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Presented by:Patrick Duffy MCRPresident | HoustonChairman Colliers Retail Specialty GroupDirect +1 713 830 2112 | Mobile +1 727 460 3215Main +1 713 222 2111 |
Citation preview
TRENDS 2012COMMERCIAL REAL ESTATE MARKET UPDATE
January 31, 2012
Houston’s Brag Book2011-2012 Headlines
“Houston driving Texas' growth, economist says”
“Houston ranks as North America’s fastest-growing metro area”
“Strong year for jobs in Houston”“Houston MSA personal income increased 5.5% in 2011”
“Houston remains popular with foreign real estate investors”
“Houston tops U.S. retail job growth” “High-end retail thriving in Houston”
“Houston gains most retail trade jobs in U.S. since 2007 “
HOUSTON OFFICE
HOUSTON OFFICE MARKET INDICATORS
YE 2010 YE 2011
CITYWIDE NET ABSORPTION (SF) 476K 2.6M
CITYWIDE AVERAGE VACANCY 16.0% 15.5%
CITYWIDE AVERAGE RENTAL RATE $23.08 $23.20
CLASS A RENTAL RATE
CBD $35.00 $40.00
SUBURBAN $27.00 $31.00
CLASS A VACANCY
CBD 10.4% 14.3%
SUBURBAN 17.5% 14.4%
79% of leases
we tracked in
2011 were
energy industry
tenants
HOUSTON OFFICE
ABSORPTION, NEW SUPPLY & VACANCY RATES
5.0%
7.0%
9.0%
11.0%
13.0%
15.0%
17.0%
-1,000,000
-500,000
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
Net Absorption New Supply Vacancy
HOUSTON OFFICE
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Q1 '08 Q1 '09 Q1 '10 Q1 '11
Rolling 12-mo. Total Quarterly Vol.
0
50
100
150
200
250
300
Q1 '08 Q1 '09 Q1 '10 Q1 '11
Houston United States
3%
5%
7%
9%
11%
Q1 '08 Q1 '09 Q1 '10 Q1 '11
Houston United States
Sales by Total $ (mil)
Average Cap Rate (Yield)Average Price ($) Per SF
Data Source:
HOUSTON INDUSTRIAL
HOUSTON INDUSTRIAL MARKET INDICATORS
YE 2010 YE 2011
CITYWIDE NET ABSORPTION (SF) 4.8M 4.4M
CITYWIDE AVERAGE VACANCY (%) 6.2% 5.2%
CITYWIDE AVERAGE RENTAL RATE ($) $5.33 $5.45
NEW SUPPLY DELIVERED (SF) 2.3M 1.7M
4Q UNDER CONSTRUCTION (SF) 200K 2.9M
Build-to-suit
and spec
construction on
the uptick as
vacancy
decreases to
5.2%
ABSORPTION, NEW SUPPLY & VACANCY RATES
HOUSTON INDUSTRIAL
0%
1%
2%
3%
4%
5%
6%
7%
8%
-1,000,000
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
Absorption New Supply Vacancy
HOUSTON INDUSTRIAL
Sales by Total $ (mil)
Average Cap Rate (Yield)
Data Source:
0100200300400500600700800900
Q1 '08 Q1 '09 Q1 '10 Q1 '11
Rolling 12-mo. Total Quarterly Vol.
Average Price ($) Per SF
0
20
40
60
80
Q1 '08 Q1 '09 Q1 '10 Q1 '11
Houston United States
3%
5%
7%
9%
11%
Q1 '08 Q1 '09 Q1 '10 Q1 '11
Houston United States
HOUSTON RETAIL MARKET INDICATORS
YE 2010 YE 2011
CITYWIDE NET ABSORPTION (SF) 2.8M 1.8M
CITYWIDE AVERAGE VACANCY (%) 8.0% 7.2%
CITYWIDE AVERAGE RENTAL RATE ($) $14.85 $15.13
NEW SUPPLY DELIVERED (SF) 393K 687K
4Q UNDER CONSTRUCTION (SF) 231K 617K
HOUSTON RETAIL
Restaurant
owners expanding
Houston footprint
ABSORPTION, NEW SUPPLY & VACANCY RATES
HOUSTON RETAIL
0%
2%
4%
6%
8%
10%
12%
-2,000,000
-1,000,000
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
Absorption New Supply Vacancy
HOUSTON RETAIL
Sales by Total $ (mil)
Average Cap Rate (Yield)Average Price ($) Per SF
Data Source:
0
500
1,000
1,500
2,000
2,500
Q1 '08 Q1 '09 Q1 '10 Q1 '11
Rolling 12-mo. Total Quarterly Vol.
0
50
100
150
200
250
Q1 '08 Q1 '09 Q1 '10 Q1 '11
Houston United States
3%
5%
7%
9%
11%
Q1 '08 Q1 '09 Q1 '10 Q1 '11
Houston United States
HOUSTON MULTI-FAMILY
HOUSTON MULTI-FAMILY MARKET INDICATORS
YE 2010 YE 2011
UNITS ABSORBED 15,722 14,036
CITYWIDE AVERAGE VACANCY (%) 14.1% 12.5%
CITYWIDE AVERAGE RENTAL RATE ($) $723 $749
UNITS DELIVERED 3,852 4,963
4Q UNDER CONSTRUCTION 2,367 2,831
Class A
apartments
had lower
than average
vacancy of
6.6% in
December
2011
HOUSTON MULTI-FAMILY
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
-10,000
-5,000
0
5,000
10,000
15,000
20,000
25,000
Units Absorbed Units Delivered Vacancy
ABSORPTION, NEW SUPPLY & VACANCY RATES
HOUSTON MULTI-FAMILY
Sales by Total $ (mil)
Average Cap Rate (Yield)Average Price ($) Per SF
Data Source:
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Q1 '08 Q1 '09 Q1 '10 Q1 '11
Rolling 12-mo. Total Quarterly Vol.
0
20,000
40,000
60,000
80,000
100,000
120,000
Q1 '08 Q1 '09 Q1 '10 Q1 '11
Houston United States
3%
5%
7%
9%
11%
Q1 '08 Q1 '09 Q1 '10 Q1 '11
Houston United States
HOUSTON HOTEL MARKET INDICATORS
YE 2010 YE 2011
TOTAL UNITS 72,111 74,450
CITYWIDE AVERAGE VACANCY (%) 44.7% 42.0%
CITYWIDE AVERAGE DAILY RATE ($) $88.66 $92.50
UNITS DELIVERED 4,244 2,339
HOUSTON HOTEL
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
Supply Vacancy
SUPPLY & VACANCY RATES
HOUSTON HOTEL
HOUSTON HOTEL
Sales by Total $ (mil)
Average Cap Rate (Yield)Average Price ($) Per SF
Data Source:
0
200
400
600
800
1,000
1,200
1,400
Q1 '08 Q1 '09 Q1 '10 Q1 '11
Rolling 12-mo. Total Quarterly Vol.
0
50,000
100,000
150,000
200,000
250,000
Q1 '08 Q1 '09 Q1 '10 Q1 '11
Houston United States
3%
5%
7%
9%
11%
Q1 '08 Q1 '09 Q1 '10 Q1 '11
Houston United States
2012 CONSTRUCTION COMMENTS
General contractors and subcontractors actively pursuing new hires
It is not uncommon to have at least one of the bidders decline (workload)
Construction costs have not shown significant increases, but….
We are seeing subcontractor quotes holding their prices for as little as one week due to material volatility.
Confirming that the market is still unpredictable, manufacturers are not stocking a number of standard construction items.
We are still experiencing long delivery times on light fixtures and doors.
In working with contractors that have a national presence, we continually hear
“Thank God we’re in Houston!”
2012 TRENDS
CONTINUED JOB GROWTH ESPECIALLY IN ENERGY
OCCUPANCY, ABSORPTION, AND RATES WILL INCREASE
CONSTRUCTION UPTICK IN ALL REAL ESTATE SECTORS
INCREASED DEMAND FOR LAND
VALUES WILL INCREASE NEAR TERM
OCCUPANCY COSTS WILL INCREASE NEAR & MID TERM
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