houston office submarket update 12-2012

Houston’s Most Active Office Submarkets R

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HOUSTON OFFICE MARKET STATISTICS FOR ALL CLASS198M SF3.2M SF YTD Net Absorption14.2% Vacancy Rate$23.61/SF Average Rental Rate4.1M SF Under Construction8.6 M SF Proposed

• 93MSFofInventory• 2.8MSFYTDNetAbsorption• 11.6%VacancyRate• $29.96/SFAverageRentalRate• 4.1MSFUnderConstruction• 4.1MSFProposed

Class A Submarket Statistics Economic IndicatorsJobGrowth&Unemployment(NotSeasonallyAdjusted)

UNEMPLOYMENT 10/11 10/12

Houston 7.7% 6.2%

Texas 7.6% 6.3%

U.S. 8.5% 7.5%

JOBGROWTHANNUALCHANGE

#OFJOBSADDED

Houston 3.6% 96K

Texas 2.6% 276K

U.S. 1.4% 1.9M

Houston led the state in annual job growth adding

96,000 jobs between October 2011 and

October 2012!

• 85MSFofInventory• 363,000SFYTDNetAbsorption• 16.7%VacancyRate• $19.29/SFAverageRentalRate

Class B Submarket Statistics

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• 26MSFofInventory• 617,000SFYTDNetAbsorption• 10.9%VacancyRate• $36.85/SFAverageRentalRate• 0SFUnderConstruction• 0SFProposed

Class A Submarket Statistics

• DEVON ENERGY CORPORATION-880ksforiginallyin1999;550ksfnow.SomesubleasedtoENIandCopano,but425ksfwillbevacatedin1Q2013,themajorityofwhichisin2AllenCenter(1200Smith).

• HESS CORPORATION-HessCorpleasedallofthe845ksfnewlyconstructed(2011)officetowerat1501McKinneySt.

• KBR/HALLIBURTON-Occupies900,000SFinthe1MSFKBRTowerwhichwasjustpurchasedfor$174.6M(or$167/SF)byanontradedREITaffiliateofNewYorkbasedW.P.CareyInc.ThesellerwasajointventurebetweenKBRandBrookfield.KBR’sleasedoesn’texpireuntil2030.

• UNITED AIRLINES-Merged/AcquiredContinentalAirlines4Q2011.141,990SFofvacantspacecurrentlyavailablein1600Smith

• BG GROUP-Leasedfloors22-34inthenewestCBDtower(972ksf)builtbyHinesin2011.Eightfullfloors(216ksf)ofthe46-storytowerarestillavailableforlease.

HIGHLIGHTS

• 9.8MSFofInventory• 85,800SFYTDNetAbsorption• 18.0%VacancyRate• $24.00/SFAverageRentalRate• 0SFUnderConstruction• 0SFProposed


CBD OFFICE SUBMARKET - 8M SF

• BGGroup• CalpineCorporation• CenterPointEnergy• ChaseBank• ChevronCorporation• Deloitte• DevonEnergyCorporation• Dynegy

Major Tenants• ElPasoCorporation• EnterpriseProductsPartners• Ernst&Young• ExxonMobilCorporation• HessCorporation• KBR• KPMG• LyondellBasellIndustries

• PricewaterhouseCoopers• ReliantEnergy,NRG• ShellOilCompany• UnitedAirlines• WasteManagement,Inc.• WellsFargo

ALLEN CENTER COMPLEX• Hess relocated to Discovery Green• Kinder Morgan acquired El Paso• Continental merger with United• Devon moving to OKC

Over 1M SF available for leaseOpportunity or Concern?

Galleria C

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• 15MSFofInventory• 146,000SFYTDNetAbsorption• 10.7%VacancyRate• $30.13/SFAverageRentalRate• 609,000SFUnderConstruction• 420,900to(?,Apache)SFProposed


• ApacheCorporation-Purchased6.4acresofthe20-acremixed-useBlvdPlacedevelopmentfora33-storyofficetower,approx.497,000SF,withenoughdirtleftoverforanadditionofficebuildingforfuturegrowth.Currentlyinplanningstage.

• BBVACompass-306,000SFunderconstructiondelivering4/2013and59%pre-leasedtoBBVACompass.AdevelopmentorRedstoneandStreamRealty.

• BlvdPlace-Underconstruction-Largestnewmixed-useprojectintheareawithover1.8MSF.205,000SFofRetail;1.4MSFofoffice;275luxuryhotelroom;1,000high-riseresidentialunits.

Highlights



GALLERIA OFFICE SUBMARKET38M SF

• AirLiquide• AonInternationalEnergy• ApacheCorporation• BBVACompass• BechtelCorporation• BHP• BlueCrossBlueShieldofTexas• CameronInternationalCorporation• ChristusHealth• ClearChannelCommunications• ColliersInternational• GEEnergy• GDFSUEZEnergyNorthAmerica• Landry’sRestaurants,Inc.• MarathonOilCorporation• NetIQCorporation• PanhandleEnergy• SpectraEnergyCorporation• StewartTitleCompany• SymantecCorporation• WeatherfordInternationalLtd.• Williams

Major Tenants

West Houston E

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• 10.2MSFofInventory• 595,000SFYTDNetAbsorption• 4.2%VacancyRate• $28.14/SFAverageRentalRate• 1.5MSFUnderConstruction• 1.7MSFProposed


• MASON CREEK-MyersCrow&Saviers,Ltd.andMoodyRambinInterestsarecurrentlydevelopingatwo-story,136,000SFofficebuilding.Thebuildingiscurrently0%pre-leasedandwilldeliver5/2013.

• GREENHOUSE-StreamRealtyPartnershasproposedbuildinga200,000SFofficebuilding.• WESTGATE-Transwesternhasthefirstofthreeplannedbuildingsunderconstruction.182,000SFunderconstruction,70%pre-

leasedtoSubsea7andWoodGroupMustang.Deliveryisscheduledfor12/2013.Thetwoproposedbuildingsare242,000SFeach.

• ENERGY CROSSING-LincolnPropertycompanyhasEnergyCrossingIIunderconstruction.The322,000SFbuildingis63%pre-leasedtoModecInternationalandAtwoodOceanics.Thebuildingisscheduledforcompletion8/2013.

• ENERGY CENTER THREE-CBREplanstobreakground12/2012ona551,000SFClassA,20-storyofficetower.Thebuildingis0%pre-leased.

• WOODBRANCH-PMRealtyGroupplanstobreakground1/2013ona168,000SFClassA,7-storyofficetower.Thebuildingis0%pre-leased.

• ENERGY TOWER-MacHaikRealtyLLCcurrentlyhasthethirdEnergyTowerbuildingunderconstruction.The429,000SFClassA,17-storyofficetoweris0%pre-leasedandscheduledtodeliver1/2014.

• 8 WEST CENTRE-CBREhasa228,000SF4-storyofficebuildingunderconstruction.Thebuildingis53%pre-leasedbyHelixEnergySolutionsandisscheduledtodeliver7/2013.

• MURPHY OIL-MetroNational’s332,000SFClassAofficetoweriscurrentlyunderconstruction.MurphyExplorationhaspre-leased120,000SFandplantomoveinwhencompletedinQ32013.

• NEXEN-MetroNationalcompletedthis332,000SFClassA,14-storyofficetower10/2012.Thebuildingis79%pre-leasedbyNexenInc.

• CITYCENTRE-ThefourthbuildingintheMidwayCompaniesnewcomplexiscurrentlyunderconstructionandis53%pre-leased.The120,000SFbuildingdelivers6/2013.

HIGHLIGHTS



KATY FREEWAY OFFICE SUBMARKET - 20M SF• AllianceEngineering• BPNorthAmerica• CobaltInternationalEnergy,Inc.• ConocoPhillipsCompany• DetNorskeVeritas• DiamondOffshore• ExproAmericas• ExxonMobilChemical• FosterWheeler• GulfInterstateEngineering• J.RayMcDermott,Inc.• KBR• MustangEngineering/WoodGroup• Nexen,Inc.

• NorthernOffshoreLtd.• Paradigm• PegasusInternational• PetroleumGeo-Services• Phillips66Company• Schlumberger• ShellExploration• SyscoCorporation• TheShawGroup• TransoceanLtd.• UnionCarbideCorporation• WorleyParsons

Major Tenants

WESTCHASE OFFICE SUBMARKET13.2M SF

• 6.8MSFofInventory• 383,000SFYTDNetAbsorption• 7.8%VacancyRate• $29.98/SFAverageRentalRate• 300,000SFUnderConstruction• 2.6SFProposed

Class A Submarket Statistics• ABB• AffiliatedComputerServices• AkerSolutions• ApacheOilCorporation• BMCSoftware• Brown&Gay• CalDiveInternational• CameronInternational• Chevron• Dresser-Rand• Halliburton• Honeywell• JacobsEngineering• LandmarkGraphics• NationalOilwellVarco• Phillips66• UnitedRecoverySystems• SamsungEngineeringAmerica,Inc.• Schlumberger• UnitedRecoverySystems• WesternGeco• WoodGroupPressureControl

Major Tenants

• TwoBriarLake -332,000 rentable square feet in 12 storiesof officespace,with half recently pre-leased to Samsung Engineering as North Americanheadquarters.Constructiontobegin4Q2012anddelivering1Q2014.

• Phillips66-Purchaseda14.2acretractonthewestsideofBeltway8,justnorthofWestheimertobuildfutureglobalheadquartersaftersplitwithConoco.

• GraniteBriarparkGreen-300,000SFspecofficebuildingunderconstructiondelivering7/2013.

• TwoOakPark - 300,000SFOakPark complex features26-storyClassAbuildings.OneOakParkiscompletedandtheentirebuildingisavailable.TwoOakParkisproposed.

• CityWestPlace-30acresitewithfourexistingbuildingsandanadditional1.5millionsquarefeetoffirst-classofficespacewillbedevelopedatCityWestPlace,including a 640,000 square foot, 22-level office tower; a 465,000 squarefoot, 16-levelofficetower;a387,000square foot, 16-levelofficetower;anda307,000squarefoot,12-levelofficetower.EachbuildingwillhaveitsownstructuredparkingandwillofferCityWestPlace-Classamenitiesandservices.

• Westchase Park - Two (2) “Class A” office buildings totaling approximately540,000rentablesquarefeet.Bldg1isexistingandBldg2isproposed.

Highlights

Woodlands/Greenspoint

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WOODLANDS OFFICE SUBMARKET7M SF

• 3.2MSFofInventory• 62,000SFYTDNetAbsorption• 2.1%VacancyRate• $34.82/SFAverageRentalRate• 1.1MSFUnderConstruction• 3.4MSFProposed


Woodlands Major Tenants• AnadarkoPetroleum• AonHewitt• BakerHughes• ChevronPhillipsChemicalCo.,LLP• CB&I• EnergyAlloys,LLC• EntergyServices• FoxNetworksGroup• Halliburton• HuntsmanInternational• LexiconGenetics• MaerskSealand• NewfieldExplorationCompany• NexeoSolutions• PraxairTechnology,Inc.• RepsolServiceCompany• RigakuCorp.• TalismanEnergyUSAInc.• TETRATechnologies,Inc.• USOncology• WasteConnections

• 3WaterwaySquarePlace-234,000SFunderconstruction,90%pre-leaseddelivering6/2013

• AnadarkoTower2-550,000SFunderconstructiondelivering4/2014

• ResearchForestLakeside -Planned,ten-buildingdevelopmenton77-acres.1bldgcompleted(Talisman);1underconstruction(Talismanpre-leased150KSF).

• One Hughes Landing - 8-story, 197,000 SF spec office building underconstruction.

Woodlands Highlights

Greenspoint/North Belt Highlights• ExxonMobilCampus-385-acrecampus,10kemployeesmovingby2015

• SouthwestEnergy-Developing10-storyofficebuildinginSpringwoodsVillagenearExxonMobilcampus.

• HalliburtonNorthBeltCampus-100,000SFofficebuildingonMilnerRddelivering4Q2012

• GreenspointPlaza-ExxonMobilwillmoveoutof1.6MSFbetween2014and2015

houston office submarket update 12-2012

Real Estate