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Confidential – Colliers International 2014
JOBS
Confidential – Colliers International 2014
2012 – Dr. Ray Perryman, the Perryman Group: “For every oilfield job created – two jobs are created in Houston”
-100,000
-50,000
0
50,000
100,000
150,000
2009 2010 2011 2012 2013 2014
Houston-Sugar Land-Baytown Annual Job Growth
JOBS
Confidential – Colliers International 2014
JOBS
Confidential – Colliers International 2014
$50
SHALE PLAY BREAKEVEN
Confidential – Colliers International 2014
OPEC “BREAK EVEN”
Confidential – Colliers International 2014
Average Class A
Vacancy:
9.5%
HOUSTON OFFICE Class A Submarket Vacancy
Confidential – Colliers International 2014
Average Class B
Vacancy:
13.4%
HOUSTON OFFICE Class B Submarket Vacancy
Confidential – Colliers International 2014
MARKET INDICATORS YE 2013 YE 2014
CITYWIDE NET ABSORPTION (SF) 2.9M 6.8M
CITYWIDE AVERAGE VACANCY 12.0% 11.5%
CITYWIDE AVERAGE RENTAL RATE $25.97 $26.79
CLASS A RENTAL RATE
CBD $38.16 $42.01
SUBURBAN $30.80 $31.61
CLASS A VACANCY
CBD 10.7% 8.6%
SUBURBAN 9.2% 9.8%
At the close of Q4, 17.1M SF of new office development was under construction, more than any other U.S. metro.
Market Metro U/C
Houston, TX 17,134,157
San Jose - Silicon Valley 8,086,492
Dallas, TX 6,873,662
Washington DC 6,168,610
Seattle/Puget Sound, WA 5,983,892
San Francisco, CA 5,161,899
Toronto, ON 5,088,689
Calgary, AB 4,950,500
Boston, MA 4,558,156 New York, NY - Midtown South Manhattan 4,170,000
HOUSTON OFFICE – 212.9M SF
Confidential – Colliers International 2014
10.0%
11.0%
12.0%
13.0%
14.0%
15.0%
16.0%
$16.00
$18.00
$20.00
$22.00
$24.00
$26.00
$28.00
Houston Average Rent Houston Average Vacancy
HOUSTON OFFICE – 212.9M SF
Confidential – Colliers International 2014
Average Cap Rate (Yield) Average Price ($) Per 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
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
Houston United States
4%5%6%7%8%9%
10%11%12%
Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14
Houston United States
Data Source:
HOUSTON OFFICE – 212.9M SF
Confidential – Colliers International 2014
Average Industrial Vacancy:
4.9%
HOUSTON INDUSTRIAL Submarket Vacancy
Confidential – Colliers International 2014
HOUSTON INDUSTRIAL MARKET INDICATORS
YE 2013 YE 2014
CITYWIDE NET ABSORPTION (SF) 7.4M 10.2M
CITYWIDE AVERAGE VACANCY (%) 5.3% 4.8%
CITYWIDE AVERAGE RENTAL RATE ($) $5.96 $6.20
NEW SUPPLY DELIVERED (SF) 8.0M 8.7M
4Q UNDER CONSTRUCTION (SF) 4.4M 8.0M
8.7M SF of
new inventory
delivered in
2014, 6.2M SF
was spec
construction!
HOUSTON INDUSTRIAL – 496.1M SF
Confidential – Colliers International 2014
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
$5.00
$5.20
$5.40
$5.60
$5.80
$6.00
$6.20
$6.40
$6.60Houston Average Rent Houston Average Vacancy
HOUSTON INDUSTRIAL – 496.1M SF
Confidential – Colliers International 2014
Sales by Total $ (mil)
Data Source:
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14
Rolling 12-mo. Total Quarterly Vol.
Average Cap Rate (Yield) Average Price ($) Per SF
$0$10$20$30$40$50$60$70$80
Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14
Houston United States
2%
4%
6%
8%
10%
12%
Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14
Houston United States
HOUSTON INDUSTRIAL – 496.1M SF
Confidential – Colliers International 2014
HOUSTON RETAIL MARKET INDICATORS
YE 2013 YE 2014
CITYWIDE NET ABSORPTION (SF) 3.4M 3.2M
CITYWIDE AVERAGE VACANCY (%) 6.6% 6.1%
CITYWIDE AVERAGE RENTAL RATE ($) Statistically Irrelevant
NEW SUPPLY DELIVERED (SF) 1.9M 1.9M
4Q UNDER CONSTRUCTION (SF) 1.0M 2.2M
Houston’s Strong
Economy Helps
Push Retail
Vacancy Rate to
Historic Low
HOUSTON RETAIL – 269.9M SF
Confidential – Colliers International 2014
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
Houston Average Vacancy
HOUSTON RETAIL – 269.9M SF
Confidential – Colliers International 2014
Sales by Total $ (mil)
0200400600800
1,0001,2001,4001,6001,800
Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14
Rolling 12-mo. Total Quarterly Vol.
Average Cap Rate (Yield) Average Price ($) Per SF
0
50
100
150
200
250
Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14
Houston United States
4%5%6%7%8%9%
10%11%12%
Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14
Houston United States
Data Source:
HOUSTON RETAIL – 269.9M SF
Confidential – Colliers International 2014
Current Multi-Family Projects Under Construction
Confidential – Colliers International 2014
HOUSTON MULTI-FAMILY MARKET INDICATORS
YE 2013 YE 2014
UNITS ABSORBED 16,248 16,432
CITYWIDE AVERAGE VACANCY (%) 9.5% 8.9%
CITYWIDE AVERAGE RENTAL RATE ($) $857 $923
UNITS DELIVERED 12,186 18,305
4Q UNDER CONSTRUCTION 20,479 27,787
The average
monthly rent
increased 8.1% in
2014.
HOUSTON MULTI-FAMILY – 588.8K Units
Confidential – Colliers International 2014
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
$600
$700
$800
$900
$1,000
Houston Average Rent Houston Average Vacancy
HOUSTON MULTI-FAMILY – 588.8K Units
Confidential – Colliers International 2014
Data Source:
Average Cap Rate (Yield) Average Price ($) Per Unit
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
Rolling 12-mo. Total Quarterly Vol.
020,00040,00060,00080,000
100,000120,000140,000
Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14
Houston United States
4%5%6%7%8%9%
10%11%12%
Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14
Houston United States
HOUSTON MULTI-FAMILY – 588.8K Units
Confidential – Colliers International 2014
• Starts up 9.4% over 2013 (29,905)
• Closings (New) 27,647
• Months Supply – 7.3 Near historic lows.
• “Lot supply constraints are stopping builders from ramping up more quickly”
Source: Metrostudy / Hanley Wood
Median Home Prices
SINGLE FAMILY
Confidential – Colliers International 2014
• Consultants continue to struggle to keep up with demand. The duration of design and construction documentation on projects has not improved.
• Work under contract/construction by General Contractors continues to drive a demand for skilled personnel. However a number of new projects HAVE been put on hold we see real concern on backlog.
• The Subcontractor community has little or no excess capacity to accommodate present workloads causing construction schedules to lengthen.
• Labor and material costs continue to escalate but there are some signs of leveling off of price increases.
• Long lead delivery times for critical path material and equipment continues to drive completion dates.
CONSTRUCTION COMMENTS
Confidential – Colliers International 2014
Office
Retail
Hotel
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
Houston Q4 2014 SELL
HOLD
BUY
U.S. Commercial Real Estate Market Cycle
Thank you, have a great 2015.