Post on 08-Feb-2017
2017
0
5,000
10,000
15,000
20,000
25,000
30,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Texas Drilling Permits
Energy
2017
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
Rotary Rig Count
North America Texas
Energy
2017
“For every oilfield job created – two jobs are created in Houston” - Dr. Ray Perryman, the Perryman Group - 2012
Jobs
-111
49,800
83,200
118,600
89,800
117,800
15,200 14,800
-20,000
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
2009 2010 2011 2012 2013 2014 2015 2016
Houston-Sugar Land-Baytown Annual Job Growth
2017
-5.0%
-1.7%
-7.5%
-2.0
-1.3%
-0.3%
0.8%
2.3%
1.6%
3.7%
-15,000 -10,000 -5,000 0 5,000 10,000 15,000 20,000
Construction
Professional and Business Services
Mining and Logging
Manufacturing
Other Services
Information
Financial Activities
Government
Trade, Transportation and Utilities
Education and Health Services
Houston 2016 Annual Job Growth
Energy
An estimated 80,000+ energy industry jobs lost after 2014
Jobs
2017 Houston Office – 230.8M SF
Houston’s office inventory doubled between 1982-1988 causing the vacancy rate to soar from 5.7% to 28.4%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
$0
$20
$40
$60
$80
$100
$120
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
YTD
2016
Houston Office Vacancy WTI Crude Oil Annual Average Price
Avg. Annual WTI Crude Oil Price Houston Historical Office Vacancy
doubled office
inventory
2017
Office Big Picture – End of Q4
• Total Market – 230,820,000 SF
• Vacancy up 40 basis points Q3 – Q4
• Vacancy up 220 basis points Y-Y
• Negative net absorption decreased Q3 to Q4 from -300,000 SF to -100,000 SF
• Available sublease space contracted Q3 – Q4
• Construction pipeline increased marginally Q3 – Q4 but decreased significantly Y-Y
• No deliveries in Q4
2017 Houston Office – 230.8M SF
11.4M SF of Available Sublease Space Q4 2016 available sublease space decreased for the first time since Q2 2014
2017 Houston Office – 230.8M SF
Forecast
Vacancy rates should level off in 2017 and rents will remain flat
Confidential – Colliers International 2016
2017
Average Class A Vacancy: 18.1%
Houston Office Class A Submarket Vacancy
Q4 2016 Vacancy Rate 0.0% - 16.1%
16.2% - 18.1%
18.2% - 20.1%
20.2% - >
Confidential – Colliers International 2016
2017 2017
Average Cap Rate (Yield) Average Price ($) Per SF
Data Source:
Houston Office – 230.8M SF
Sales by Total ($) (mil)
0
1,000
2,000
3,000
4,000
5,000
6,000
Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14 Q4 '15 Q4 '16
Rolling 12-mo. Total Quarterly Vol.
0
50
100
150
200
250
300
Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14 Q4 '15 Q4 '16
Houston United States
3%
5%
7%
9%
11%
Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14 Q4 '15 Q4 '16
Houston United States
Confidential – Colliers International 2016
2017 2017
Industrial Big Picture – End of Q4
• Total Market – 534,962,373 SF
• Vacancy low at 5.6% up 10 bps Q3 – Q4 ;
• Vacancy up 60 bps Y - Y
• 9.1M SF absorbed in 2016. Daikin Applied America + 3.9M SF in the NW
corridor.
• Several large B2S distribution facilities under construction –
FedEx 800,000 SF in the NW Outlier corridor Two 500,000 SF buildings for Ikea in the ESE
Far corridor.
Confidential – Colliers International 2016
2017 2017
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
$5.00
$5.50
$6.00
$6.50
$7.00
$7.50
Houston Average Rent Houston Average Vacancy
Houston Industrial – 534.9M SF
Forecast
Confidential – Colliers International 2016
2017
Average Industrial Vacancy: 5.6%
Houston Industrial Submarket Vacancy Q4 2016 Vacancy Rate 0.0% - 3.6%
3.7% - 5.6%
5.7% - 7.6%
7.7% - >
Confidential – Colliers International 2016
2017 2017
Sales by Total $ (mil)
Data Source:
Average Cap Rate (Yield) Average Price ($) Per SF
Houston Industrial – 534.9M SF
0
500
1,000
1,500
2,000
2,500
Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14 Q4 '15 Q4 '16
Rolling 12-mo. Total Quarterly Vol.
0
20
40
60
80
100
Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14 Q4 '15 Q4 '16
Houston United States
3%
5%
7%
9%
11%
Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14 Q4 '15 Q4 '16
Houston United States
Confidential – Colliers International 2016
2017 2017 Retail Big Picture – End of Q4
• Total Market – 281,610,093 SF
• Absorption down due to limited (quality) available space
• 2.4M SF under construction, 75% pre-leased
• Galleria upscale renovation sparked by high-end tenants moving to River Oaks District.
Confidential – Colliers International 2016
2017 2017
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
Houston Average Vacancy
Houston Retail – 281.6M SF
Forecast
Confidential – Colliers International 2016
2017 2017 Retail Under Construction
2.4M SF 75% Pre-Leased Grand Parkway Dominant Largest Projects: Fairfield Town Center Simon 374,000 SF 100% Pre-Leased Paragon Outlets Lightstone 300,000 SF
Confidential – Colliers International 2016
2017
Active Larger (Anchor) Tenants
Confidential – Colliers International 2016
2017 2017
Sales by Total $ (mil)
Average Cap Rate (Yield) Average Price ($) Per SF
Data Source:
Houston Retail – 281.6M SF
0
500
1,000
1,500
2,000
2,500
Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14 Q4 '15 Q4 '16
Rolling 12-mo. Total Quarterly Vol.
0
50
100
150
200
250
Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14 Q4 '15 Q4 '16
Houston United States
3%
5%
7%
9%
11%
Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14 Q4 '15 Q4 '16
Houston United States
Confidential – Colliers International 2016
2017 2017
Multifamily Projects Under Construction
15,933 units in 61 projects #1 - 2016 #3 - 2017
Confidential – Colliers International 2016
2017 2017 Multifamily Big Picture – End of Q4
Total Market – 626,027 Units
Absorption is down – Demand is stabilizing
Under Construction – Inner Loop Hot Spot
Developers pushing new projects to 2018
Confidential – Colliers International 2016
2017 2017
80.0%
85.0%
90.0%
95.0%
100.0%
$600
$700
$800
$900
$1,000
Houston Average Rent Houston Average Occupancy
Houston Multifamily – 626.0K Units
Forecast
Confidential – Colliers International 2016
2017 2017
Data Source:
Average Cap Rate (Yield) Average Price ($) Per Unit
Sales by Total $ (mil)
Houston Multifamily 537.8K Units
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14 Q4 '15 Q4 '16
Rolling 12-mo. Total Quarterly Vol.
020,00040,00060,00080,000
100,000120,000140,000160,000
Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14 Q4 '15 Q4 '16
Houston United States
3%
5%
7%
9%
11%
Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14 Q4 '15 Q4 '16
Houston United States
Confidential – Colliers International 2016
2017 2017
• Consultants back log continues to dwindle.
• Some firms are branching out supporting markets outside Houston while others are supplementing national account requirements with local personnel.
• The general contracting community chasing new markets to supplement the lack of new ground up projects as well as the tenant improvement sector.
• Sublease office tenant improvement market has limited significant construction allowances.
• Residential construction continues to thrive in “premium” locations. Medical and retail have not been adversely affected by the current downturn.
• The number of proposals received in individual trades has increased, pointing to increased interest in upcoming work.
• Companies are looking to trim costs without affecting production. This has not translated to any significant decrease in recognized cost.
• Long lead delivery times for critical path material and equipment continues to drive completion dates.
Construction Comments
Confidential – Colliers International 2016
2017
Office
Retail
Industrial
Apartment
Phase I Recovery
Phase II Expansion
Phase IV Recession
Phase III Oversupply
Rent Increasing
Rents Decreasing
Above Long-Term Avg.
Occupancy
Below Long-Term Avg. Occupancy
SELL
HOLD
BUY
Houston Commercial Real Estate Market Cycle
Thank you, have a great 2017.