Market Brief...
Houston
INDUSTRIAL
2Q18 Property Pictured Above: 7150 Business Park Drive, Houston, Texas
HOUSTON INDUSTRIAL MARKET BRIEF 2Q 2018
TABLE OF CONTENTS 1. HOUSTON INDUSTRIAL SUBMARKETS
1 2 3
2. OVERALL HOUSTON MARKET A. Industrial Trends & Transactions
B. Facts and Figures
2. SUBMARKET INTELLIGENCE A. Far West & Katy
B. C. D. E. F. G.
Northwest Houston North Houston Near East Houston Port Area South Houston Southwest Houston
3
HOUSTON HLC SUBMARKET COVERAGE
TOMBALL PRAIRIE VIEW SPRING
NORTH 52,747,799 SF
CYPRESS
HUMBLE
GEORGE BUSH INTERCONTINENTAL AIRPORT
LAKE HOUSTON
NORTHWEST 129,148,476 SF MONT BELVIEU
NEAR EAST 47,454,120 SF BROOKSHIRE
KATY
FAR WEST/KATY 14,815,143 SF
SOUTHWEST 45,236,516 SF
HOUSTON SHIP CHANNEL
GALLERIA
PORT AREA 52,953,852 SF
BAY TOWN
PASADENA
MEDICAL CENTER
LA PORTE
SOUTH 38,630,579 SF
SUGAR LAND
HOBBY AIRPORT
ELLINGTON AIRPORT
RICHMOND
TRINITY BAY
MISSOURI CITY
PEARLAND
LEAGUE CITY
5
HLC HOU
INDUSTRIAL TRENDS & TRANSACTIONS
INDUSTRIAL MARKET EXPERTS
HLC OUTLOOK Houston’s industrial real estate market continued its positive momentum in the second quarter, building on its strong close to 2017 and the increased activity witnessed in the first quarter of 2018. Rapid population growth, increasing consumer demand, and the resurgence and expansion of the petrochemical industry along the Texas Gulf Coast all played key roles in pushing industrial demand during the second quarter. Although the overall vacancy rate increased from 1Q 2018, this was largely due to new, large-scale speculative developments coming online and was not a result of decreasing demand.
TRENDS & TRANSACTIONS • The Northwest, North and Port submarkets are seeing the majority of KELLY LANDWERMEYER
JOHN KRUSE
Managing Principal klandwermeyer@hlhouston.com 713.602.3762
Market Director jkruse@hlhouston.com 713.602.3756
Houston’s new industrial construction, with many new speculative and buildto-suit developments breaking ground during 2Q • Total industrial construction in Houston is the highest it’s been in at least two years • Houston’s population growth and low cost of living will necessitate the need for more e-commerce distribution facilities in the coming years
Absorption
6
BRAD SEGRETO
CRAIG BEAN
Market Associate bsegreto@hlhouston.com 713.602.3758
Market Associate cbean@hlhouston.com 713.602.3752
vs. Prev. Qtr
vs. 12 Mths Ago
(122,926)
2,848,641
403,781
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
5.5%
5.1%
5.6%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
4,343,303
4,184,531
6,946,850
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
11,422,217
9,298,047
4,831,355
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
1,641,269
2,485,437
1,358,179
HLC HOU FACTS & FIGURES
Market
Existing Inventory # Bldgs.
Total RBA
3,500,000 3,000,000
5.5%
2,500,000 2,000,000
5.0%
1,500,000 1,000,000
Vacancy Direct SF
OVERALL HOU
6.0%
4.5%
Total SF
500,000
Vac. %
0 4.0%
Far West/Katy
123
14,815,143
449,426
457,092
3.1%
1,658
129,148,476
8,487,003
9,005,871
6.9%
North
632
52,747,799
3,740,606
4,062,860
7.7%
Near East
509
47,454,120
1,601,892
1,630,587
3.4%
Port Area
380
52,953,852
937,682
1,364,682
2.6%
-500,000 Q2 15
Q3 15
Q4 15
Q1 16
Q2 16
Q3 16
Q4 16
Absorption
Northwest
Q1 17
Q2 17
Q3 17
Q4 17
Q1 18
Deliveries
Q2 18
Vacancy
VACANCY - OVERALL HOU 5.5%
6.0%
5.0%
5.1%
4.4% 4.3%
South
512
38,630,579
1,535,459
1,563,557
4.0%
Southwest
632
45,236,516
2,733,747
2,880,053
6.4%
Totals
4,446
380,986,485
19,485,815
20,964,702
5.5%
7.0%
4.0%
3.0%
2.0%
1.0%
0.4%
0.1%
0.0% Q2 15
Q3 15
Q4 15
Q1 16
Q2 16
Q3 16
Q4 16
Direct
Q1 17
Q2 17
Q3 17
Q4 17
Q1 18
Sublet
Q2 18
Total
ABSORPTION - OVERALL HOU 9,000,000
8,000,000
YTD Net Absorption
YTD Deliveries
Under Construction SF
YTD Leasing Activity
1,399,621
1,016,000
1,194,665
565,454
(1,387,362)
823,219
2,889,858
1,428,325
North
1,057,974
766,000
2,439,140
959,351
Near East
(140,381)
0
0
768,575
Port Area
1,979,946
1,484,792
4,348,554
601,321
South
(191,304)
65,020
0
304,673
Southwest
(74,514)
0
550,000
999,304
2,643,980
4,155,031
11,422,217
5,627,003
Market
7,000,000 6,000,000 5,000,000 4,000,000
Far West/Katy
3,000,000 2,000,000
Northwest
1,000,000 0 -1,000,000 Q2 15
Q3 15
Q4 15
Q1 16
Q2 16
Q3 16
Q4 16
Q1 17
Total Net
Q2 17
Q3 17
Q4 17
Q1 18
Q2 18
Leasing Activity
CONSTRUCTION - OVERALL HOU 12,000,000
10,000,000
Totals
8,000,000
6,000,000
4,000,000
Source: CoStar
2,000,000
0 Q2 15
Q3 15
Q4 15
Q1 16
Q2 16
Q3 16
Delivered Inventory
Q4 16
Q1 17
Q2 17
Q3 17
Q4 17
Q1 18
Q2 18
Under Construction
7
SUBMARKET INTELLIGENCE FAR WEST & KATY
HLC OUTLOOK The Far West/Katy industrial submarket follows along Interstate 10 and stretches from Highway 6 out to Brookshire and up and down the newly developed Grand Parkway. The submarket continues to benefit from the population growth in the communities of West Houston, Cypress, Richmond, Fulshear, Brookshire and Katy.
14,815,143 SF KATY
BROOKSHIRE
Construction of both speculative and build-to-suit industrial product has been increasing in this submarket in recent years. In 2013, Igloo completed its 535,000 SF building and in 2015, Exeter Property Group finished a 373,000 SF building, dubbed Mason Ranch, which was recently leased to Rooms-To-Go. Phase II of Mason Ranch is currently underway and has been preleased to Veritas. Rooms-To-Go also has a 1M SF distribution center in this submarket. In 2017, FedEx completed its 800,000 SF BTS facility along the Grand Parkway and in January, Amazon wrapped up a 1M SF distribution center along Interstate 10 expected to create up to 1,000 jobs.
Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
93,577
1,282,466
454,426
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
3.1%
3.7%
6.0%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
557,788
48,301
457,830
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
1,194,665
956,665
1,187,750
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
0
A number of new developments are planned to break ground in the coming months including Hines’ 150-acre masterplanned business park, Pintail Crossing. This new park will be able to accommodate up to 2.1M SF of industrial and mixed-use commercial buildings.
1,016,000
NEW DEVELOPMENTS • Oakmont West 10 - 525 Cane Island Parkway - 673,785 SF by Oakmont Industrial Group, Estimated delivery Q3 2018 • Mason Ranch Building II - 2240 N Mason Road 282,880 SF by Exeter Property Group, Estimated delivery November 2018, Pre-leased by Veritas
93,000
VITAL STATS 12.0%
1,325,000
11.0% 1,125,000
10.0% 9.0%
925,000
8.0% 725,000
7.0% 6.0%
525,000
5.0% 325,000
4.0% 3.0%
125,000
2.0% 1.0%
-75,000 Q2 15
Q3 15
Q4 15
Q1 16
Absorption
Q2 16
Q3 16
Q4 16
Q1 17
Deliveries
Q2 17
Q3 17
Q4 17
Q1 18
Q2 18
Vacancy Source: CoStar
8
LARGE EXISTING VACANCIES • 1325 S Creek Drive – 76,138 SF
Property Photo: Mason Ranch Building I, CoStar
SUBMARKET INTELLIGENCE NORTHWEST HOUSTON
GEORGE BUSH INTERCONTINENTAL AIRPORT
CYPRESS
HLC OUTLOOK
129,148,476 SF
The Northwest industrial submarket consists of approximately 130M SF and is generally considered the most desirable submarket in greater Houston for the vast majority of tenants. Regarding new development, the Northwest submarket is the second most active submarket with only the Port submarket experiencing more new development currently. The 2.8M SF under construction in the Northwest submarket is approximately one-third of the total current construction for the entire Houston industrial market. The vacancy rate for the Northwest submarket was 7.0% at the close of the second quarter. Looking forward, this submarket will continue to benefit from the rapidly expanding population in communities such as Cypress-Fairbanks, Tomball and Katy. HOUSTON
Absorption
vs. Prev. Qtr
(1,007,479)
(63,295)
(507,108)
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
6.9%
5.8%
4.7%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
1,428,325
1,730,953
2,120,446
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
2,889,858
2,831,782
89,500
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
525,119
298,100
is the seller
• 1530 W Sam Houston Parkway N – 170,040 SF, National Oilwell Varco is the seller
NEW DEVELOPMENTS • Fallbrook Pines Business Park – 660,073 SF by
-
VITAL STATS
7.0%
DEALS ON THE MARKET • 4414 Hollister Road – 234,215 SF, Georgia Pacific
vs. 12 Mths Ago
1,250,000 1,000,000 750,000
6.0%
500,000 250,000 5.0% 0 -250,000 4.0%
-500,000 -750,000
3.0%
-1,000,000 Q2 15
Q3 15
Q4 15
Absorption
Q1 16
Q2 16
Q3 16
Q4 16
Q1 17
Deliveries
Q2 17
Q3 17
Q4 17
Q1 18
Q2 18
Vacancy Source: CoStar
Clairon Partners and Trammel Crow, 3Q 2018 estimated completion • Northwest Logistics Center - 6751 N Eldridge Parkway, 411,442 SF by Stream Realty Partners, 3Q 2018 estimated completion • Gateway Northwest Three – 20510 Hempstead Road, 368,432 SF by Duke Realty, 3Q 2018 estimated completion • AIV, Inc. Building – 22806 NW Lake Drive, 320,000 SF by KDW, Ltd., 4Q 2018 estimated completion • Seton Lake Logistics Center – Hwy 249 & Old Fairbanks N. Houston Road, 246,000 SF by Clairon Partners and Trammel Crow, 4Q 2018 estimated completion • First 290 at Guhn Road – 6913 Guhn Road, 126,250 SF by First Industrial, 4Q 2018 estimated completion
LARGE EXISTING VACANCIES • 10700 Telge Road – 400,328 SF • 11833 Cutten Road – 293,280 SF • 9700 W Gulf Bank Road – 245,319 SF • 22533 NW Lake Drive – 231,839 SF • 6315 West by Northwest Boulevard – 201,600 SF • 10901 Tanner Road – 195,951 SF • 6410 Langfield Road, Building D – 154,661 SF • 3480 W 11th Street – 154,600 SF • 8802-8824 Fallbrook Drive – 153,000 SF • 9010 West Little York Road – 152,624 SF Property Photo: Fallbrook Pines Business Park, CoStar
9
SUBMARKET INTELLIGENCE NORTH HOUSTON
HLC OUTLOOK 52,747,799 SF
The North Houston industrial submarket—defined as the area between Veterans Memorial Drive and Highway 59— provides a strategic location for companies looking for convenient access to George Bush Intercontinental Airport, as well as three of Houston’s critical thoroughfares: Interstate 45, Sam Houston Tollway (Beltway 8), and Highway 59.
HUMBLE
GEORGE BUSH INTERCONTINENTAL AIRPORT
This submarket has been one of the fastest growth submarkets, growing by about 30% since 2010. Strong demand has driven fundamentals through the supply wave, and the North Houston submarket’s vacancy rate as of 2Q 2018 was well below the historical average. As vacancy decreases, rental rates, are expected to return to more normal levels.
LAKE HOUSTON
Absorption
vs. Prev. Qtr
426,440
478,197
57,990
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
7.7%
7.9%
10.7%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
959,351
779,922
1,315,646
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
2,439,140
1,146,900
855,000
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
766,000
0
120,000
VITAL STATS
12.0%
DEALS ON THE MARKET • 18727 Kenswick Drive – 150,000 SF, DGM Services
vs. 12 Mths Ago
is the seller
• 711-713 Rankin Road – 81,014 SF, Gamble Simmons is the seller
NEW DEVELOPMENTS • Parc Air 59 – 18250-18760 Highway 59 N
1,500,000 1,300,000
11.0%
1,100,000 900,000
10.0%
700,000 9.0%
500,000 300,000
8.0%
– 1,005,400 SF by Jackson Shaw & Archway Properties, 4Q 2018 estimated completion • Grocers Supply Distribution Center – 727,600 SF by Liberty Property Trust, 1Q 2019 estimated completion • Pine North Three - 7500 Volta Drive - 337,700 SF by Duke Realty Corporation, 3Q 2018 estimated completion • Interstate Commerce Center – 1910 Cypress Station Drive – 333,600 SF by Hillwood & Copeland Commercial, 1Q 2019 estimated completion
100,000 -100,000
7.0%
-300,000 6.0%
-500,000 Q2 15
Q3 15
Q4 15
Absorption
Q1 16
Q2 16
Q3 16
Q4 16
Q1 17
Deliveries
Q2 17
Q3 17
Q4 17
Q1 18
Q2 18
Vacancy Source: CoStar
10
LARGE EXISTING VACANCIES • 1401 N Rankin Road – 656,116 SF • 600 Fallbrook Drive – 500,400 SF • Greenspoint & Aldine Bend Road – 345,000 SF • 971 N. Sam Houston Parkway E – 251,220 SF • 18727 Kenswick Drive – 150,000 SF
Property Photo: Pine North Three, CoStar
SUBMARKET INTELLIGENCE NEAR EAST HOUSTON
HLC OUTLOOK Houston’s Near East submarket only contains approximately 10% of the metro’s industrial inventory, with a majority of the product constructed 20+ years ago. There has been relatively little new construction in this submarket over the last 20 years as the typical user in this submarket has historically been more price-sensitive relative to other parts of Houston; for this reason, justifying new-construction rents has been a challenge. This submarket borders downtown Houston and runs east, ending just outside of Loop 610. It enjoys excellent freeway access via I-10, Highway 59 and Loop 610. The Near East submarket has the most active rail infrastructure in Houston, serving the many plants and refineries along the Gulf Coast.
47,454,120 SF
HOUSTON SHIP CHANNEL
Historically a very stable submarket from an occupancy standpoint, 2017 was a challenge and saw significant negative absorption. This was driven by a downsizing across the pipe and fitting industry and several other large users shuttering their Houston operations or relocating to self-owned real estate outside of the submarket. The first half of 2018 saw activity levels increase significantly over 2017 levels, with several larger leases signed to date and more deals pending. Third-party logistics companies (3PLs) have historically been active in leasing space within this submarket, and many the deals currently in the market are for 3PL companies.
PASADENA
Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
(170,579)
30,198
(10,974)
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
3.4%
3.1%
4.0%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
448,170
320,405
564,564
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
-
-
-
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
-
-
Property Photo: 8900 Railwood, HLC
-
VITAL STATS
5.0%
LARGE EXISTING VACANCIES • 3401 Navigation Boulevard – 238,464 SF • 4849 Homestead Road – 102,680 SF • 550 Aleen Street – 117,000 SF • 7350 Roundhouse Lane – 69,680 SF
500,000 400,000
4.0%
300,000 200,000
3.0% 100,000 0 2.0% -100,000 -200,000
1.0%
-300,000 0.0%
-400,000 Q2 15
Q3 15
Q4 15
Absorption
Q1 16
Q2 16
Q3 16
Q4 16
Q1 17
Deliveries
Q2 17
Q3 17
Q4 17
Q1 18
Q2 18
Vacancy Source: CoStar
11
SUBMARKET INTELLIGENCE PORT AREA
MONT BELVIEU
HLC OUTLOOK The Port Submarket provides convenient access to Interstate 45, Highway 225, Highway 146 and Interstate 10 east to Baytown. This network of highways allows for quick access to and from both the Barbours Cut container terminal and the Bayport container terminal, where almost all the foreign inbound shipments of goods come into the Houston market.
BAY TOWN
HOUSTON
52,953,852 SF
SHIP CHANNEL
Over the last decade, the Port submarket has emerged as one of the strongest submarkets in Houston with a surge in speculative development and strong absorption. This can be attributed to several factors, including its strategic location near the Port of Houston, proximity to Gulf Coast plants and refineries, and the extensive multi-modal transportation infrastructure in the area, including an extensive rail network. In addition to the spec development, there are a significant amount of proposed build-to-suit developments currently in the submarket.
PASADENA LA PORTE HOBBY AIRPORT
ELLINGTON AIRPORT
TRINITY BAY
Rent growth has been positive for much of the current cycle, creating a strong appetite for institutional investment within the Port Submarket that shows no signs of slowing down. Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
513,694
1,466,252
337,205
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
2.6%
3.0%
5.6%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
75,106
526,215
691,226
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
4,348,554
3,774,200
2,526,992
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
311,650
1,173,142
1,110,179
VITAL STATS
8.0%
NEW DEVELOPMENTS • Energy Commerce Business Park Phase II – two spec
3,000,000
7.0%
2,500,000
6.0%
2,000,000
5.0% 1,500,000 4.0% 1,000,000 3.0% 500,000
2.0%
0
1.0% 0.0%
-500,000 Q4 15
Q1 16
Q2 16
Absorption
Q3 16
Q4 16
Q1 17
Q2 17
Deliveries
Q3 17
Q4 17
Q1 18
Q2 18
Vacancy Source: CoStar
12
buildings; one cross-dock and one rear load, 101,000 and 233,000 SF respectively, at or near completion • Port Crossing Commerce Center – two spec buildings; one cross-dock and one rear load, 600,000 SF and 105,000 SF respectively, 3Q 2018 estimated completion • Port 10 Logistics Center Phase I – two spec crossdock buildings – 485,000SF and 295,000 SF respectively, 3Q/4Q 2018 estimated completion • Carson Bayport – 207,000 SF cross-dock spec building, 4Q 2018 estimated completion • Bayport Logistics Park – two building BTS park for Kuraray totaling approximately 562,000 SF, 4Q 2018 estimated completion • Bayport South Business Park Building 3 – 500,000 SF cross-dock building, 1Q 2019 estimated completion • Victory Commerce Center – 349,000 SF cross-dock spec building, 1Q 2019 estimated completion • Thompson 10 Logistics Center – two spec buildings; one cross-dock and one rear load, 260,000 SF and 130,000 SF respectively, 1Q 2019 estimated completion
DEALS ON THE MARKET • Bayport Logistics Park (Kuraray BTS), Avera Companies – two buildings totaling 562,000 SF
• Bayport South Business Park, Johnson Development Associates – 258,000 SF cross-dock • Beltway Green, Investment & Development Ventures, LLC – 121,520 SF rear load, multi-tenant building
LARGE EXISTING VACANCIES • 1706 S 16th Street, La Porte, Texas 77571 – 157,200 SF • 359 Old Underwood Road, La Porte, Texas 77571 – 150,000 SF
• 9770 New Century Drive, Pasadena, Texas 77507 – 137,500 SF
• 10025 Porter Road, La Porte, Texas – 94,556 SF • 9311 Bay Area Boulevard, Pasadena, Texas 77507 – 83,500 SF • 4300 Malone Drive, Pasadena, Texas 77507 – 57,359 SF • 12552 Highway 3, Webster, Texas 77598 – 50,300 SF
SUBMARKET INTELLIGENCE SOUTH HOUSTON
HOUSTON
SHIP CHANNEL
HLC OUTLOOK MEDICAL CENTER
PASADENA
38,630,579 SF
HOBBY AIRPORT
The South submarket is Houston’s smallest submarket. It benefits from its proximity to Houston’s Medical Center just south of downtown, and is defined by a high volume of flex buildings designed to service the wide range of healthcare providers within the Medical Center. This submarket stretches from just north of Loop 610 south to Beltway 8. It’s eastwest boundaries are roughly Buffalo Speedway to the west and the Gulf Freeway to the east. Large portions of this area have not been developed yet, making this submarket the least land constrained in the Houston market. However, due to the lack of population growth relative to the Northwest or Far West submarkets, there has not been a strong demand for new development in this area. That could change as other areas of Houston run out of developable land and population growth accelerates in communities such as Pearland and Missouri City. Over the last decade, construction has been sparse in this submarket, although occupancy rate has stayed well above 95% for much of that time-period. Institutional owners are starting to show an increased interest in the South submarket, with a handful of new Class A distribution warehouses being built along the South Beltway over the last few years.
Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
(182,766)
(8,538)
(60,217)
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
4.0%
3.5%
2.9%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
99,201
205,472
659,242
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
-
38,500
59,613
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
38,500
26,520
DEALS ON THE MARKET • 3730 S Main Street, Pearland, Texas 77581 (FloWorks Distribution Center) – 205,060 SF 300,000
4.0%
200,000
3.0%
100,000
2.0%
0
1.0%
-100,000
0.0%
-200,000 Q2 15
Q3 15
Q4 15
Absorption
Q1 16
Q2 16
Q3 16
Q4 16
Q1 17
Deliveries
Q2 17
Property Photo: 3703 S Main Street, CoStar
Point Business Park Buildings 1 and 5) – Two rear load buildings 38,500 SF and 64,800 SF respectively
-
VITAL STATS
5.0%
NEW DEVELOPMENTS • 3203 and 3207 Sam Houston Parkway E (South
Q3 17
Q4 17
Q1 18
Q2 18
Vacancy Source: CoStar
LARGE EXISTING VACANCIES • 750 Almeda Genoa Road, Houston, Texas 77047 – 125,000 SF • 3203 S Sam Houston Parkway E, Houston, Texas 77032 (South Point Business Park Building 2) – 108,000 SF • 8201-8211 La Porte Freeway, Houston, Texas 77012 – 99,652 SF • 3440 Sam Houston Parkway E, Houston, Texas 77047 (288 Business Center) – 50,700 SF 13
SUBMARKET INTELLIGENCE SOUTHWEST HOUSTON
KATY
45,236,516 SF
HLC OUTLOOK
HOUSTON GALLERIA
MEDICAL CENTER
HOBBY AIRPORT
Houston’s Southwest submarket has experienced an uptick in activity over the last few years, and investors continue to be bullish on this submarket. The business-friendly local governments in Fort Bend County and available Triple Freeport Tax Exemption are just two of the many reasons industrial developers and investors are interested in this submarket. The labor demographics in this part of the Houston market are excellent and the rapid population growth will continue to be a driver for absorption and new construction.
SUGAR LAND
We anticipate that new speculative developments will continue to be a significant driver of activity in Southwest Houston for the foreseeable future.
RICHMOND MISSOURI CITY
PEARLAND
Absorption
vs. Prev. Qtr
(26,140)
(48,374)
104,947
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
6.4%
6.3%
6.5%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
624,815
374,489
689,245
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
550,000
550,000
112,500
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
0
0
0
Class A, 674,418 SF business park completed in 2017 and being offered for sale by Hines • 700-766 Industrial Boulevard, Sugar Land, Texas 77478 (South by Southwest) – 90,525 SF Flex Center • Crow Holdings’ Texas Urban Logistics Portfolio (includes multiple buildings in SW and NW submarkets) – 528,155 SF in SW
NEW DEVELOPMENTS • 636 Highway 90, Missouri City, Texas 77489
VITAL STATS
8.0%
DEALS ON THE MARKET • Beltway Southwest Business Park – four building,
vs. 12 Mths Ago
1,300,000 1,100,000
7.0%
900,000 700,000
6.0%
(Best Buy Distribution Center)
• 611 S Cravens Road, Missouri City, Texas 77489 – Southwest Commerce Center – 477,355 SF cross-dock building being developed by Ridge
500,000 300,000 5.0% 100,000 -100,000
4.0%
-300,000 3.0%
-500,000 Q2 15
Q3 15
Q4 15
Absorption
Q1 16
Q2 16
Q3 16
Q4 16
Q1 17
Deliveries
Q2 17
Q3 17
Q4 17
Q1 18
Q2 18
105,300 SF
• 10650 W Airport Boulevard, Stafford, Texas 77477 – 66,626 SF
Vacancy Source: CoStar
14
LARGE EXISTING VACANCIES • 12200 Parc Crest Drive, Stafford, Texas 77477 –
Property Photo: Beltway Southwest Business Park, CoStar
DALLAS
5950 Berkshire Lane Suite 900 Dallas, Texas 75225 T 972.241.8300 F 972.241.7955
FORT WORTH
300 Throckmorton Street Suite 550 Fort Worth, Texas 76102 T 817.710.1110 F 817.810.9017
www.holtlunsford.com
HOUSTON
11757 Katy Freeway Suite 250 Houston, Texas 77079 T 713.850.8500 F 713.850.8550