Post on 07-Apr-2018
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on pointHouston . Industrial Outlook . Q2 2011Houston's industrial market
continues to outperformthe nation.
Tenant power is eroding as available space diminishes.
Rental rate growth is expected to continue into the remainder of 2011
and 2012.
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Houston industrial overview, cont.
Houston property clock
Peaking
market
Falling
market
Risingmarket
Bottomingmarket
Landlord
lev
erage T
en
antleverage
Outlook
The Northwest and Southeast Houston submarketscontinue to garner the attention of users in
search of larger blocks of distribution space. As demand for quality space increases, new
developments in North / Northwest Houston can be expected into 2012 as prospectors look to
capitalize on improving market conditions. In the near term, absorption numbers should continue to
improve throughout the year as speculative constructionremains limited. As the inventory crunch
on Big Box properties persists in the face of rising demand, rental rate growth across Houston is
expected to continue its upward trend. Developers searching for quality sites are apt to venturefarther into the various submarkets in search of less expensive land.
Crane-served and crane-ready buildings between 20,000 and 50,000 square feet will continue to behighly sought after as oil and gas service companies continue to increase activity. We have alsoseen an influx of foreign companies seeking opportunities in the United States with Houston being acommon front-runner due to its favorable business climate and affordable real estate. The risingpriceof oil will continue to spur demand for single-tenant service oriented manufacturing buildingsbelow 100,000 square feet. Increased activity offshore should have a positive impact on theSoutheast submarket later in the year. Current market conditions will carry into the third and fourthquarters as companies attempt to finalize real estate decisions for 2011 and early 2012.
NortheastCBD, South
Northwest, SoutheastNorth, Southwest
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Pricing trends
The average asking rental rate for available Industrial space was $0.40 per square foot permonth at the end of the second quarter 2011 in the Houston market area.
Lease rates for first generation crane-ready buildings are favorable to landlords as demandoutweighs supply.
Houston industrial overview, cont.
YTD net absorption
Demand tr ends
Demand is being fueled by numerous factors including 1) increasing population; 2) employmentrate growth; 3) positive trade indicators; 4) increased activity in the oil and gas sector, and ; 5) adiversified economy.
Net absorption for the overall Houston Industrial market was positive 1,698,100 square feet in thesecond quarter of 2011.
Average rental rate
$0.00
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
CBD North Northeast Northwest Southeast Southern Southwest -200,000 -150,000 -100,000 -50,000 0 50,000 100,000 150,000 200,000
CBD
North
Northeast
Northwest
Southeast
Southern
Southwest
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Methodology
Theleasedindustrialsectorexcludesowneroccupiedproductfromthemarketsdataset,andprovidesarentalequivalentperspectiveforindustrialbuildingsthatareleasedbytenants. Buildingscanmoveintoandoutofthisdatasetbaseduponbeingpurchasedorsoldbyaparticularuser.
Recent lease transactions
Tenant name Location Submarket Deal type Size (s.f.)
Schenker Logistics 6911 Fairbanks N Houston Northwest New Lease 147,000
Palmer Logistics 200 Portwall St. Northeast New Lease 140,000
Packwell Inc. 8786 Wallisville Rd. Northeast Renewal 136,928
Sercel Inc. 10570 Bissonnet St. Southwest Renewal 99,000
J.A.M. Distributing Company 6100-6120 Donoho St. Southern New Lease 54,820
Total leased industrial market (excluding owner occupied facilities)
Supply total
stock (s.f.)
Vacancy
rate
Availability
rate
Demand
Q2 2011 net
absorption (s.f.)
Pricing
Average rental
rate (nnn)
Total l eased indus tr ial market 212,620,637 8.4% 13.7% 1,228,742 $4.72
Warehouse/distribution 171,625,706 9.0% 14.6% 757,142 $4.83
Manufacturing 21,951,409 5.0% 10.4% 157,595 $3.94
Total leased flex market 23,716,991 13.9% 18.3% -97,019 $8.39
Houston leased industrial market [excluding owner occupied facilities]
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CBD 10300 N Loop Freeway E
RBA 289,209 s.f.
Buyer Interplast Group, Ltd.
Seller International Paper Company
Price (p.s.f.) $34.06
Date sold Q2 2011
Southeast 8451 Market St. (Investment Sale)
RBA 120,810 s.f.
Buyer Mayfield Properties
Seller The National Realty Group, Inc.
Price (p.s.f.) $33.11
Date sold Q4 2010
Southwest 14623 Fairway Pines
RBA 152,844 s.f.
Buyer The Allied Group
Seller Crow Holdings
Price (p.s.f.) $50.00
Date sold Q2 2011
Houston select salesBased on Sales from Q2 2010 Through Q2 2011
Houston Citywide
RBA 1,200,000 s.f.
Buyer Cabot Properties, Inc.
Seller Granite Properties, Inc.
Price (p.s.f.) N/A
Date sold Q1 2011
Northwest 777 Igloo Rd.
RBA 914,195 s.f.
Buyer Cole Credit Property Trust III, Inc.
Seller Igloo Products Corp.
Price (p.s.f.) $41.68
Date sold Q2 2010
Northwest 16101 Vallen Dr.
RBA 174,139 s.f.
Buyer Western Well Tool, Inc.
Seller The KhoshbinCompany
Price (p.s.f.) $74.65
Date sold Q3 2010
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Statistics
Large block availabilities
Construction map
Contacts
Appendix
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Houston industrial market statistics
SubmarketTotal
inventory(s.f.)
Directvacancy
(%)
Totalvacancy
(%)
Directavailability
(%)
Totalavailability
(%)
Q2 direct netabsorption
(s.f.)
YTD 2011directnet absorption
(s.f.)
Q2 total netabsorption
(s.f.)
YTD 2011 totalnet absorption
(s.f.)
Average directasking rent
($ p.s.f.)
Average totalasking rent
($ p.s.f.)
Underconstruction
(s.f.)
YTDcompletions
(s.f.)
CBD
Warehouse / Distribution 37,933,008 4.8% 4.9% 9.9% 10.2% 224,546 170,770 224,546 170,770 $4.12 $4.12 0 0
Manufacturing 6,308,973 6.2% 6.2% 15.5% 15.5% 1,500 -76,100 1,500 -76,100 $3.02 $3.02 0 0
Total industrial 47,427,962 4.7% 4.8% 10.3% 10.4% 226,046 94,670 226,046 94,670 $3.88 $3.88 0 0
Flex / R&D 2,791,579 10.3% 10.3% 16.2% 16.2% 4,800 4,020 4,800 33,218 $11.80 $11.80 0 0
North
Warehouse / Distribution 34,219,677 5.8% 6.0% 9.3% 10.4% 327,582 296,826 327,582 316,026 $6.41 $6.04 670,767 206,036
Manufacturing 7,067,652 2.0% 2.0% 3.8% 5.2% 0 -16,000 0 -16,000 $3.82 $4.03 0 0
Total industrial 50,188,829 5.2% 5.4% 8.4% 9.4% 446,081 268,382 446,081 287,632 $5.67 $5.45 670,767 206,036
Flex / R&D 5,766,375 11.5% 11.9% 15.4% 17.9% 162,592 185,254 166,118 188,780 $10.67 $10.67 34,709 34,709
Northeast
Warehouse / Distribution 20,998,519 6.5% 6.8% 10.1% 10.5% 210,382 127,823 210,382 127,823 $4.48 $4.48 0 0
Manufacturing 5,525,178 2.5% 4.8% 9.3% 11.6% 35,816 -7,014 35,816 -136,014 $2.64 $2.64 0 0
Total industrial 27,839,327 5.4% 6.1% 9.6% 10.3% 246,198 120,818 246,198 -8,182 $3.98 $3.98 0 0
Flex / R&D 341,190 26.6% 26.6% 22.6% 22.6% 0 958 0 958 N/A N/A 0 0
Northwest
Warehouse / Distribution 78,871,213 5.1% 5.5% 9.1% 10.1% 27,260 -148,100 -2,440 -215,660 $4.92 $4.91 251,787 300,000
Manufacturing 11,318,680 1.7% 1.7% 3.7% 5.1% 100,100 117,100 -100,100 117,100 $4.43 $4.63 0 0
Total industrial 97,947,189 4.9% 5.1% 8.4% 9.5% 261,000 152,577 231,300 85,017 $4.89 $4.92 251,787 300,000
Flex / R&D 9,869,806 9.1% 9.4% 12.3% 12.8% -73,345 614,478 -79,495 606,658 $7.10 $7.13 0 0
Vacancy: Physically vacant space. Total Vacancy includes both direct and sublease space.
Availabili ty: Space being marketed for lease by owner or sublessor, regardless of occupancy. Total Availability includes both direct and sublease space.
Net Absorption: The net change in occupancy over a measured period of time.
Average Asking Rent: Direct monthly values presented on a NNN basis, then weighted by the amount of direct available space in a building.
Statistics reflect the total industrial market, including owner occupied facilities
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Houston industrial market statistics, cont.
SubmarketTotal
inventory(s.f.)
Directvacancy
(%)
Totalvacancy
(%)
Directavailability
(%)
Totalavailability
(%)
Q2 direct netabsorption
(s.f.)
YTD 2011directnet absorption
(s.f.)
Q2 total netabsorption
(s.f.)
YTD 2011 totalnet absorption
(s.f.)
Average directasking rent
($ p.s.f.)
Average totalasking rent
($ p.s.f.)
Underconstruction
(s.f.)
YTDcompletions
(s.f.)
Southeast
Warehouse / Distribution 53,261,524 7.7% 7.8% 12.1% 12.5% 494,530 771,676 494,530 771,676 $4.41 $4.46 495,170 118,000
Manufacturing 11,945,342 0.0% 0.0% 0.7% 0.7% 0 143,045 0 143,045 $5.80 $5.80 0 0
Total industrial 74,605,198 5.8% 5.8% 9.6% 9.8% 534,936 1,147,977 534,936 1,097,977 $4.47 $4.52 495,170 118,000
Flex / R&D 1,802,007 15.7% 16.1% 18.8% 19.2% 8,008 0 2,683 -6,887 $6.43 $6.43 0 0
Southern
Warehouse / Distribution 25,447,956 3.5% 4.0% 8.4% 8.9% 80,777 82,327 -35,328 -33,778 $4.64 $4.64 0 0
Manufacturing 6,093,978 2.1% 2.1% 3.0% 3.0% 52,500 30,000 52,500 30,000 $3.90 $3.90 0 0
Total industrial 34,336,567 3.0% 3.4% 6.9% 7.3% 170,777 156,827 54,672 40,722 $4.54 $4.54 0 0
Flex / R&D 1,834,024 11.5% 11.5% 17.9% 17.9% -36,915 -22,981 -36,915 -22,981 $8.35 $8.35 0 0
Southwest
Warehouse / Distribution 31,847,387 7.7% 7.9% 10.9% 11.4% -247,875 -191,123 -234,281 -177,529 $5.90 $5.89 543,797 99,500
Manufacturing 5,363,693 3.0% 3.0% 7.5% 8.8% -28,821 -28,821 -28,821 -28,821 $5.04 $5.04 0 0
Total industrial 45,933,558 6.2% 6.4% 9.0% 9.6% -121,352 -42,100 -107,758 -28,506 $5.78 $5.78 543,797 99,500
Flex / R&D 7,261,554 11.7% 11.7% 14.8% 14.9% -23,700 -43,425 -23,700 -43,425 $8.23 $8.23 0 0
Total market
Warehouse / Distribution 282,716,030 5.9% 6.1% 10.1% 10.7% 1,116,327 1,109,333 984,116 908,462 $4.87 $4.88 1,961,521 723,536
Manufacturing 53,623,496 2.7% 2.4% 5.3% 6.2% 161,095 162,210 161,095 33,210 $3.84 $3.96 0 0
Total industrial 378,417,703 5.1% 5.4% 8.9% 9.6% 1,830,311 1,965,776 1,698,100 1,635,905 $4.74 $4.77 1,961,521 723,536
Flex / R&D 29,575,362 11.2% 11.4% 14.7% 15.4% 27,339 724,203 19,390 742,220 $8.14 $8.16 34,709 34,709
Vacancy: Physically vacant space. Total Vacancy includes both direct and sublease space.
Availabili ty: Space being marketed for lease by owner or sublessor, regardless of occupancy. Total Availability includes both direct and sublease space.
Net Absorption: The net change in occupancy over a measured period of time.
Average Asking Rent: Direct monthly values presented on a NNN basis, then weighted by the amount of direct available space in a building.
Statistics reflect the total industrial market, including owner occupied facilities
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Houston industrial buildings with large block availabilities
CBD
2 Blocks
551,430 SF
6501 Navigation Blvd. (M) - 286,000 SF
3480-3484 W 11thSt. (W) - 265,430 SF
Manufacturing
Warehouse
Manufacturing
Warehouse
Warehouse
DistributionWarehouse
Distribution
Contiguous blocks greater than 250,000 square feet; (M): Manufacturing; (D): Distribution; (F): Flex; (W): Warehouse
North
0 Blocks
Northeast
Blocks
535,300 SF
8501 E I-10 Fwy (M) 298,000 SF
10000 N Loop Fwy E (W) 237,300 SF
Northwest
4 Blocks
1,184,122 SF
8760 Clay Rd. (W) 339,664 SF
369020 Jackrabbit Rd. (D) 315,020 SF
11711 Clay Rd. (W) 275,600 SF
6535 Guhn Rd. (D) 253,838 SF
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Houston industrial buildings with large block availabilities, cont.
Distribution
Distribution
Warehouse
Distribution
Distribution
Distribution
DistributionWarehouse
Warehouse Warehouse Distribution
Contiguous blocks greater than 250,000 square feet; (M): Manufacturing; (D): Distribution; (F): Flex; (W): Warehouse
Southeast
9 Blocks
3,729,280 SF
359 Pike Ct. (D) 710,200 SF
4906 Broadway St. (D) 605,879 SF
9501 Bay Area Blvd. (W) 480,480 SF
359 Old Underwood Rd. (D) 450,000 SF
5151 Rice Farm Rd. (D) 312,000 SF
1701 S 16thSt. (D) 309,481 SF
13031 Bay Area Blvd. (D) 296,400 SF
9401 Bay Area Blvd. (W) 294,840 SF
10000 Manchester St . (W) 270,000 SF
Southern
1 Block
397,002 SF
7110-7198 Mykawa Rd. (W) -397,002 SF
Southwest
1 Block
369,439 SF
1601 Gillingham Ln. (D) 369,439 SF
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Houston contacts
Research
Lauren Kelley
Research Assistant
+1 713 888 4046
lauren.kelley@am.jll.com
Brokerage
Bob Berry, SIOR
Executive Vice President
+1 713 888 4028
bob.berry@am.jll.com
Ryan Fuselier
Vice President
+1 713 888 4032
ryan.fuselier@am.jll.com
Richard Quarles, CCIMSenior Associate
+1 713 888 4019
richard.quarles@am.jll.com
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