway West Loop/Galleria 18,547 King Ranch1
Aug-13
Ashford 6 Katy Freeway 10,947 Ocean Installers International Jul-13
Q3 2013 Top Office Leases
6. RESEARCH & FORECAST REPORT | Q3 2013 | HOUSTON OFFICE MARKET
HOUSTON SUBURBAN OFFICE MARKET SUMMARY - CONTINUED
6COLLIERS INTERNATIONAL | P.
Vacancy
Rental
Rate
Class
# of
Bldgs.
Total (SF) (SF) Rate (%) (SF) Rate (%) Total (SF) Q3-2013 Q2-2013 Q3-2013 YTD-2013 AVG ($/SF)
A 13 2,475,342 475,119 19.2% 35,870 1.4% 510,989 20.6% 19.0% -40,829 -86,059 $21.84
B 68 6,536,797 1,376,686 21.1% 114,628 1.8% 1,491,314 22.8% 21.6% -78,766 -133,031 $17.21
C 23 920,098 197,570 21.5% 0 0.0% 197,570 21.5% 18.9% -23,692 -69,064 $13.91
Total 104 9,932,237 2,049,375 20.6% 150,498 1.5% 2,199,873 22.1% 20.7% -143,287 -288,154 $18.20
B 12 695,665 214,679 30.9% 0 0.0% 214,679 30.9% 33.5% 18,701 38,873 $16.30
C 12 541,718 124,291 22.9% 0 0.0% 124,291 22.9% 21.7% -6,553 -47,470 $12.60
Total 24 1,237,383 338,970 27.4% 0 0.0% 338,970 27.4% 28.4% 12,148 -8,597 $15.24
A 3 1,714,929 264,182 15.4% 0 0.0% 264,182 15.4% 16.7% 21,895 53,747 $32.81
B 29 3,072,793 297,451 9.7% 15,862 0.5% 313,313 10.2% 11.3% 32,850 -43,975 $21.41
C 3 204,649 64,384 31.5% 0 0.0% 64,384 31.5% 32.7% 2,568 -480 $13.00
Total 35 4,992,371 626,017 12.5% 15,862 0.3% 641,879 12.9% 14.0% 57,313 9,292 $25.08
A 1 80,000 0 0.0% 0 0.0% 0 0.0% 0.0% 0 0 $25.63
B 13 508,569 39,129 7.7% 0 0.0% 39,129 7.7% 8.4% 3,737 30,314 $19.05
C 6 204,042 45,900 22.5% 0 0.0% 45,900 22.5% 22.5% 0 1,250 $12.90
Total 20 792,611 85,029 10.7% 0 0.0% 85,029 10.7% 11.2% 3,737 31,564 $16.28
A 3 1,491,140 0 0.0% 0 0.0% 0 0.0% 0.0% 0 335,597 -
B 13 1,136,299 290,558 25.6% 0 0.0% 290,558 25.6% 16.4% -104,595 -103,749 $24.46
C 6 429,923 71,791 16.7% 0 0.0% 71,791 16.7% 18.4% 7,148 10,384 $17.27
Total 22 3,057,362 362,349 11.9% 0 0.0% 362,349 11.9% 8.7% -97,447 242,232 $22.83
B 9 950,711 80,791 8.5% 0 0.0% 80,791 8.5% 9.0% 4,989 15,043 $20.02
C 2 48,054 17,283 36.0% 0 0.0% 17,283 36.0% 36.0% 0 0 $17.00
Total 11 998,765 98,074 9.8% 0 0.0% 98,074 9.8% 10.3% 4,989 15,043 $19.46
A 5 1,446,902 251,845 17.4% 24,235 1.7% 276,080 19.1% 22.2% 44,583 -1,246 $15.85
B 54 5,353,566 1,701,282 31.8% 1,867 0.0% 1,703,149 31.8% 34.5% 144,170 104,695 $15.48
C 26 1,528,278 210,145 13.8% 1,600 0.1% 211,745 13.9% 13.5% -5,501 -18,289 $13.24
Total 85 8,328,746 2,163,272 26.0% 27,702 0.3% 2,190,974 26.3% 28.5% 183,252 85,160 $15.27
A 2 93,951 19,292 20.5% 0 0.0% 19,292 20.5% 19.7% 25,301 25,638 $25.53
B 17 684,900 29,676 4.3% 1,594 0.2% 31,270 4.6% 4.3% -1,594 10,753 $22.72
C 2 51,396 2,100 4.1% 0 0.0% 2,100 4.1% 9.0% 2,500 -50 $18.00
Total 21 830,247 51,068 6.2% 1,594 0.2% 52,662 6.3% 5.8% 26,207 36,341 $23.40
Inventory Direct Vacancy Sublease Vacancy Vacancy Rate (%) Net Absorption (SF)
Southeast/Outlier
Southw est
Southw est Far and Outlier
Northw est and Northw est Outlier
Richmond/Fountainview
San Felipe/Voss
South
South Main/Med Center
7. RESEARCH & FORECAST REPORT | Q3 2013 | HOUSTON OFFICE MARKET
OFFICE DEVELOPMENT PIPELINE
Houston’s construction pipeline continues to expand with 10.5 million SF under construction at the end of Q3 2013. The table below
includes buildings containing 150,000 SF or greater.
HOUSTON SUBURBAN OFFICE MARKET SUMMARY - CONTINUED
COLLIERS INTERNATIONAL | P. 7
Vacancy
Rental
Rate
Class
# of
Bldgs.
Total (SF) (SF) Rate (%) (SF) Rate (%) Total (SF) Q3-2013 Q2-2013 Q3-2013 YTD-2013 AVG ($/SF)
A 35 14,188,640 1,739,127 12.3% 230,100 1.6% 1,969,227 13.9% 12.2% 55,743 382,087 $33.00
B 47 6,073,446 905,716 14.9% 4,732 0.1% 910,448 15.0% 14.9% -2,839 37,556 $23.39
C 6 369,268 4,464 1.2% 0 0.0% 4,464 1.2% 1.3% 253 -2,902 $19.27
Total 88 20,631,354 2,649,307 12.8% 234,832 1.1% 2,884,139 14.0% 12.8% 53,157 416,741 $29.73
A 21 6,208,844 420,992 6.8% 78,380 1.3% 499,372 8.0% 8.0% -3,331 38,931 $34.31
B 48 5,570,723 648,686 11.6% 19,461 0.3% 668,147 12.0% 12.4% 24,898 19,023 $19.05
C 10 686,419 55,120 8.0% 0 0.0% 55,120 8.0% 8.7% 4,374 966 $15.24
Total 79 12,465,986 1,124,798 9.0% 97,841 0.8% 1,222,639 9.8% 10.0% 25,941 58,920 $27.04
A 16 3,406,739 250,080 7.3% 51,758 1.5% 301,838 8.9% 2.6% 270,228 454,750 $36.81
B 42 2,723,049 299,804 11.0% 34,172 1.3% 333,976 12.3% 10.0% -41,484 -39,513 $22.29
C 1 24,080 2,000 8.3% 0 0.0% 2,000 8.3% 8.3% 0 1,500 $19.20
Total 59 6,153,868 551,884 9.0% 85,930 1.4% 637,814 10.4% 6.1% 228,744 416,737 $28.86
West Loop/Galleria
Westchase
The Woodlands
Inventory Direct Vacancy Sublease Vacancy Vacancy Rate (%) Net Absorption (SF)
Building Name Address Submarket SF Pre-Leased Developer
Est.
Delivery
ExxonMobil North Campus I-45 & Springwoods Village Woodlands 3,000,000 100.0% ExxonMobil (Gilbane Building Jun-14
Anadarko Tower 2 1201 Lake Robbins Dr Woodlands 550,000 100.0% Patrinely Group Inc Apr-14
Energy Center Three 935 N Eldridge Pky Katy Freeway 546,604 100.0% Trammell Crow Company May-15
Noble Energy Center II SH 249 & Louetta Rd FM 1960/Hwy 249 456,000 100.0% Trammell Crow Company Jun-15
Energy Tower III 11740 Katy Fwy Katy Freeway 428,831 100.0% Mac Haik Realty LLC Jan-14
Energy Tower IV 11750 Katy Fwy Katy Freeway 428,831 100.0% Mac Haik Realty LLC Jan-14
Two BriarLake Plaza 2050 W Sam Houston Pky S Westchase 331,689 50.8% Cassidy Turley Apr-14
West Memorial Place 15375 Memorial Dr Katy Freeway 334,147 36.6% Skanska Commercial
Development
Jan-15
Energy Crossing II 15011 Katy Fwy Katy Freeway 321,508 87.5% Opus Corporation Feb-14
Granite Briarpark Green 3151 Briarpark Dr Westchase 302,515 21.2% Granite Properties Nov-13
Westchase Park 3600 W Sam Houston Pky S Westchase 300,000 0.0% PM Realty Group Dec-14
Shell Woodcreek 11910 Katy Fwy Katy Freeway 284,178 100.0% Hines Nov-13
Shell Woodcreek 200 N Dairy Ashford Rd Katy Freeway 263,835 100.0% Hines Feb-14
Town Centre I Queensbury Ln and Town &
Country Blvd.
Katy Freeway 254,489 0.0% Moody Rambin Nov-14
Westgate I 17220 Katy Fwy Katy Freeway 248,500 67.7% Transwestern Dec-13
Mustang Engineering 17325 Park Row Katy Freeway 225,885 100.0% Transwestern Jul-14
The Offices at Greenhouse 18918 Katy Fwy Katy Freeway 203,149 67.1% Stream Realty Partners Jul-14
Building 5 - Repsol 2455 Technology Forest Blvd Woodlands 200,000 100.0% Warmack Investments May-14
Two Hughes Landing Hughes Landing Blvd Woodlands 197,719 0.5% The Woodlands Development
Company, L.P.
May-14
Westgate II 17320 Katy Fwy Katy Freeway 186,375 100.0% Transwestern Dec-13
Jacobs Plaza 12140 Wickchester Ln Katy Freeway 168,050 45.4% PM Realty Group Jun-14
Texas Instruments 13905 University Blvd E Fort Bend Co/Sugar
Land
160,000 100.0% Planned Community
Developers
Apr-14
Sierra Pines II 1575 Sawdust Rd The Woodlands 153,810 0.0% Stream Realty Partners Aug-14
8. RESEARCH & FORECAST REPORT | Q3 2013 | HOUSTON OFFICE MARKET
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COLLIERS INTERNATIONAL
1223 W. Loop South
Suite 900
Houston, Texas 77027
Main +1 713 222 2111
LISA R. BRIDGES
Director of Market Research | Houston
Direct +1 713 830 2125
Fax +1 713 830 2118
lisa.bridges@colliers.com
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