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Forecast Report
HOUSTON | OFFICE
Q2 2017
Available sublease space decreased slightly but this was primarily Net Absorption
(Million Square Feet)
-0.2 -0.7 -0.7
due to expiring terms and the space going back to direct marketing
by the landlord. There were a few instances where the sublease New Construction
(Million Square Feet)
2.3 1.8 0.2
space was withdrawn by the sublessor. The majority of the
sublease space in the market now has 1-3 years of term remaining. Under Construction
(Million Square Feet)
4.0 1.6 2.2
According to the U.S. Bureau of Labor Statistics, the Houston Class A Vacancy Rate
11.7% 17.1% 17.3%
metropolitan area created 45,300 jobs (not seasonally adjusted) CBD
18.7% 20.8% 21.4%
between May 2016 and May 2017. Most of the recent quarterly job Suburban
growth occurred in employment services, public education, food
Asking Rents
services and drinking places, health care, and fabricated metal Per Square Foot Per Year
products.
Houston Class A $35.94 $35.79 $36.12
CBD Class A $44.76 $44.39 $44.36
Suburban Class A $34.54 $33.26 $33.76
12,000,000
15.0%
10,000,000
8,000,000
6,000,000 10.0%
4,000,000
2,000,000
5.0%
0
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017
0.0%
Large Sublease Availabilities (Total available in building and/or complex) CBD Vacancy Suburban Vacancy
BUILDING TENANT SUBMARKET SF
One Shell Plaza Shell Oil CBD 801,990 CLASS A OFFICE RENTS
Four WestLake Park BP Katy Freeway 504,327 $50.00
Four Oaks Place BHP West Loop/Galleria 411,038 $45.00
Two Allen Center Chevron CBD 396,309
$40.00
1100 Louisiana Enbridge CBD 294,580
$35.00
Three Greenspoint Place ExxonMobil North Belt 253,562
$30.00
Three WestLake Park Phillips 66 Katy Freeway 221,723
$25.00
Energy Center II WorleyParsons Katy Freeway 203,343
Page 1 $20.00
Pinnacle Westchase Phillips 66 Westchase 198,425
$15.00
8 Greenspoint ExxonMobil North Belt 198,256
$10.00
CityWestPlace 2 Statoil Westchase 190,214
$5.00
10777 Clay Rd AMEC Foster Wheeler Katy Freeway 189,285
$0.00
Westway II GE Oil & Gas West Belt 186,957
Energy Center I Foster Wheeler Katy Freeway 182,966
West Memorial Place II IHI E&C Katy Freeway 158,317
CBD Rents Suburban Rents
Source: CoStar
Rental Rates
Houstons average Class A asking rental rate increased over the quarter from $35.79 per SF to $36.12 per SF. The average Class A rental
rate in the CBD decreased marginally over the quarter while the average Suburban Class A rental rate increased from $33.26 to $33.76
per SF. The current average rental rate, which includes all property classes, for Houston office space is $29.89 per SF gross.
Leasing Activity
Houstons office leasing activity changed marginally between quarters. It increased by 100,000 SF to 2.6 million SF of transactions in Q2
2017.
Sales Activity
Houstons office investment sales activity increased substantially over the year, increasing by 439% since Q2 2016. With most of the
investor community believing the downturn in the energy industry has reached the bottom and has begun to rebound, they now see
Houston as offering limited downside and the potential for healthy returns. The average sales price increased marginally over the quarter,
but is still well below the historical average.
Q2 2017 CHANGE IN SALES (YEAR OVER YEAR) Q2 2017 OFFICE SALES PRICE PER SF
PRE- EST.
BUILDING NAME ADDRESS SUBMARKET SF DEVELOPER/CONTRACTOR
LEASED DELIVERY
Capitol Tower 800 Capitol St CBD 778,344 27.0% SCD Acquisitions LLC Jun-19
CityPlace 2 - BTS for ABS 1701 City Plaza Dr The Woodlands 326,800 93.9% Barker Patrinely Group, Inc Oct-18
Kirby Collection 3200 Kirby Dr Greenway Plaza 188,545 0% Thor Properties LLC Aug-17
Lockton Place 3657 Briarpark Dr Westchase 187,011 77.9% Triten Real Estate Partners Oct-17
Lake Pointe One 0 Creek Bend Dr E Fort Bend Co/Sugar Land 147,159 0% Planned Community Developers Sep-18
The Post Oak 1600 West Loop S West Loop/Galleria 104,579 5.6% Tellepsen Builders Dec-17
55 55
50 50
45 45
2
40 40
19 3 6
35 35 1
20 7 8
4 5
30 30 21
25 22 9
25 25 18
23 26 17 14 10 11 12
30 24 16
20 20
32 15
33 31
15 15 27
13
10 10 29
5
28
5
70
65
55 Available Sublease Space Available Sublease Space Class A Rental Rate and Vacancy Percentage
Q2 2017
50 Central Business District Central Business District - Houston, TX
Class A: 2,214,721 SF or 6.6% CBD Class A Rents CBD Class A Vacancy
Westchase.
BUILDING NAME 1001 FANNIN ONE CITY CENTRE HILCORP ENERGY TOWER 1000 MAIN KINDER MORGAN BLDG. WELLS FARGO PLAZA HERITAGE PLAZA 1100 LOUISIANA CENTERPOINT ENERGY ONE ALLEN CENTER TOTAL PLAZA THREE ALLEN CENTER TWO ALLEN CENTER
*Vacancy percentage includes direct and sublease space.
ADDRESS 1001 Fannin Street 1021 Main Street 1111 Main Street 1000 Main Street 1001 Louisiana Street 1000 Louisiana Street 1111 Bagby Street 1100 Louisiana Street 1111 Louisiana Street 500 Dallas Street 1201 Louisiana Street 333 Clay Street 1200 Smith Street
RBA / AVG FLOOR / # OF FLOORS 1,385,212 / 27,210 / 49 608,660 / 21,266 / 29 406,600 / 17,678 / 23 837,161 / 23,333 / 36 937,003 / 28,510 / 32 1,721,242 / 25,000 / 71 1,212,895 / 26,652 / 51 1,327,882 / 23,060 / 55 1,081,251 / 22,968 / 47 993,297 / 29,214 / 34 843,533 / 24,600 / 35 1,194,719 / 25,000 /50 995,623 / 26,613 / 36
% LEASED 97.8% 71.7% 95.7% 99.7% 98.5% 86.3% 99.1% 99.4% 97.7% 92.8% 78.2% 96% 88.3%
TOTAL AVAILABLE SF 71,102 167,060 17,700 147,422 99,255 459,130 72,793 334,588 24,723 109,989 191,774 294,158 511,145 *Gold and white indicators are approximate only at the time of printing and are presented to show approximate percentage of available
MAX CONTIGUOUS SF 28,065 42,047 7,771 144,815 85,530 114,372 28,560 22,997 24,723 37,140 121,124 158,351 311,850 space by floor/building. All indicators are left-to-right and are not meant to show location of available space. COLLIERS INTERNATIONAL
QUOTED RATE** $44.85 $29.22 N/A $53.56 N/A $48.30-$51.30 $51.06 $46.04 $30.72 $45.85 $38.91 $46.21 $44.60
PARKING RATIO 1.0 2.3 N/A 2.0 1.0 1.7 2.4 1.8 2.5 1.0 1.0 1.0 1.0 **Rental rates listed are net + operating expenses. 1233 West Loop South, Suite 900
OWNER JMB Financial Advisors Accesso Partners, LLC Hilcorp Ventures Inc. Union Investment EPC Property Holdings New York State Common Brookfield Office Enterprise Products CenterPoint Energy, Inc. Brookfield Office Brookfield Office Brookfield Office Brookfield Office Houston, TX 77027
Real Estate Retirement Fund Properties, Inc. Partners L.P. Properties, Inc. Properties, Inc. Properties, Inc. Properties, Inc.
www.colliers.com/texas