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www.boyarmiller.com
The Houston Commercial Real Estate Markets: What’s Ahead for 2013
Breakfast Forum
December 5, 2012
www.boyarmiller.com
Land Development, Homebuildng & Multi-Family Markets Will Holder Trendmaker Homes
A National Real Estate Anomaly A Free Market Case Study
Out of control, sprawl crazed megalopolis?
Human intuitive, naturally evolving Super City?
OR
-35%
-25%
-15%
-5%
5%
15%
25%
35%
45%
2Q90 2Q92 2Q94 2Q96 2Q98 2Q00 2Q02 2Q04 2Q06 2Q08 2Q10 2Q12
Las Vegas-Paradise, NV Fresno, CA
Riverside-San Bernardino-Ontario, CA Cape Coral-Ft Myers, FL
Houston-Sugar Land-Baytown, TX
Source: FHFA
Houston MSA Residential Building Permits
Number of Dwelling Units -- Thousands
81,500 Net New Jobs vs. 27,285 New Dwelling Units – 2.65 Jobs Per Unit
Houston Existing Home Prices Median Price Prior 12 Month Average
Houston Association of REALTORS®
What Will the Next Five, Ten
Years Look Like for Houston
Real Estate?
Houston MSA Population Forecasts Scenario 2000-2007 Migration
Texas State Data Center Millions
Location, Location, Location?
No!
Location, Jobs, Location, Jobs
Houston MSA Job Numbers
Recession Millions of Jobs
Seasonally-Adjusted
More Jobs Than Ever In
History
MSA Rank- Starts Last 12 Months
Conclusion:
• Houston is a Stable Steady Market • Economy & Population is Going to Grow • Supply & Demand is Moving Toward a Sellers Market • Prices Almost Have to Increase
www.boyarmiller.com
Retail Market Jay K. Sears NewQuest Properties
Annual Job Growth
U.S. Consumer Sentiment Index
75
100
125
75
100
125
Rolling 12-mo
average
U.S. Consumer Sentiment Index
502002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: University of Michigan Survey of Consumers
Retail Trade Sales
Source: U.S. Census
Retail Trade Sales
Source: State of Texas Comptroller
2008 Trend 2009 Trend 2010 Trend 2011 Trend Projected 2012 Trend
U.S. 100.00% 92.64% 97.84% 105.57% 114.01%
Texas 100.00% 88.06% 90.93% 98.89% 107.79%
Houston MSA 100.00% 86.63% 89.05% 99.57% 108.54%
Harris County 100.00% 85.54% 87.18% 98.69% 108.56%
Montgomery County 100.00% 91.94% 99.33% 105.29% 111.61%
Fort Bend County 100.00% 84.81% 91.94% 95.67% 110.03%
75.00%
80.00%
85.00%
90.00%
95.00%
100.00%
105.00%
110.00%
115.00%
120.00%
Retail Trade Sales By National, State, MSA, and County 2008 2009 2010 2012 2011
2008 Trend 2009 Trend 2010 Trend 2011 Trend Projected 2012 Trend
Katy 100.00% 92.59% 105.85% 121.72% 131.46%
Pearland-Friendswood-League City 100.00% 98.96% 102.43% 115.74% 125.00%
Conroe 100.00% 87.80% 94.60% 108.64% 117.34%
Baytown 100.00% 87.93% 90.13% 101.49% 115.70%
Sugarland-Rosenberg-Missouri City 100.00% 102.29% 97.87% 105.98% 115.52%
Pasadena-Deer Park-La Porte 100.00% 104.12% 105.74% 117.79% 129.57%
Houston 100.00% 85.00% 87.02% 99.06% 107.97%
Humble 100.00% 87.95% 88.15% 95.22% 103.79%
80.00%
90.00%
100.00%
110.00%
120.00%
130.00%
Retail Trade Sales By City
Retail Trade Sales
Source: State of Texas Comptroller
2008 2009 2010 2012 2011
Holiday Sales
“35 million consumers visited stores and Web sites on Thursday, up from 29 million last year.” “Average consumer spent $423 – roughly $25 more than they did last year.” “Total spending increased nearly 13% to an estimated $59.1 billion, according to the NRF.” “89 million consumers, up from 86 million in 2011 shopped on Black Friday.” “Holiday sales are expected to increase 4.1% from 2011,
said NRF.”
Thanksgiving Weekend Sale
Source: www.washingtonpost.com “Thanksgiving weekend sales better than last year”
“Online shopping on Black Friday rose 26% to exceed $1 billion for the first time.” “Online sales advanced 16% in the first 23 days of November to $13.7 billion, with sales on Thanksgiving Day increasing 32% to $633 million.” “Total spending increased nearly 13% to an estimated $59.1 billion, according to the NRF.”
Online Shopping “Traffic to retail sites on Black Friday rose to 24% from 14.3%, and the mobile share of sales hit 16%, up from 9.8% a year ago.” “Nielsen in September reported 55.5% of U.S. mobile subscribers had smartphones as of July, up from 41% a year earlier.” “The data all points to a larger addressable market for mobile sales and promotions during the holiday season.”
Mobile Shopping
Source: www.bloomberg.com “Retailers Keep Deals Flowing on 13% Holiday-Sales Jump”
Source: www.mediapost.com “Mobile Becomes Major Shopping Player”
Best Buy Annual Sales
Source: Business Insider
Same Store Sales at
Source: www.investors.Best Buy.com
Kroger 3rd Quarter Highlights
Kroger's adjusted earnings per diluted share was a record $0.46 for the quarter.
Identical supermarket sales growth, without fuel, was 3.2% in the third quarter.
Achieved 36(th) consecutive quarter of positive identical supermarket sales
Reports Record Third Quarter Earnings Per Share
Source: PRNewswire
Population Growth
5,946,800
6,127,645
6,280,138
6,435,268
6,593,498
6,754,896
5,400,000
5,600,000
5,800,000
6,000,000
6,200,000
6,400,000
6,600,000
6,800,000
7,000,000
2010 2011 2012 2013 2014 2015
Houston MSA Population Growth
Source: State of Texas Years
Popu
latio
n
-5,000
5,000
15,000
25,000
35,000
45,000
55,000
65,000
75,000
85,000
95,000
105,000
115,000
School Enrollment 2008-2009
2009-2010
2010-2011
2011-2012
School Enrollment Growth
Source: Texas Education Agency
Districts
Stud
ents
Enrollment Increases
District 2008-2012
Houston ISD 1.4%
Katy ISD 9.8%
Fort Bend ISD 1.1%
Spring ISD 9.9%
Cypress-Fairbanks ISD 6.9%
Humble ISD 7.9%
Klein ISD 5.2%
Conroe ISD 8.4%
Aldine ISD 3.9%
Clear Lake ISD 5.0%
Alvin ISD 12.6%
198,500199,000199,500200,000200,500201,000201,500202,000202,500203,000203,500204,000
Houston ISD
Houston’s Retail Market
in Texas City
in the Heights
at Hwy 249 & Smiling Wood
in Sienna Plantation
in Fairfield Market
& in Cinco Ranch
New Shopping Centers in 2012
Grocery Anchored Developments Openings 2012
25.0% market share
24.8% market share
22.2 % market share
Houston – area Market Leaders
Source: The Shelby Report of the Southwest; October 2012
2012 Store
Openings
Planned Grocery Anchored Developments 2013 & Future
25.0% market share
24.8% market share
22.2 % market share
Houston – area Market Leaders
Source: The Shelby Report of the Southwest; October 2012
2013 & Beyond Store Openings
New Shopping Centers Projects Planned
Project / Anchor Developer Location Projected Opening
Grand Lakes Marketplace
Fry & Grand Pkwy
Jan. 2013
Village at Northpark
Northpark & US 59
2nd Qtr 2013
Spring Marketplace
Rayford & Kuykendahl
1st Qtr 2014
Spring Town Center
Kuykendahl & FM 2920
Summer 2013
Blvd. Place
Post Oak & San Felipe
Spring 2014
Vintage Marketplace
Louetta & Cutten Rd
Summer 2014
Fountainview & San Felipe
2014
Development
Loop 306 & Hwy 105
2013
FOR LEASING: CALL 281-477-4300
Spring Town Center Brazos Town Center Sam Houston Town Center
NEC & SEC of FM 2920 & Kuykendahl Houston, Texas
Project Size:
Anchors: 354,559 SF
Retail: 153,845 SF Pad Sites: 27 Total; 7 Available
Tenants:
NWC & SWC of US 59 & FM 762 Rosenberg, Texas
Project Size:
550.00 acres (1.8 million SF of retail)
Tenants:
NWC of I-45 & FM 1097 Willis, Texas
Project Size:
Kroger Market Place: 123,000 SF Retail: 27,407 SF Pad Sites: 6 Available
Tenants:
OPENING MAY 2013 12 SCREEN
NOW OPEN COMING SOON
New to Houston’s Market
• California base specialty Grocery • 3 new stores
• Limited assortment grocery with over 1,000 stores nationwide • 9 new stores in Houston out of 30 planned
• Phoenix based healthy foods/ organic grocery store • 3 new stores
• North Carolina based gourmet grocery store • 4 new stores taking over Rice Epicurean locations
• 2 sites under contract Hwy 59 & University Grand Pkwy & I-10
• Same company as Bed Bath & Beyond • 1st store in Webster, TX
• Discount soft goods • Family-owned, family- oriented company
• New pet store concept • Looking for 7,000 – 9,000 sq. ft.
• 5,000 sq. ft. Petco store • Grocery anchored & urban markets • No live animals • Organic foods
• 1st store Baybrook Mall 20,500 sq. ft. • 2nd store Willowbrook Mall 25,000 sq. ft.
• California-based clothing company • 6,000 sq. ft. at First Colony Mall
• New store coming soon in Texas City
• New concept 30,000 sq. ft.
• New size 40,000 sq. ft.
• 1st location located in downtown Houston
Rent Growth Rate & Forecast
Construction / Absorption and Vacancy
Houston Sales Comps 2012
www.boyarmiller.com
Office Market Robert S. Parsley Colliers International
Houston’s Most Active Office Submarkets R
obus
t Eco
nom
y
Central Business District O
ppor
tuni
ty o
r Con
cern
Galleria C
ompa
ny E
xpan
sion
s
West Houston E
nerg
y &
Con
stru
ctio
n
Woodlands/Greenspoint
A Ta
le o
f Tw
o C
ities
What to expect in 2013
• Houston’s economy is a magnet for business!
• Even with concerns over the U.S. economy of the “Fiscal Cliff”, expect that office leasing activity will continue to be robust!
• Continued growth in the suburban markets - Woodlands and Energy Corridor.
• Greenspoint will be active, but due to exodus of companies relocating to other submarkets.
• 1M SF available in Allen Center (CBD) will attract a large tenant or tenants - it is an Opportunity!
• Thankful to be in Houston! Continued Growth
www.boyarmiller.com
Industrial Market Welcome W. Wilson, Jr. GSL Welcome Group
December 5, 2012
2013 INDUSTRIAL
FORECAST
Welcome Wilson, Jr.
Houston…A force to be reckoned with
2011
507.9 million SF
1.977 million SF
under construction
2012
843 million SF
2.156 million SF
under construction
HOUSTON INDUSTRIAL
MARKET TOTALS
VACANCY RATES BY BUILDING TYPE
5.3% HOUSTON AVERAGE
Vacancy Rates
U.S. - VS - HOUSTON
Rental Rates
INVESTMENT SALES
Ameriport 2 - Update
DiMare Fresh, Inc. - Update
JOB GROWTH
Fuels
ENERGY
The
Economy
ExxonMobil - Update
Trade and the Panama Canal
HOUSTON SHIP CHANNEL
Exxon/Qatar Proposal
Exxon Mobil Corp. and Qatar Petroleum
International are teaming up on a proposal
to export liquid natural gas from Golden Pass
terminal near the Houston ship channel.
Driving
Energy
&
Producing
Jobs
Eagle Ford Shale
GAME ON!