Market Brief...
Houston
OFFICE
1Q2021 Property Pictured Above: Greenbriar Place | 650 North Sam Houston Parkway East • Houston, Texas 77060
HOUSTON OFFICE MARKET BRIEF 1Q 2021
TABLE OF CONTENTS 1. HOUSTON OFFICE TEAM AND SUBMARKETS
1 2 3
2. HOUSTON OFFICE MARKET A. Facts and Figures
2. SUBMARKET INTELLIGENCE
A. CBD B. West Loop C. Katy Freeway West D. The Woodlands E. Westchase F. Greenspoint/IAH G. FM 1960 Corridor H. Greenway Plaza I. Medical Center J. Southwest K. Katy Freeway East L. Northwest M. Sugar Land N. Clear Lake O. Midtown P. West Belt Q. East Houston/Pasadena R. Far West S. Kingwood T. Suburban Outliers
1
2
HOUSTON HLC SUBMARKET COVERAGE
OTHER SUBMARKETS 1 CBD | 49,457,159 SF 2 WEST LOOP | 35,256,064 SF 3 WESTCHASE | 19,387,882 SF 4 GREENWAY PLAZA | 11,104,585 SF 5 MEDICAL CENTER | 10,685,885 SF 6 MIDTOWN | 7,673,949 SF 7 SUBURBAN OUTLIERS | 11,294,523 SF
THE WOODLANDS 20,704,090 SF
TOMBALL
KINGWOOD 2,634,357 SF SPRING
FM 1960 CORRIDOR 11,599,070 SF
HUMBLE
GEORGE BUSH INTERCONTINENTAL AIRPORT
CYPRESS
GREENSPOINT/IAH 12,645,278 SF
WEST BELT 5,922,833 SF
NORTHWEST 8,570,343 SF
KATY FREEWAY WEST 27,042,107 SF
KATY
KATY FREEWAY EAST 9,192,040 SF
FAR WEST 4,262,358 SF
LAKE HOUSTON
HOUSTON 6
EAST HOUSTON/ PASADENA 5,588,006 SF
1
2 3
GALLERIA
SHIP CHANNEL
4 5
SOUTHWEST 9,480,076 SF
BAY TOWN
MEDICAL CENTER
PASADENA LA PORTE HOBBY AIRPORT
SUGAR LAND
SUGAR LAND 7,867,843 SF
ELLINGTON AIRPORT
RICHMOND
TRINITY BAY
MISSOURI CITY PEARLAND
CLEAR LAKE 6,972,833 SF
LEAGUE CITY
3
HLC HOUSTON OFFICE MARKET EXPERTS
Brandon Avedikian joined Holt Lunsford Commercial (HLC) in 2016 and serves as Managing Principal of the Houston Office Group. Brandon was originally in HLC’s Dallas Office Group, where he was responsible for executing transactions on approximately 2 million square feet of office assets, representing both private and institutional investors. In February 2020, Brandon relocated to Houston, where is he responsible for growing HLC’s office portfolio and providing exceptional service to clients. Prior to joining HLC, Brandon was an assurance professional at Ernst & Young, LLP in Fort Worth, where he performed financial statement audits on both public and private organizations in the real estate, oil & gas, and oilfield services industries.
BRANDON AVEDIKIAN
Brandon received a BBA in accounting and master’s degree in accounting from Abilene Christian University. Brandon is a Texas Real Estate Commission license holder, a member of NAIOP, and a Certified Public Accountant (CPA).
Managing Principal bavedikian@holtlunsford.com 713.602.3754
Brad Segreto joined Holt Lunsford Commercial (HLC) in 2017 and serves as a Market Associate. His primary responsibilities include project leasing and business development initiatives for HLC’s Houston office portfolio. During his time at HLC, Brad has participated in more than 90 transactions totaling more than 3.4 million square feet of rentable space. Prior to HLC, Brad worked as a sales representative for an industrial engineering firm where he assisted clients in a variety of industries with their predictive and reliability maintenance needs. During this time, he gained valuable sales experience and provided excellent customer service to his clients, including many Fortune 500 companies. BRAD SEGRETO Market Associate bsegreto@holtlunsford.com 713.602.3758
4
Brad received a Bachelor of Science in Organizational Leadership & Supervision from the University of Houston. Brad is a Texas Real Estate Commission license holder, a member of NAIOP, the Houston Golf Association, and Champions Golf Club.
GREENBIAR PLACE
NEW LISTING
650 North Sam Houston Parkway East: 168,817 SF Class B office building in Houston
5
NEW LISTING
BRIDGEWOOD I
654 North Sam Houston Parkway East: 138,912 SF Class B office building in Houston
6
NEW LISTING
652 North Sam Houston Parkway East: 142,464 SF Class B office building in Houston
7
HLC HOUSTON OFFICE OVERALL MARKET
HOUSTON OVERALL At the close of 1Q 2021, the overall Houston office market had a vacancy rate of 20.7% which was slightly higher than the 20.4% at the close of 4Q 2020. Absorption was negative with 523K SF of space given back, up from the 780K SF of negative absorption in 4Q 2020. Leasing activity fell slightly from 4Q 2020 with 2.1M SF of deals completed. There is currently more than 5.1M SF of class A and B office space under construction with nearly 440K SF of space delivered in 1Q 2021.
CONSTRUCTION - OVERALL HOUSTON
VACANCY - OVERALL HOUSTON 25.0%
6,000,000
20.4% 5,000,000
20.0% 19.3%
4,000,000
15.0% 3,000,000
10.0% 2,000,000
5.0%
1,000,000
1.1% 0
0.0% 2Q 18
3Q 18
4Q 18
1Q 19
2Q 19
3Q 19
4Q 19
Direct
1Q 20
2Q 20
3Q 20
Sublet
4Q 20
2Q 18
1Q 21
3Q 18
4Q 18
1Q 19
2Q 19
3Q 19
4Q 19
Delivered Inventory
Total
2Q 20
3Q 20
4Q 20
1Q 21
Under Construction
OVERVIEW - OVERALL HOUSTON
ABSORPTION - OVERALL HOUSTON 7,000,000
1Q 20
22.0%
2,000,000
6,000,000
1,500,000
21.0% 5,000,000 4,000,000
1,000,000 20.0%
500,000
3,000,000
19.0%
0
2,000,000 1,000,000
(500,000)
18.0%
(1,000,000)
0
17 .0%
(1,500,000)
(1,000,000) (2,000,000) 2Q 18
3Q 18
4Q 18
1Q 19
2Q 19
Total Net
3Q 19
4Q 19
1Q 20
2Q 20
3Q 20
Leasing Activity
4Q 20
1Q 21
16.0%
(2,000,000) 1Q 18
2Q 18
3Q 18
4Q 18
Absorption
1Q 19
2Q 19
3Q 19
4Q 19
Deliveries
1Q 20
2Q 20
3Q 20
4Q 20
1Q 21
Vacancy
Source: CoStar 1Q 2021 Office Report
8
HLC HOUSTON OFFICE OVERALL MARKET
Market
Existing Inventory #Bldgs.
Vacancy
Total RBA
Direct SF
Total SF
Vac. %
YTD Net Absorption
YTD Deliveries
Under Const. SF
Quoted Rates
CBD
88
49,457,159
10,396,653
11,202,471
22.7%
(175,228)
0
1,270,856
$38.93
West Loop
197
35,256,064
7,390,751
7,752,755
22.0%
(213,530)
70,000
77,189
$32.36
Katy Freeway West
164
27,042,107
5,655,053
6,390,498
23.6%
(182,669)
0
0
$26.51
The Woodlands
171
20,704,090
3,142,134
3,370,547
16.3%
412,472
0
603,000
$32.01
Westchase
103
19,387,882
4,485,593
4,652,913
24.0%
(33,460)
0
0
$26.80
Greenspoint/IAH
96
12,645,278
5,476,384
5,525,234
43.7%
(67,337)
0
0
$18.21
FM 1960 Corridor
149
11,599,070
2,377,079
2,417,394
20.8%
(9,378)
24,000
158,374
$21.03
Greenway Plaza
57
11,104,585
2,092,220
2,216,557
20.0%
(191,935)
0
0
$33.87
Medical Center
61
10,685,885
879,990
895,934
8.4%
(40,973)
0
1,215,780
$28.62
Southwest
88
9,480,076
2,054,243
2,054,243
21.7%
(11,212)
0
0
$17.29
Katy Freeway East
68
9,192,040
987,170
1,090,726
11.9%
6,036
0
960,559
$35.31
Northwest
92
8,570,343
1,684,929
1,710,368
20.0%
(89,277)
0
23,200
$20.89
Sugar Land
100
7,867,843
1,082,034
1,180,523
15.0%
(116,975)
0
0
$30.33
Clear Lake
97
6,972,833
948,440
993,745
14.3%
(15,098)
0
0
$21.78
Midtown
68
7,673,949
946,361
981,537
12.8%
21,847
35,400
458,000
$33.34
West Belt
67
5,922,833
1,337,200
1,547,430
26.1%
(24,128)
0
0
$26.22
East Houston/Pasadena
98
5,588,006
735,420
771,114
13.8%
45,223
0
64,396
$21.56
Far West
58
4,262,358
677,681
811,410
19.0%
(44,985)
0
86,625
$30.63
Kingwood
44
2,634,357
300,381
303,866
11.5%
274,201
270,000
0
$25.11
Suburban Outliers
192
11,294,523
1,420,897
1,439,333
12.7%
46,623
36,650
270,256
$27.55
2,058
277,341,281
54,070,613
57,308,598
20.7%
(409,783)
436,050
5,188,235
$27.42
Totals
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HOUSTON CENTRAL BUSINESS DISTRICT SUBMARKET INTELLIGENCE Absorption (127,993)
vs. Prev. Qtr
VITAL STATS
vs. 12 Mths Ago 24.0%
(259,544)
(335,335)
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
22.0%
22.7%
22.4%
21.2%
20.0%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
18.0%
573,696
1,117,257
vs. Prev. Qtr
vs. 12 Mths Ago
-
-
161,864 Delivered SF Quoted Rates $39.02
vs. Prev. Qtr
vs. 12 Mths Ago
$41.02
$39.47
1,200,000 1,000,000 800,000 600,000 400,000 200,000 0
16.0%
(200,000) (400,000)
14.0%
(600,000) 12.0%
(800,000) 1Q 18
2Q 18
3Q 18
4Q 18
1Q 19
2Q 19
Absorption
3Q 19
4Q 19
Deliveries
1Q 20
2Q 20
3Q 20
4Q 20
1Q 21
Vacancy
Source: CoStar 1Q 2021 Office Report
HLC OUTLOOK The Central Business District (CBD) is the largest Houston office submarket, containing more than 50M SF of class A and B office space in an area totaling less than two square miles. Houston’s CBD continues to command the highest rents in the city with a current YTD average of $39 per SF for class A and B property types. The submarket is home to a large concentration of energy, professional and business services, and government tenants. Recent residential and retail developments, and the existing infrastructure of the underground tunnel system, have helped Houston’s CBD become a true live-work-play environment. At the close of 1Q 2021, the CBD submarket had a vacancy rate of 22.7%, slightly higher than 4Q 2020. Absorption was negative with 128K SF of space given back, higher than the 260K SF given back in 4Q 2020. Leasing activity included just 161K SF of deals completed and was less than half the number of deals completed in 4Q 2020. Currently, over 1.2M SF of office space is under construction in this submarket.
TOP LEASE TRANSACTIONS • Greenberg & Traurig has signed a 37K SF lease in
Wells Fargo Plaza. • Sabine Oil & Gas has signed a 28K SF renewal in 1415 Louisiana. • Toppan Merrill has signed a 12K SF renewal in Bayou Place II. • Jackson Lewis has signed an 11K SF lease in 717 Texas. • McMillan Law Firm has signed a 4K SF lease in Younan Square. • Chernoff Law has signed a 3K SF renewal in the Commercial Bank Building.
10
DEALS IN THE MARKET • The Tamborello Building | 1901 Milam Street – a 24K SF class B office building
NEW DEVELOPMENTS • Texas Tower | 845 Texas Avenue – a 1.1M SF class A office building
• Post Houston | 401 Franklin Street – a 150K SF class A office building
LARGE EXISTING VACANCIES • 800 Bell | 800 Bell Street – 1,314,350 SF • 1001 Fannin Street – 751,539 SF • Wells Fargo Plaza | 1000 Louisiana Street – 601,659 SF • 4 Houston Center | 1221 Lamar Street – 575,259 SF • Fulbright Tower | 1301 McKinney Street – 544,135 SF • Two Allen Center | 1200 Smith Street – 530,899 SF • 1600 Smith Street – 497,330 SF • One City Centre | 1021 Main Street – 482,690 SF • GreenStreet Tower | 1201 Fannin Street – 481,442 SF • 919 Milam | 919 Milam Street – 447,882 SF • One Allen Center | 500 Dallas Street – 437,979 SF • TC Energy Center | 700 Louisiana Street – 428,830 SF • 1301 Fannin Office Tower | 1301 Fannin Street – 391,841 SF • 1111 Fannin Street – 378K SF • Pennzoil Place North Tower | 700 Milam Street – 342,494 SF • 1801 Smith Street – 329,022 SF • Pennzoil Place South Tower | 711 Louisiana Street – 299,799 SF • Three Allen Center | 333 Clay Street – 296,276 SF • 1000 Main | 1000 Main Street – 290,200 SF
WEST LOOP SUBMARKET INTELLIGENCE Absorption (42,622)
vs. Prev. Qtr (91,322)
(147,491)
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
22.0%
21.7%
19.1%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
623,002
575,206
vs. Prev. Qtr
vs. 12 Mths Ago
489,635 Delivered SF 70,000 Quoted Rate $32.72
VITAL STATS
vs. 12 Mths Ago
-
-
vs. Prev. Qtr
vs. 12 Mths Ago
$33.62
$33.48
24.0%
400,000
22.0%
200,000
20.0%
0
18.0%
(200,000)
16.0%
(400,000) 1Q 18
2Q 18
3Q 18
Absorption
4Q 18
1Q 19
2Q 19
3Q 19
4Q 19
Deliveries
1Q 20
2Q 20
3Q 20
4Q 20
1Q 21
Vacancy
Source: CoStar 1Q 2021 Office Report
HLC OUTLOOK CoStar’s Galleria, Uptown, Post Oak Park, San Felipe/Voss, Richmond/Fountain View, Riverway, and Bellaire submarkets make up HLC’s West Loop submarket. This submarket contains approximately 35M SF of class A and B office space. Thanks to the high-profile location and assets, asking rents here are among the highest in the city. At the close of 1Q 2021, the West Loop submarket had a vacancy rate of 22.0% which was slightly higher than 4Q 2020. Absorption was negative with 43K SF of space given back, but less than half of the 91K SF of space given back in 4Q 2020. Leasing activity remained similar to 4Q 2020 with 490K SF of deals completed. Currently, 77K SF of office space is under construction in this submarket.
TOP LEASE TRANSACTIONS • Buckeye Partners has signed a 73K SF lease in 200 Park Place.
• SIBS International has signed a 26K SF lease in Post Oak Park.
• Veritex Community Bank has signed a 20K SF renewal in 777 Post Oak.
• Memorial Hermann has signed an 11K SF renewal in The Offices at Pin Oak Park.
• NorthMarq Capital has signed a 9K SF lease in One Riverway
• Nova Chemicals has signed a 9K SF lease in Galleria Tower I.
• Wounded Warrior Project has signed a 6K SF lease in Post Oak Park.
• Southside Bank has signed a 5K SF lease in 6 BLVD Place.
• 5606 South Rice Avenue – a 20K SF class B office building
NEW DEVELOPMENTS • 4411 San Felipe Street – a 93K SF class A office building
LARGE EXISTING VACANCIES • Marathon Oil Tower | 5555 San Felipe Street – 884,262 SF
• Williams Tower | 2800 Post Oak Boulevard – 427,070 SF • San Felipe Plaza | 5847 San Felipe Street – 326,827 SF • Two Post Oak Central | 1980 Post Oak Boulevard – 257,983 SF
• Bellaire Station | 6500 West Loop South – 251K SF • BHP Petroleum Building | 1500 Post Oak Boulevard – 250,311 SF
• Sage Plaza | 5151 San Felipe Street – 247,597 SF • Three Riverway | 3 Riverway – 239,187 SF • Galleria Tower I | 2700 Post Oak Boulevard – 236,919 SF
• Thirty Forty Post Oak | 3040 Post Oak Boulevard – 221,167 SF
• Galleria Tower 2 | 5051 Westheimer Road – 213,343 SF • Five Post Oak Park | 4400 Post Oak Parkway – 208,190 SF
• TwentyFour25 | 2425 West Loop South – 204,590 SF • 2000 West Loop | 2000 West Loop South – 199,739 SF • One Riverway | 1 Riverway – 197,026 SF • Schlumberger Building | 5599 San Felipe Street – 196,384 SF
DEALS IN THE MARKET • 9009 West Loop South – a 472K SF class B office building
• 5610-5613 Southwest Freeway – a 23K SF class B office building
• 5718 Westheimer | 5718 Westheimer Road – 194,998 SF • Three Post Oak Central | 1990 Post Oak Boulevard – 193,900 SF
11
KATY FREEWAY WEST SUBMARKET INTELLIGENCE Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
(186,217)
277,479
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
23.6%
23.5%
21.2%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
302,055
272,694
vs. Prev. Qtr
vs. 12 Mths Ago
(48,543)
131,279 Delivered SF Quoted Rates $20.24
-
-
vs. Prev. Qtr
vs. 12 Mths Ago
$20.40
$21.42
24.0%
VITAL STATS
30.0%
1,000,000 500,000
800,000
22.0% 300,000 600,000 25.0%
20.0%
400,000
100,000
200,000
18.0%
(100,000)
20.0%
0 16.0%
(300,000)
(200,000)
14.0%
15.0%
1Q 16
1Q 182Q
16
2Q 183Q
16
3Q 18 4Q
16
Absorption Absorption
4Q 1Q 18 1Q 19
17
2Q 17
2Q 19
3Q 17
3Q 19
4Q
4Q 19 17
1Q
1Q20 18
Deliveries Deliveries
2Q
2Q20 18
3Q
3Q 20 18
4Q
4Q 20 18
1Q
(500,000) (400,000)
1Q 21 19
Vacancy Vacancy
Source: CoStar 1Q 2021 Office Report
HLC OUTLOOK Other than the Greenspoint submarket, no major Houston office submarket was hit harder by the oil downturn than the Katy Freeway West submarket. This submarket includes the Energy Corridor which is home to large energy corporations including ConocoPhillips, Shell, and British Petroleum, among other energy and energy service related organizations. With the downturn of the energy sector, the Katy Freeway West submarket has transformed from a landlorddriven to a tenant-driven submarket. This submarket, along with most of the metro, has experienced a recent and significant flightto-quality helping these large corporations to continue attracting a talented workforce. At the close of 1Q 2021, the Katy Freeway West submarket had a vacancy rate of 23.6%, slightly higher than 4Q 2020. Absorption was, once again, negative, but fell to just 49K SF of space given back, down from the 186K SF of negative absorption in 4Q 2020. Leasing activity decreased with 131K SF of deals completed. Currently, no office product is under construction in this submarket.
TOP LEASE TRANSACTIONS
LARGE EXISTING VACANCIES • Two WestLake | 580 Westlake Park Boulevard – 455,142 SF • Three WestLake Park | 550 Westlake Park Boulevard – 407,832 SF • Energy Tower III | 11740 Katy Freeway – 376,819 SF • Eldridge Oaks Phase 1 | 1080 Eldridge Parkway – 363,086 SF • Three Eldridge Place | 737 North Eldridge Parkway – 308,186 SF • Energy Center II | 575 North Dairy Ashford Road – 301,622 SF • Enclave on the Lake | 1255 Enclave Parkway – 289,632 SF • West Memorial Place 2 | 15377 Memorial Drive – 265,761 SF • Republic Square 1 | 13501 Katy Freeway – 242,843 SF • Two Eldridge Place | 757 North Eldridge Parkway – 233,763 SF • One Eldridge Place | 777 North Eldridge Parkway – 182,840 SF
• NewRez has signed a 60K SF lease in 17000 Katy Freeway.
• Energy Tower IV | 11750 Katy Freeway – 169,051 SF
• Lighthouse Surgical has signed a 4K SF lease in The Westchester.
• Energy Center I | 585 North Dairy Ashford Road – 160,907 SF
• Marksman Security has signed a 2K SF lease in The Westchester.
• 1401 Enclave | 1401 Enclave Parkway – 158,812 SF
HLC Deal
HLC Deal
DEALS IN THE MARKET • Cardinal Health | 1330 Enclave Parkway – a 200K SF class A office building
• Schlumberger Building | 1325 South Dairy Ashford Road – 155,320 SF • Ashford 5 | 14701 St. Mary’s Lane – 152,341 SF • 1200 Enclave Parkway – 144,594 SF
• 15721 Park Row – a 154K SF class A office building • Ashford Place | 1500 South Dairy Ashford Road – a 132K SF class B office building • Ten West Plaza | 15915 Katy Freeway – a 105K SF class B office building • 14511 Old Katy Road – a 36K SF class B office building • 16000 Memorial Drive – a 28K SF class B office building • Ashford Corner | 1710 South Dairy Ashford Road – a 24K SF class B office building
12
12
THE WOODLANDS SUBMARKET INTELLIGENCE Absorption (378,199)
vs. Prev. Qtr
vs. 12 Mths Ago
115,907
(114,476)
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
16.3%
14.5%
10.7%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
176,545
1,146,200
vs. Prev. Qtr
vs. 12 Mths Ago
-
180,000
vs. Prev. Qtr
vs. 12 Mths Ago
$32.64
$32.59
252,219 Delivered SF Quoted Rates $31.94
VITAL STATS
16.0% 20.0%
300,000 800,000 250,000
18.0%
600,000
16.0%
400,000 150,000
14.0%
200,000
12.0%
0
200,000
14.0%
100,000 50,000
12.0%
0 (50,000)
10.0%
(200,000)
8.0%
(400,000)
(100,000)
10.0%6.0%
(150,000)
(200,000) (600,000) 1Q1Q 16 18
2Q2Q 16 18
3Q 3Q 1618
4Q 4Q 1618
Absorption Absorption
1Q 1Q 1719
2Q 2Q 19 17
3Q 3Q 19 17
4Q 4Q 19 17
1Q 1Q 20 18
2Q 2Q 20 18
3Q 3Q 2018
Deliveries
4Q 4Q 2018
1Q1Q 21 19
Vacancy Vacancy
Source: CoStar 1Q 2021 Office Report
HLC OUTLOOK The Woodlands submarket continues to be one of the most active Houston office submarkets. It has grown so much that it now competes with other premier submarkets such as the CBD, West Loop, Greenway Plaza, and the two Katy Freeway submarkets. This submarket continues to outperform averages in Houston by commanding higher rents and maintaining a vacancy rate well below the city average. At the close of 1Q 2021, The Woodlands submarket had a vacancy rate of 16.3% which was nearly 2% higher than 4Q 2020. Absorption turned negative with over 378K SF of space given back compared to the 116K SF of positive absorption in 4Q 2020. Leasing activity consisted of 252K SF of deals completed, nearly 100K SF more of deals completed in 4Q 2020. Currently, more than 600K SF of office space is under construction in this submarket.
NEW DEVELOPMENTS • HPE Buildings 3 & 4 | City Place Drive – two (2) 284K SF class A office buildings • LifeTime Co-Work | Six Pine Drive – a 35K SF class B office building
LARGE EXISTING VACANCIES • The Woodlands Towers at The Waterway | 9950 Woodloch Forest Drive – 408,221 SF • Hewitt Lake Woodlands | 9500 Lakeside Boulevard – 360,000 SF • SWN South Tower | 10000 Energy Drive – 288,609 SF • Hughes Landing | 1725 Hughes Landing Boulevard – 149,315 SF • 24955 I-45 North – 148,104 SF • 9709 Lakeside Boulevard – 137,938 SF
TOP LEASE TRANSACTIONS
• 8000 Technology Forest Boulevard – 127,790 SF
• Linge PLC has signed a 120K SF renewal in Sierra Pines I.
• CityPlace 1 | 1700 City Plaza Drive – 114,193 SF
• Ring Energy has signed a 16K SF sublease in Hughes Landing.
• 3831 Technology Forest Boulevard – 95,078 SF
DEALS IN THE MARKET • 3000 Research | 3000 Research Forest Drive – a 26K SF class B office building • The Gateway Building | 26865 I-45 North – a 24K SF class B office building • 143 Vision Park Boulevard – a 20K SF class B office building
• 9201 Pinecroft Drive – 112,299 SF • One Hughes Landing | 1800 Hughes Landing Boulevard – 92,368 SF • Lake Front North | 2107 Research Forest Drive – 90,937 SF • Two Hughes Landing | 1790 Hughes Landing Boulevard – 72,506 SF • Sierra Pines II | 1575 Sawdust Road – 72,008 SF • 2001 Timberloch Place – 69,288 SF • Havenwood Office Park | 25700 I-45 North – 61,607 SF • 3 Waterway Square Place | 3 Waterway Avenue – 58,681 SF • Waterway Plaza Two | 10001 Woodloch Forest Drive – 58,054 SF
13
13
WESTCHASE SUBMARKET INTELLIGENCE Absorption 71,564 Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
(97,771)
(198,306)
vs. Prev. Qtr
vs. 12 Mths Ago
24.0%
24.4%
23.1%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
299,134
294,219
vs. Prev. Qtr
vs. 12 Mths Ago
-
-
vs. Prev. Qtr
vs. 12 Mths Ago
141,449 Delivered SF Quoted Rates $26.88
$28.09
$27.93
20.0%
VITAL STATS 26.0%
250,000
18.0% 16.0% 14.0%
150,000 24.0%
100,000 50,000
12.0% 10.0%
0 22.0% (50,000)
8.0% 6.0%
400,000 200,000 0
(100,000)(200,000) (150,000)
20.0%
(400,000)
4.0%
(200,000) (250,000)(600,000)
2.0% 0.0%
800,000
200,000 600,000
(300,000)
18.0%
1Q 16
1Q 18
2Q 16
2Q 18
3Q 16
3Q 18
4Q
4Q 18 16
Absorption
Absorption
1Q
1Q19 17
2Q
19 2Q 17
3Q 19 3Q
4Q 19 4Q
1Q 201Q
17
17
18
Deliveries
2Q 3Q 20 2Q 20
18
Deliveries
3Q 18
4Q 20
1Q
4Q 21 18
Vacancy
(800,000)
1Q 19
Vacancy
Source: CoStar 1Q 2021 Office Report
HLC OUTLOOK The Westchase office submarket is located 15 miles west of the CBD and five miles southeast of the Energy Corridor. Historically, this submarket has been popular with oil, gas, and engineering firms, providing an alternative to the nearby Energy Corridor. However, given the concentration of energy related tenants in this submarket, demand in Westchase is affected by changes in the energy sector similar to other energy dependent submarkets. Westchase surpasses almost all other submarkets with its unrivaled ingress and egress, along with the submarket’s vicinity to Houston’s population center. These attributes make it an attractive alternative to CBD, West Loop, and other competing submarkets. At the close of 4Q 2020, The Westchase submarket had a vacancy rate of 24%, slightly higher than 3Q 2020. Absorption was negative by 58K SF, down from the 89K SF of negative absorption in 3Q 2020. Leasing activity consisted of 266K SF of deals completed, nearly double the 134K SF of deals completed in 3Q 2020. Currently, no office space is under construction in the submarket.
TOP LEASE TRANSACTIONS
• 2610 West Sam Houston Parkway South – a 26K SF class B office building
LARGE EXISTING VACANCIES • 10200 Bellaire Boulevard – 568,458 SF • Pinnacle Westchase | 3010 Briarpark Drive – 356,648 SF • Towers at Westchase II | 10350 Richmond Avenue – 182,635 SF • One BriarLake Plaza | 2000 West Sam Houston Parkway – 175,440 SF • Millennium Tower | 10375 Richmond Avenue –173,815 SF • 2500 CityWest | 2500 CityWest Boulevard – 155,630 SF • Towers at Westchase I | 10370 Richmond Avenue – 147,932 SF • Westchase Point | 1250 West Sam Houston Parkway – 147,403 SF • West8 Tower | 10205 Westheimer Road – 143,678 SF • One Westchase Center | 10777 Westheimer Road – 138,548 SF
• Key Energy has signed a 20K SF lease in 1500 CityWest.
• Millennium Tower II | 10353 Richmond Avenue –125,840 SF
• Kemira has signed a 14K SF lease in Two BriarLake Plaza.
• 3250 Briarpark Drive – 125,544 SF
• Advanced Geophysical Technology has signed a 9K SF lease in 9990 Richmond Avenue.
• 10333 Richmond | 10333 Richmond Avenue – 119,303 SF
• Digital Insurance has signed an 8K SF lease in 2925 Briarpark Drive.
DEALS IN THE MARKET
• Westchase Oaks | 10111 Richmond Avenue – 113,546 SF • CityWestPlace Building 4 | 2103 CityWest Boulevard – 109,330 SF • Westchase Park I | 3700 West Sam Houston Parkway – 106,522 SF
• Columbia Centre | 11011 Richmond Avenue – a 167K SF class A office building • 2929 Briarpark Drive – a 140K SF class B office building • The Mosing Building | 10260 Westheimer Road – a 130K SF class B office building • 3990 Rogerdale Road – a 123K SF class B office building • The Colonnade | 11111 Richmond Avenue – a 96K SF class B office building • 10590 Westoffice Drive – a 26K SF class B office building 14
14
GREENSPOINT/IAH SUBMARKET INTELLIGENCE Absorption (85,442) Vacancy 43.7% Leasing Act. 113,036 Delivered SF Quoted Rate $18.24
vs. Prev. Qtr
vs. 12 Mths Ago
(21,247)
82,212
vs. Prev. Qtr
vs. 12 Mths Ago
43.0%
44.1%
vs. Prev. Qtr
vs. 12 Mths Ago
101,732
187,539
vs. Prev. Qtr
vs. 12 Mths Ago
-
-
vs. Prev. Qtr
vs. 12 Mths Ago
$18.76
$18.53
VITAL STATS
25.0%
200,000
48.0%
300,000
24.5% 100,000
24.0%46.0% 23.5%
0
23.0% 44.0%
100,000
(100,000)
22.5%
0 (200,000)
22.0% 42.0% 21.5% 21.0%
200,000
(300,000)
(100,000)
40.0% (400,000)
(200,000)
20.5% 20.0%
38.0%
1Q 16
(500,000) 1Q 18
2Q 16
2Q 18
3Q
3Q18 16
4Q
4Q18 16
Absorption
Absorption
1Q 19 1Q 17
2Q 19
2Q 17
3Q 19
3Q 17
4Q 19
4Q 17
Deliveries
1Q 20
Deliveries
1Q 18
2Q 20
3Q
4Q
1Q
2Q 20 18
3Q20 18
4Q21 18
Vacancy
(300,000)
1Q 19
Vacancy
Source: CoStar 1Q 2021 Office Report
HLC OUTLOOK The Greenspoint/IAH office submarket continues to suffer more than any other submarket in Houston. This northern Houston submarket’s vacancy rate was largely affected by the downturn within the energy sector and remains the highest in the city. Rents have fallen significantly and investors have been working persistently to rebrand the submarket. At the close of 1Q 2021, the Greenspoint/IAH submarket had a vacancy rate of 43.7% which was slightly higher than 4Q 2020. Absorption remained negative with 85K SF of negative absorption, four times the 21K SF of negative absorption in 4Q 2020. Leasing activity consisted of 113K SF of deals completed, slightly higher than the 101K SF of deals completed in 4Q 2020. Currently, no office space is under construction in this submarket.
TOP LEASE TRANSACTIONS • General Services Administration has signed a 23K SF renewal in 15109 Heathrow Forest Parkway.
DEALS IN THE MARKET • CityNorth 1 | 233 Benmar Drive – a 253K SF class A office building
• Northpoint Central | 2 Northpoint Drive – a 180K SF class A office building
• EM Houston | 13401 I-45 North – a 143K SF class A office building
• Cross Continents I | 3838 North Sam Houston Parkway East – a 118K SF class A office building
• Northborough Business Park | 220 Meadowfern Drive – a 102K SF class B office building
• WorldCom Call Center | 3200 FM 1960 Road West –
• Greens Crossing I | 810 Gears Road – a 79K SF class B office building
• 14450 John F Kennedy Boulevard – a 46K SF class B office building
• 1030-1034 Regional Park Drive – a 23K SF class B office building
• 3808 World Houston Parkway – a 22K SF class A office building
LARGE EXISTING VACANCIES • CityNorth 5 | 17001 Northchase Drive – 458,331 SF • CityNorth 6 | 12450 Greenspoint Drive – 343,495 SF • 363 North Sam Houston Parkway East – 264,612 SF • CityNorth 1 | 233 Benmar Drive – 253,562 SF • 222 Benmar | 222 Benmar Drive – 198,256 SF • Glenborough Tower | 100 Glenborough Drive – 181,984 SF
• 396 West Greens Road – 164,411 SF • World Houston Plaza | 15710 John F. Kennedy Boulevard – 158,352 SF
• North Houston Tech Tower | 12707 North Freeway – 157,276 SF
• 16666 Northchase Drive – 147,135 SF • 450 Gears | 450 Gears Road – 146,073 SF • EM Houston | 13401 I-45 North – 143,410 SF • Bridgewood II | 652 North Sam Houston Parkway East – 135,253 SF
• Northbelt Office Center V | 500 North Sam Houston Parkway West – 135,030 SF
• 333 Northbelt | 333 North Sam Houston Parkway East – 125,788 SF
a 95K SF class B office building
15
15
FM 1960INTELLIGENCE CORRIDOR SUBMARKET Absorption
VITAL STATS
vs. Prev. Qtr
vs. 12 Mths Ago
(4,470)
(38,960)
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
24.0%
20.8%
20.7%
20.3%
23.0%20.0%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
22.0%
79,066
134,407
151,818
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
4,704
24,000 Quoted Rate $21.07
-
-
vs. Prev. Qtr
vs. 12 Mths Ago
$20.60
$20.20
26.0%24.0%
200,000
300,000 250,000
25.0% 22.0%
200,000 0
150,000 100,000
18.0%
50,000
21.0%
0
20.0%16.0%
(200,000)
19.0%
(50,000) (100,000)
14.0%
18.0%
(150,000) 12.0%
(400,000)
17.0%
1Q 16
1Q 18
2Q 2Q 18
3Q 3Q18
16
16
4Q 18 4Q
1Q 19 1Q
2Q 19 2Q
16
17
17
Absorption
Absorption
3Q 193Q
4Q 19 4Q
17
1Q 20
17
Deliveries
1Q 18
2Q 20
3Q 2Q 20
4Q 3Q20
18
18
Deliveries
1Q 21 4Q
18
Vacancy
(200,000)
1Q 19
Vacancy
Source: CoStar 1Q 2021 Office Report
HLC OUTLOOK HLC’s FM 1960 Corridor office submarket includes CoStar’s FM 1960/ Highway 249, Champions, and I-45 North submarkets. The submarket follows Farm-to-Market Road 1960 from Clay Road in West Houston up to Northeast Houston and stops just before George Bush International Airport. This submarket is home to nearly 12M SF of class A and B office space. At the close of 1Q 2021, the FM 1960 Corridor had a vacancy rate of 20.8% which was the same as 4Q 2020. Absorption was once again positive with 4K SF of space absorbed. Leasing activity fell with 80K SF of deals completed compared to the 134K SF of deals completed in 4Q 2020. Currently, 158K SF of office space is under construction in this submarket.
TOP LEASE TRANSACTIONS HLC Deal
• University Title has signed a 2K SF lease in Cypresswood Crossing. • Two Eight One Salon has signed a 2K SF lease in Cypresswood Crossing.
HLC Deal
DEALS IN THE MARKET • Wells Fargo Cypress | 12337 Jones Road – an 85K SF class B office building • Willowchase Atrium | 8203 Willow Place Drive South – a 75K SF class B office building • Cornerstone North | 3303 FM 1960 West – a 70K SF class B office building
• Copperfield Professional Building | 8711 Highway 6 North – a 20K SF class B office building
NEW DEVELOPMENTS • North Cypress Physician Office Building III – a 110K SF class B office building • 8900 Point Six Circle – a 48K SF class B office building
LARGE EXISTING VACANCIES • Noble Energy Center II | 1002 Noble Energy Way – 437,793 SF • 11403 Compaq Center West Drive – 260,790 SF • University Park Buildings 9 & 10 | 11450 Compaq Center West Drive – 208,841 SF • Creekridge II | 140 Cypress Station Drive – 123,605 SF • Chasewood Crossing III | 19350 State Highway 249 – 108,250 SF • 616 FM 1960 West – 92,105 SF • 7310 Eldridge Parkway – 81,800 SF • Chasewood Crossing I | 19500 State Highway 249 – 61,611 SF • Cy-Fair Medical Office Building | 13114 FM 1960 West - 51,846 SF • Northwest Medical Plaza | 800 Peakwood Drive – 51,633 SF • Cypress Station Medical Building | 1140 Cypress Station Drive – 49,533 SF • 21212 Northwest Freeway – 49,265 SF
• Champions Forest Office Building | 13231 Champion Forest Drive – a 64K SF class B office building
• Chasewood Crossing II | 19450 State Highway 249 – 48,605 SF
• 3648 Cypress Creek Parkway – a 61K SF class B office building
• Northchase Center | 14550 Torrey Chase Boulevard – 44,399 SF
• 11210 Steeplecrest – a 47K SF class B office building
• 3648 FM 1960 West – 44,335 SF
• Texas School of Business | 711 Airtex Drive – a 43K SF class B office building
• Reverse Mortgage Solutions | 14405 Walters Road – 43,217 SF
• 12824 Willow Centre Drive – a 32K SF class B office building • Park at Champions I | 13910 Champion Forest Drive – a 32K SF class B office building
• Willowbrook Medical Arts Building | 13215 Dotson Road – 46,091 SF
• Willowchase Atrium | 8203 Willow Place Drive South – 43,194 SF • Two Chasewood | 20405 State Highway 249 – 42,932 SF • Texas School of Business | 711 Airtex Drive – 42,890 SF
• Park at Champions II | 13810 Champion Forest Drive – a 32K SF class B office building • Building One | 8403 Louetta Road – a 25K SF class B office building • West Road Office Building | 14025 West Road – a 23K SF class B office building • Butte Creek Professional Building | 17154 Butte Creek Road – a 21K SF class B office building • 6810 FM 1960 West – a 20K SF class B office building
16
16
GREENWAY PLAZA SUBMARKET INTELLIGENCE Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
(250,132)
33,378
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
20.0%
19.8%
16.8%
(16,076)
Leasing Act. 91,439 Delivered SF Quoted Rates $33.84
vs. Prev. Qtr
vs. 12 Mths Ago
130,836
353,071
vs. Prev. Qtr
vs. 12 Mths Ago
-
-
vs. Prev. Qtr
vs. 12 Mths Ago
$35.61
VITAL STATS
20.0% 22.0%
200,000
300,000 250,000
200,000 150,000
16.0% 20.0%
150,000 100,000
100,000
18.0%
50,000
12.0%
0 (50,000) 50,000
16.0%
(100,000)
8.0%
(150,000)
14.0%
0
(200,000) (250,000)
4.0% 12.0%
(50,000) (300,000) (350,000)
0.0%
10.0%
1Q 16
$35.10
(400,000) 1Q 18
2Q 16
2Q 18
3Q 3Q 18
16
4Q 4Q 18
16
Absorption Absorption
1Q 1Q19
17
2Q 2Q 19
17
3Q 3Q 19
17
4Q 4Q 19
17
Deliveries Deliveries
1Q 1Q 20
18
2Q 202Q
18
3Q 4Q 20 3Q 20
18
4Q 18
1Q 21
(100,000)
1Q 19
Vacancy Vacancy
Source: CoStar 1Q 2021 Office Report
HLC OUTLOOK The Greenway Plaza office submarket received its name from the eleven (11) building, 50-acre, master-planned complex at the heart of the submarket. Given its convenient location between the West Loop, Medical Center, and CBD submarkets, Greenway Plaza continues to be one of the most desirable submarkets in Houston. Recent improvements to the master-planned Greenway Plaza complex and other recent developments in the area have helped breathe life back into this submarket. At the close of 1Q 2021, the Greenway Plaza submarket had a vacancy rate of 20.0% which was slightly higher than 4Q 2020. Absorption remained negative with 16K SF of space given back, up from the 250K SF given back in 4Q 2020. Leasing activity fell with 91K SF of deals completed, which was lower than the 131K SF of deals in 4Q 2020. Currently, no office space is under construction in the submarket.
TOP LEASE TRANSACTIONS • APEX has signed a 9K SF lease in Weslayan Tower. • Detechtion Technologies has signed a 3K SF lease in Weslayan Tower.
17
LARGE EXISTING VACANCIES • Nine Greenway Plaza | 9 Greenway Plaza – 309,464 SF • Four Greenway Plaza | 4 Greenway Plaza – 242,628 SF • Phoenix Tower | 3200 Southwest Freeway – 237,493 SF • Twelve Greenway Plaza | 12 Greenway Plaza – 209,916 SF
• Three Greenway Plaza | 3 Greenway Plaza – 196,825 SF
• Eight Greenway Plaza | 8 Greenway Plaza – 114,312 SF • Eleven Greenway Plaza | 11 Greenway Plaza – 103,351 SF
• 20 Greenway Plaza – 94,327 SF • Five Greenway Plaza | 5 Greenway Plaza – 85,356 SF • Weslayan Tower | 24 Greenway Plaza – 82,534 SF • 3800 Buffalo Speedway – 82,167 SF • 3355 West Alabama | 3355 West Alabama Street – 80,267 SF
• 3555 Timmons Lane – 74,549 SF • Two Greenway Plaza | 2 Greenway Plaza – 69,056 SF • 3900 Essex | 3900 Essex Lane – 66K SF • Nitya Tower | 2211 Norfolk Street – 65,786 SF • 3737 Buffalo Speedway Avenue – 61,720 SF
17
MEDICAL CENTER SUBMARKET INTELLIGENCE Absorption (43,151)
vs. Prev. Qtr
vs. 12 Mths Ago
2,181
(24,723)
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
8.4%
8.0%
6.5%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
66,886
105,815
vs. Prev. Qtr
vs. 12 Mths Ago
-
-
70,929 Delivered SF Quoted Rates $28.34
vs. Prev. Qtr
vs. 12 Mths Ago
$27.59
$26.86
VITAL STATS
14.0%
200,000
9.0%
200,000
150,000
12.0%
150,000
8.0% 100,000
100,000 50,000
7.0%
10.0%
0 6.0%
50,000
(50,000)
0 8.0%
(100,000) 5.0% (150,000)
6.0%
4.0%
1Q 16
(200,000) 1Q 18
2Q 18
3Q 18
4Q 18
2Q 3Q 4Q 16 Absorption 16 16
Absorption
1Q 19
1Q 17
2Q 19
2Q 17
3Q 19
4Q 19
3Q 4Q 17 17 Deliveries
1Q 20
Deliveries
1Q 18
2Q 20
3Q 20
2Q 18
4Q 20
1Q 21
3Q 4Q 18 18 Vacancy
(50,000)
(100,000)
1Q 19
Vacancy Source: CoStar 1Q 2021 Office Report
HLC OUTLOOK The Medical Center submarket is located three miles southwest of the CBD and is a specialty market focused heavily on the healthcare sector. It is home to the Texas Medical Center, the largest medical center in the world. More than two-thirds of the 10M SF of office space in this submarket is considered medical office space. Major medical institutions, such as the M.D. Anderson Cancer Center and Memorial Hermann Hospital, are among the top medical office tenants in this submarket. Historically, this submarket holds the lowest vacancy rate in the city. At the close of 1Q 2021, the Medical Center submarket had a vacancy rate of 8.4% which was slightly higher than 4Q 2020. Absorption was negative with 43K SF of space given back. Leasing consisted of 71K SF of deals completed. Currently, 1.2M SF of office space is under construction in this submarket.
LARGE EXISTING VACANCIES • 6624 Fannin Tower | 6624 Fannin Street – 151,525SF • Museum Medical Tower | 1213 Hermann Drive – 73,019 SF
• Texas Medical Center | 7501 Fannin Street – 92,562 SF • 1919 Pressler Street – 68,607 SF • 7900 Fannin | 7900 Fannin Street – 59,599 SF • 8000 Greenbriar Drive – 52,180 SF • 7807 Main Street – 47,916 SF • Greenpark One | 7515 South Main Street – 42,235 SF • 7505 Fannin Street – 41,010 SF • One Fannin | 7400 Fannin Street – 39,328 SF • US Pain & Spine Institute | 5445 La Branch Street – 36,394 SF
• Memorial Hermann Medical Plaza | 6400 Fannin Street – 35,214 SF
NEW DEVELOPMENTS • Horizon Tower | 6929 Main Street – a 512K SF class A office building
• 1200 Binz | 1200 Binz Street – 32,747 SF • Atrium 2656 | 2656 South Loop Freeway West – 29,508 SF
• O’Quinn Medical Tower | 7200 Cambridge Street – a
• Prosperity Bank Plaza | 5020 Montrose Boulevard –
• Museo Plaza Office Building | 5115 Fannin Street – a
• NRG Office Complex | 2626 South Loop Freeway West
• 7500 Fannin Street – a 126K SF class B office building
• Southside Medical Plaza | 7700 Main Street – 22K SF • 2636 South Loop Freeway West – 21,358 SF • Houston Medical Plaza | 6655 Travis Street – 17,736 SF • Fannin South Professional Building | 7707 Fannin Street
427K SF class A office building 160K SF class A office building
26,950 SF
– 25,839 SF
– 16,954 SF
18
18
SOUTHWEST SUBMARKET INTELLIGENCE Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
21,977
92,152
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
21.7%
21.6%
20.8%
(7,807)
Leasing Act. 85,890 Delivered SF Quoted Rates $17.34
vs. Prev. Qtr
vs. 12 Mths Ago
101,125
131,696
vs. Prev. Qtr
vs. 12 Mths Ago
-
-
vs. Prev. Qtr
vs. 12 Mths Ago
$17.56
VITAL STATS
23.0%26.0%
1,000,000 120,000 100,000
22.0%
800,000
80,000
24.0%
60,000
21.0%
600,000
40,000 22.0%
20,000
20.0%
400,000
0
19.0%20.0%
(20,000) 200,000 (40,000)
18.0%
0
(60,000) 18.0%
(80,000)
17.0% 16.0%
(200,000)
(100,000) 16.0%
(120,000) 1Q
2Q
1Q 18 2Q 18 16 16
$16.86
3Q
3Q 18 16
4Q
4Q18 16
Absorption Absorption
1Q
1Q19 17
2Q
2Q 19 17
3Q
3Q 19 17
4Q 4Q 19
17
Deliveries Deliveries
1Q 1Q 20
18
2Q 202Q
18
3Q 203Q
18
4Q 1Q 20 4Q 21 1Q
18
(400,000)
19
Vacancy Vacancy
Source: CoStar 1Q 2021 Office Report
HLC OUTLOOK HLC’s Southwest office submarket includes CoStar’s Southwest Freeway and Southwest Beltway 8 submarkets. The submarket extends to Missouri City and northwest to the Buffalo Bayou just west of the Energy Corridor. The submarket’s geographic boundaries extend much further than those of neighboring West Houston submarkets but deliveries here have been significantly fewer than in other submarkets recently. At the close of 1Q 2021, the Southwest submarket had a vacancy rate of 21.7% which was slightly higher than 4Q 2020. Absorption turned negative with 8K SF of space given back, down from the 22K SF of positive absorption in 4Q 2020. Leasing activity fell with 86K SF of deals completed compared to the 101K SF of activity in 4Q 2020. Currently, no office space is under construction in this submarket.
TOP LEASE TRANSACTIONS • Academy of Accelerated Learning has signed a 38K SF lease in 5999 Savoy Drive.
DEALS IN THE MARKET • Regency Square Tower | 6200 Savoy Drive – a 225K SF class A office building
• American First Tower | 9999 Bellaire Boulevard – a
212K SF class A office building • 11111 South Wilcrest Drive – a 190K SF class B office building • Westwood Green | 9494 Southwest Freeway – a 140K SF class B office building • 6100 Corporate Drive – a 73K SF class B office building • Harwin International Plaza | 7171 Harwin Drive – a 73K SF class B office building • 9945 Bissonnet Street – a 28K SF class B office building 19
• 9200 West Sam Houston Parkway South – a 23K SF class B office building
LARGE EXISTING VACANCIES • Houston Technology Center | 5959 Corporate Drive – 250,578 SF
• Southwest Corporate Center | 9700-9702 Bissonnet Street – 210,558 SF
• 11111 South Wilcrest Drive – 190,398 SF • Arena Place Two | 7324 Southwest Freeway – 185,664 SF
• Arena Place One | 7322 Southwest Freeway – 140,795 SF
• 7011 Southwest Freeway – 112,590 SF • Southwest Medical Plaza 1 | 7777 Southwest Freeway – 79,722 SF
• Centre One | 9800 Centre Parkway – 78,620 SF • Westwood Green | 9494 Southwest Freeway – 75,661 SF
• Southwest Medical Plaza 2 | 7737 Southwest Freeway – 70,703 SF
• The Center | 8323 Southwest Freeway – 54,344 SF • The Center | 8303 Southwest Freeway – 51,781SF • 9896 Bissonnet Street – 50,794 SF • 6464 Savoy Drive – 48,809 SF • One West Belt – 45,945 SF • Merlyn Plaza | 9301 Southwest Freeway – 43,022 SF • The Ranchester Building | 10333 Harwin Drive – 42,559 SF
• The Atrium Tower | 9894 Bissonnet Street – 42,250 SF • 6001 Savoy Drive – 41,262 SF
19
KATY FREEWAY EAST SUBMARKET INTELLIGENCE Absorption (8,487)
vs. Prev. Qtr
vs. 12 Mths Ago
(16,285)
37,332
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
11.9%
11.8%
10.0%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
51,303
232,348
vs. Prev. Qtr
vs. 12 Mths Ago
71,209 Delivered SF Quoted Rates $35.26
-
21,000
vs. Prev. Qtr
vs. 12 Mths Ago
$35.29
$35.55
VITAL STATS
12.0%
250,000
16.0%
200,000
15.0%
200,000 160,000
11.0%
14.0%
150,000 120,000
10.0%13.0%
80,000 100,000
12.0% 40,000 50,000
9.0%11.0%
0
10.0% 8.0%
0
9.0%
(40,000)
8.0%
(80,000)
7.0%
1Q 16
(50,000)
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 18 16 18 16 18 16 18 1719 Absorption Absorption
2Q
2Q 1719
3Q
4Q 1Q 2Q 3Q 4Q 1Q 4Q 1Q 2Q 3Q 4Q 1Q 19 2018 2018 20 18 20 18 21 19 17 Deliveries Vacancy Deliveries Vacancy
(100,000)
3Q 19 17
Source: CoStar 1Q 2021 Office Report
HLC OUTLOOK The Katy Freeway East office submarket benefits greatly from the demographics of the Memorial Villages. The submarket is centrally located along Interstate 10 and Beltway 8 near the Energy Corridor and Houston’s western suburbs. It is home to MetroNational’s Memorial City and Midway’s CityCentre mixed-use developments. At the close of 1Q 2021, the Katy Freeway East submarket had a vacancy rate of 11.9%, slightly higher than 4Q 2020. Absorption remained negative with 8K SF of space given back, down from the 16K SF given back in 4Q 2020. Leasing activity consisted of 71K SF of deals completed which was slightly more than the 51K SF of deals completed in 4Q 2020. Currently, more than 960K SF of office space is under construction in this submarket.
TOP LEASE TRANSACTIONS • Goosehead Financial has signed a 15K SF lease in 10100 Katy Freeway.
• Veritex Community Bank has signed a 12K SF lease in Village Tower I.
• Renaissance Offshore has signed an 8K SF lease in Two Memorial City Plaza.
NEW DEVELOPMENTS • One MRO | 990 Town & Country Boulevard – a 440K SF class A office building
• 8020 Katy Freeway – a 193K class A office building • 9753 Katy Freeway – a 186K SF class A office building • Village Tower II | 9655 Katy Freeway – a 141K SF class
LARGE EXISTING VACANCIES • Two Memorial City Plaza | 820 Gessner Road – 145,531 SF
• 920 Memorial City Way – 122,299 SF • Memorial Hermann Tower | 929 Gessner Road – 117,212 SF
• One Memorial City Plaza | 800 Gessner Road – 100,871 SF
• Three Memorial City Plaza | 840 Gessner Road – 87,285 SF
• CityCentre One | 800 Town & Country Boulevard – 64,772 SF
• 950 Corbindale Road – 52,935 SF • Medical Plaza 3 | 915 Gessner Road – 45,480 SF • 8584-8588 Katy Freeway – 40,076 SF • Memorial City Place | 9821 Katy Freeway – 37,437 SF • CityCentre Two | 818 Town & Country Boulevard – 33,392 SF
• Hedwig Place | 8731 Katy Freeway – 28,656 SF • 952 Echo Lane – 28,431 SF • Town & Country Central I | 10497 Town & Country Way – 27,977 SF
• Nexen Building | 945 Bunker Hill Road – 25,076 SF • Piney Point Offices II | 2500 Fondren Road – 24,225 SF • Murphy Building | 9805 Katy Freeway – 23,321 SF • Park Centre I | 9950 Westpark Drive – 22,921 SF • CityCentre Five | 825 Town & Country – 22,334 SF • Park Laureate | 10000 Memorial Drive – 22,331 SF
A office building
20
20
NORTHWEST SUBMARKET INTELLIGENCE Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
12,420
77,148
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
20.0%
19.1%
19.1%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
86,333
155,885
vs. Prev. Qtr
vs. 12 Mths Ago
(75,746)
102,230 Delivered SF Quoted Rates $20.84
-
-
vs. Prev. Qtr
vs. 12 Mths Ago
$21.51
$20.92
VITAL STATS 12.0%24.0%
250,000 150,000 200,000
100,000
11.0% 22.0%
150,000
50,000
10.0%
100,000
20.0%
0
50,000
9.0%
(50,000)
0
18.0%
8.0%
(100,000)
(50,000) 7.0%
16.0%
(150,000) 1Q
2Q
1Q 18 2Q 18 16 16
3Q
3Q 18 16
4Q
4Q18 16
Absorption
Absorption
1Q
1Q19 17
2Q
19 2Q 17
3Q
19 3Q 17
4Q 19 4Q
17
1Q 20 1Q
Deliveries
18
2Q 202Q
18
Deliveries
3Q 4Q 1Q 20 3Q 20 4Q 21 1Q
18
18
Vacancy
(100,000)
19
Vacancy
Source: CoStar 1Q 2021 Office Report
HLC OUTLOOK HLC’s Northwest office submarket is located northwest of the CBD and starts at the transitioning Heights and Oak Forest/Garden Oaks communities. It also includes CoStar’s Northwest Near and Northwest Far submarkets. The struggles in this submarket over the past few years are primarily attributable to the extensive expansion and reconstruction of the major freeways which have impacted traffic flow within the submarket. The 290 project is now complete and the submarket is starting to see an increase in activity but recovery is sure to take some time. Most of the more than 10M SF of class A and B office space is located at Loop 610 and Highway 290 or in the vicinity of Highway 290 and Hollister Road. At the close of 1Q 2021, the Northwest submarket had a vacancy rate of 20.0% which was slightly higher than 4Q 2020. Absorption was negative with 75K SF of space given back, compared to the 12K SF of positive absorption in 4Q 2020. Leasing activity included 102K SF of deals completed. Currently, there is currently 23K SF office space under construction in this submarket.
TOP LEASE TRANSACTIONS • NCI Group has signed a 28K SF lease in Northwest Crossing III. • Crump Property & Casualty Insurance has signed an 11K SF renewal in Northwest Crossing III.
LARGE EXISTING VACANCIES • Brookhollow Central II | 2900 North Loop Freeway West – 141,048 SF • Brookhollow Central III | 2950 North Loop Freeway West – 117,721SF • Brookhollow Central I | 2800 North Loop Freeway West – 90,793 SF • Northwest Crossing | 13333 Northwest Freeway – 90,527 SF • North Loop Center | 1235 North Loop Freeway West – 89,823 SF • Northwest One Building | 13100 Northwest Freeway – 71,998 SF • 7000 Hollister Street – 71,372 SF • Northwest Crossing III | 13105 Northwest Freeway – 67,303 SF • Granite Tower at 290 | 13430 Northwest Freeway – 65,780 SF • One Northwind Plaza | 7600 West Tidwell Road – 61,819 SF • Wells Fargo Building | 13201 Northwest Freeway – 60,795 SF • 5252 Hollister Road – 56,316 SF • Physician Speciality Center | 1900 North Loop West – 45,126 SF • Hollister & Hillmont Building | 5300 Hollister Street – 44,987 SF • 2180 North Loop West – 36,291 SF
DEALS IN THE MARKET • Northwest Plaza | 550 Northwest Central Drive – a 75K SF class B office building • 10050 Northwest Freeway – a 43K SF class B office building
NEW DEVELOPMENTS
• Brookhollow II | 9800 Northwest Freeway – 34,823 SF • 2600 North Loop West – 31,737 SF • Park Central Plaza One | 1111 North Loop Freeway West – 31,600 SF • 1919 North Loop West Building | 1919 North Loop West – 30,347 SF
• 1224 North Post Oak – a 23K SF class B office building
21
21
SUGAR LAND SUBMARKET INTELLIGENCE Absorption
VITAL STATS
vs. Prev. Qtr
vs. 12 Mths Ago
(16,166)
47,787
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
14.0% 14.0%
15.0%
14.0%
11.4%
12.0%
vs. 12 Mths Ago
10.0%
(81,103)
Leasing Act. 43,908 Delivered SF Quoted Rates $30.09
vs. Prev. Qtr 53,838
64,149
vs. Prev. Qtr
vs. 12 Mths Ago
56,000
-
vs. Prev. Qtr
vs. 12 Mths Ago
$29.41
$26.81
18.0% 16.0%
600,000 100,000
16.0%
50,000
0
500,000 400,000 300,000 200,000
12.0%
(50,000)
8.0% 6.0%
100,000
(100,000)0 10.0%
4.0%
(100,000)
(150,000)
2.0%
(200,000) (200,000)
8.0%
0.0% 1Q 16
1Q 18
2Q 18
3Q 18
4Q 18
2Q 3Q 4Q 16 Absorption 16 16
Absorption
1Q 19
1Q 17
2Q 19
2Q 17
3Q 19
4Q 19
3Q 4Q 17 17 Deliveries
1Q 20
1Q 18
2Q 20
2Q 18
Deliveries
3Q 20
4Q 20
1Q 21
3Q 4Q 18 Vacancy 18
(300,000) 1Q 19
Vacancy
Source: CoStar 1Q 2021 Office Report
HLC OUTLOOK
LARGE EXISTING VACANCIES
The Sugar Land office submarket in Southwest Houston is home to a variety of energy and engineering firms. Large corporations such as Fluor Enterprises, Schlumberger, and Nalco Champion have a large presence in this submarket. The submarket is also home to a variety of non-energy tenants including Coca-Cola, Imperial Sugar, and Kelsey-Seybold Clinic. With its proximity to Houston’s growing population centers and workforce, the submarket continues to be a great suburban alternative to other major Houston office submarkets such as West Loop, Westchase, and Greenway Plaza.
• Sugar Creek on the Lake | 14141 Southwest Freeway – 277,838 SF
At the close of 1Q 2021, the Sugar Land submarket had a vacancy rate of 15.0% which was 1% higher than 4Q 2020. Absorption remained negative with 81K SF of space given back, much higher than the 16K SF given back in 4Q 2020. Leasing activity included 44K SF of deals completed. Currently there is no office space under construction in this submarket.
• Three Sugar Creek | 3 Sugar Creek Center Boulevard – 69,651 SF
TOP LEASE TRANSACTIONS
• Sugar Creek Tower II | 13131 Dairy Ashford Road – 104,846 SF • Sugar Creek Tower I | 13135 Dairy Ashford Road – 103,632 SF • Sugar Creek Place I | 14100 Southwest Freeway – 78,191 SF • The Minute Maid Building | 2150 Town Square Place – 77,055 SF
• Two Sugar Creek Center | 77 Sugar Creek Center Boulevard – 62,562 SF • ABB Network Management | 1601 Industrial Boulevard – 47,544 SF • Commerce Green One | 14090 Southwest Freeway – 43,316 SF
• Matthew Gardiner has signed a 2K SF lease in 800 Bonaventure Way.
• Comerica Office Tower | 1 Sugar Creek Center Boulevard – 41,386 SF
• SCZ Investments has signed a 2K SF lease in the Rotunda Building.
• The Texas Drive Building | 2245 Texas Drive – 40,692 SF
HLC Deal
DEALS IN THE MARKET
• The Glenn Lakes Professional Building | 3634 Glenn Lakes Lane – 40,068 SF • 7619 Branford Place – 35,031 SF
• 1410 Gillingham Lane – a 150K SF class B office building
• Building A | 1 Fluor Daniel Drive – 27K SF
• Wells Fargo Fort Bend Building | 2440 Texas Parkway – a 64K SF class B office building
• Sugar Land Medical Office | 15200 Southwest Freeway – 26,946 SF
• Sugar Land Physicians Center | 7616 Branford Place – a 56K SF class A office building
• Imperial Medical Plaza | 1111-1211 Highway 6 – 26,255 SF • The Plaza Building | 2277 Plaza Drive – 25,538SF • Sugar Land Plaza | 12946 Dairy Ashford Road – 24,762 SF
22
22
CLEAR LAKE SUBMARKET INTELLIGENCE Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
8,370
55,808
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
14.3%
14.2%
15.0%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
47,763
148,361
(3,086)
68,160 Delivered SF Quoted Rates $21.72
vs. Prev. Qtr -
VITAL STATS 12.0% 16.0%
80,000200,000
11.0% 15.0%
vs. Prev. Qtr
vs. 12 Mths Ago
$21.69
$21.43
60,000150,000
10.0%
40,000100,000 14.0% 20,000
50,000
9.0%
vs. 12 Mths Ago 81,446
250,000 100,000
0
13.0%
8.0%
0
(20,000)
(50,000)
7.0%
(40,000)
12.0% 1Q
2Q
1Q 18 2Q 18 16 16
3Q
3Q 18 16
4Q
4Q18 16
Absorption
Absorption
1Q
1Q19 17
2Q
19 2Q 17
3Q
19 3Q 17
4Q 19 4Q
17
Deliveries
Deliveries
1Q 20 1Q
18
2Q 202Q
18
3Q 203Q
18
4Q 1Q 20 4Q 21
18
Vacancy
(100,000)
1Q 19
Vacancy
Source: CoStar 1Q 2021 Office Report
HLC OUTLOOK Located southeast of the CBD, the Clear Lake office submarket is home to the Lyndon B. Johnson Space Center and a large concentration of government jobs. Office space in this submarket relies heavily on the Space Center but is also home to a diverse mix of industries. The area boasts strong demographics given the high volume of NASA scientists, well-paid workers at the Houston Ship Channel, and related downstream industries who choose to live in communities close to the water. At the close of 1Q 2021, the Clear Lake submarket had a vacancy rate of 14.3% which was slightly higher than 4Q 2020. Absorption was negative with 3K SF of space given back, down from the 8K SF absorbed in 4Q 2020. Leasing activity increased with 68K SF of deals completed, higher than the 48K SF of deals completed in 4Q 2020. Currently, there is no office space under construction in this submarket.
TOP LEASE TRANSACTIONS • Axiom Space has signed a 32K SF lease in Hercules II. DEALS IN THE MARKET • Gemini Plaza | 1150 Gemini Street – a 158K SF class B office building
LARGE EXISTING VACANCIES • Clear Lake Central | 600 Gemini Street – 317,198 SF • 13100 Space Center Boulevard – 99,062 SF • Atrium Crest | 18333 Egret Bay Boulevard – 54,828 SF • Two Corporate Plaza | 2625 Bay Area Boulevard – 47,521 SF
• Boeing Building | 3700 Bay Area Boulevard – 42,876 SF • One Corporate Plaza | 2525 Bay Area Boulevard – 42,163 SF
• Hercules I | 1300 Hercules Avenue – 37,941 SF • 16055 Space Center Boulevard – 29,152 SF • Space Park Office Building | 2200 Space Park Drive – 25,818 SF
• Clear Lake Tech Center | 17146 Feathercraft Laned – 26,648 SF
• Camino Center I | 17629 El Camino Real – 20,612 SF • Camino Center II | 17625 El Camino Real – 18,920 SF • East Building | 251 Medical Center Boulevard – 18,348 SF
• Marina Plaza | 2450 South Shore Boulevard – 17,478 SF • 1120 Nasa Parkway – 17,071 SF • One Harbour Square | 3027 Marina Bay Drive – 16,205 SF
• Bay Plaza | 711 West Bay Area Boulevard – 15,452 SF
• 12000 Aerospace | 12000 Aerospace Avenue – an 80K SF class B office building
• 2222 Bay Area Boulevard – a 65K SF class B office building
• 17300 Saturn Lane – a 24K SF class B office building
23
23
MIDTOWN SUBMARKET INTELLIGENCE Absorption 24,321
vs. Prev. Qtr
vs. 12 Mths Ago
VITAL STATS 18.0%
(28,174)
(34,144)
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
14.0%
12.8%
12.7%
9.5%
12.0%
vs. 12 Mths Ago
10.0%
Leasing Act. 27,871 Delivered SF 35,400 Quoted Rate $33.31
vs. Prev. Qtr 142,431
182,983
vs. Prev. Qtr
vs. 12 Mths Ago
-
-
vs. Prev. Qtr
vs. 12 Mths Ago
$38.18
$29.63
120,000
14.0%
16.0%
80,000
13.0%
600,000 500,000 400,000
40,000 12.0%
300,000 0
11.0% (40,000)
8.0% 6.0% 4.0%
10.0%
200,000 100,000
(80,000) 0
(100,000)
9.0%
(120,000)
2.0%
(200,000) 8.0%
0.0% 1Q 16
(160,000) 1Q 18
2Q 16
2Q 18
3Q
3Q 18
4Q 18
4Q
16 16 Absorption
Absorption
1Q 19
1Q 17
2Q 19
2Q 17
3Q 19
4Q 19
3Q 4Q 17 17 Deliveries
Deliveries
1Q 20
1Q 18
2Q 20
2Q 18
3Q 20
4Q 20
1Q 21
3Q 4Q 18 Vacancy 18
(300,000) 1Q 19
Vacancy
Source: CoStar 1Q 2021 Office Report
HLC OUTLOOK The Midtown office submarket is centrally located, due west of CBD, and has recently been dubbed the “Millennial Corridor.” The submarket includes the Heights to the north; Montrose, the Museum District, and Upper Kirby to the west; and Rice Village to the south. Further west along the Washington Corridor, the submarket has seen considerable interest from developers of all property types along Allen Parkway and Washington Avenue. At the close of 1Q 2021, the Midtown submarket had a vacancy rate of 12.8% which was slightly higher than 4Q 2020. Absorption was positive with 24K SF of space absorbed, opposite the 28K SF of negative absorption in 4Q 2020. Leasing activity fell considerably with just 28K SF of deals completed compared to the 142K SF of deals completed in 4Q 2020. Currently, 458K SF of office space is under construction in this submarket.
TOP LEASE TRANSACTIONS • Agent Essentials has signed a 10K SF renewal in 601 Sawyer Street.
DEALS IN THE MARKET • 2016 Main Street – a 600K SF class B office building • Washington Place Lofts | 1716-1722 Washington Avenue – a 25K SF class B office building
24
NEW DEVELOPMENTS • The Ion | 4201 Main Street – a 288K SF class A office building
• Montrose Collective | 888 Westheimer Road – a 170K SF class A office building
LARGE EXISTING VACANCIES • America Tower | 2929 Allen Parkway – 207,287 SF • Wortham Tower | 2727 Allen Parkway – 148,089 SF • Central Square | 2100 Travis Street – 118,294 SF • 2777 Allen Parkway – 71,010 SF • 100 Waugh | 100 Waugh Drive – 40,508 SF • 2302 Fannin Street – 37,881 SF • 5300 Memorial Drive – 37,745 SF • River Oaks Bank Building | 2001 Kirby Drive – 31,709 SF • River Oaks Medical | 3720 Westheimer Road – 30,861 SF
• 55 Waugh Drive – 28,000 SF • 2800-2810 San Jacinto Street – 27,484 SF • Midtown Plaza | 5225 Katy Freeway – 24,254 SF • Buffalo Heights | 3663 Washington Avenue – 23,642 SF • 2000 Crawford | 2000 Crawford Street – 23,620 SF • 5900 Memorial | 5900 Memorial Drive – 21,270 SF • 550 Westcott Street – 21,132 SF • Campanile South | 4306 Yoakum Boulevard – 19,706 SF • The Bellevue | 2323 South Shepherd Drive – 19,337 SF
24
WEST BELT SUBMARKET INTELLIGENCE Absorption (24,128) Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
14,391
(140,425)
vs. Prev. Qtr
vs. 12 Mths Ago
26.1%
25.7%
21.4%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
44,010 Delivered SF Quoted Rate $26.35
39,043
75,596
vs. Prev. Qtr
vs. 12 Mths Ago
-
-
vs. Prev. Qtr
vs. 12 Mths Ago
$26.60
$24.96
VITAL STATS 12.0%28.0%
250,000 200,000 150,000
200,000
26.0%
11.0%
100,000 50,000150,000
24.0%
0
10.0% 22.0%
100,000
(50,000)
50,000 (100,000)
9.0% 20.0%
(150,000)
0
(200,000)
8.0%18.0%
(50,000) (250,000) 16.0%
7.0%
(300,000) 1Q
2Q
1Q 18 2Q 18 16 16
3Q
3Q18 16
4Q
4Q18 16
Absorption Absorption
1Q
1Q 19 17
2Q
2Q 19 17
3Q
3Q 19 17
4Q 4Q 19
17
Deliveries Deliveries
1Q 201Q
18
2Q 202Q
18
3Q 4Q 20 3Q 20
18
1Q
(100,000)
4Q 21 1Q 18 19
Vacancy Vacancy
Source: CoStar 1Q 2021 Office Report
HLC OUTLOOK The West Belt submarket spans a quarter-mile along the West Sam Houston Parkway/Beltway 8 between Clay Road and Highway 249. This submarket houses nearly 7M SF of class A and B office space. The submarket’s proximity to the Energy Corridor makes it one of the most energy-driven office markets in Houston. With the submarket’s heavy concentration of energy related tenants, the West Belt submarket felt the oil downturn more than most other submarkets. However, the outlook for this submarket looks promising given its close proximity to the population center of Houston. At the close of 1Q 2021, the West Belt submarket had a vacancy rate of 26.1% which was slightly higher than 4Q 2020. Absorption turned negative with 24K SF of space given back, opposite the 14K SF of positive absorption in 4Q 2020. Leasing activity remained flat with 44K SF of deals completed, slightly higher than the 40K SF of completed deals in 4Q 2020. Currently, no office space is under construction in this submarket.
TOP LEASE TRANSACTIONS • Village MD has signed a 14K SF sublease in 4650 Westway Park Boulevard. • HLC DEAL TRS Staffing Solutions has signed a 3K SF lease in 10750 Hammerly Boulevard.
LARGE EXISTING VACANCIES • Westway II | 4424 West Sam Houston Parkway North – 231,666 SF • Beltway Lakes Phase III | 5775 North Sam Houston Parkway West – 150,613 SF • Westway Plaza | 11330 Clay Road – 146,501 SF • Westway One | 11220 Equity Drive – 143,960 SF • Beltway Lakes Phase I | 5825 North Sam Houston Parkway West – 88,498 SF • Westway Building Two | 11000 Corporate Centre Drive – 88,394 SF • Sam Houston Crossing One | 10343 Sam Houston Park Drive – 87,932 SF • Concourse at Westway | 4700 West Sam Houston Parkway North – 66,123 SF • Sam Houston Crossing Two | 10344 Sam Houston Park Drive – 62,329 SF • Westway Building One | 10603 West Sam Houston Parkway North – 50,597 SF • Beltway 8 Corporate Centre | 5300 West Sam Houston Parkway North – 50K SF • Heron Lakes | 10740 North Gessner Drive – 45,194 SF • York Centre | 10235 West Little York Road – 34,933 SF
DEALS IN THE MARKET • 11100 Brittmoore Park Drive – a 76K SF class B office building • 4805 Westway Park Boulevard – a 73K SF class B office building
• Tanner Office Building | 11302 Tanner Road – 33K SF • Westway Building Three | 10930 West Sam Houston Parkway North – 31,459 SF • 7840 North Sam Houston Parkway West – 29,581 SF
• 7102 North Sam Houston Parkway West – a 56K SF class A office building • 8400 North Sam Houston Parkway West – a 40K SF class B office building • 15000 Northwest Freeway – a 38K SF class B office building • 6221 West Sam Houston Parkway North – a 25K SF class B office building • 16060 Dillard Drive – a 24K SF class B office building 25
25
EAST HOUSTON/PASADENA SUBMARKET INTELLIGENCE Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
VITAL STATS 18.0%
31,464
10,922
21,160
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
14.0%
13.8%
14.4%
14.1%
12.0%
vs. 12 Mths Ago
10.0%
Leasing Act. 35,709 Delivered SF -
vs. Prev. Qtr 34,445
57,092
vs. Prev. Qtr
vs. 12 Mths Ago
-
-
Quoted Rates
vs. Prev. Qtr
vs. 12 Mths Ago
21.57
21.29
22.59
120,000 600,000
16.0%
100,000 500,000
16.0%
80,000 14.0% 60,000
400,000 300,000
40,000 12.0%
20,000
8.0%
0
6.0%
200,000 100,000
(20,000)0 10.0% (40,000)(100,000)
4.0%
(60,000)
2.0% 0.0%
(200,000)
8.0%
1Q 16
(80,000) 1Q 18
2Q 16
2Q 18
3Q 16
3Q 18
4Q 18
4Q 16
Absorption
1Q 19
1Q 17
2Q 19
2Q 17
Absorption
3Q 19
3Q 17
4Q 19
4Q 17
1Q 20
Deliveries
1Q 18
2Q 20
2Q 18
3Q 20
Deliveries
3Q 18
4Q 20
4Q 18
1Q 21
Vacancy
(300,000)
1Q 19
Vacancy
Source: CoStar 1Q 2021 Office Report
HLC OUTLOOK HLC’s East Houston/Pasadena office submarket’s location has, historically, been driven more by industrial product than office. Fundamentals, though somewhat soft, were still healthier than many submarkets across the city. At the close of 1Q 2021, the East Houston/Pasadena submarket had a vacancy rate of 13.8% which was lower than 4Q 2020. Absorption remained positive with 31K SF of space absorbed, up from the 11K SF of space absorbed in 4Q 2020. Leasing activity increased slightly with 36K SF of deals completed. Currently, 64K SF office space is under construction in this submarket.
NEW DEVELOPMENT • 4400 Harrisburg Boulevard – a 32K SF class B office building • 2351 Oleander Drive – a 32K SF class B office building
LARGE EXISTING VACANCIES • 100 Pasadena Boulevard – 114,356 SF • Atrium 10 Tower | 11811 East Freeway – 32,360 SF • 1001 Shaw Avenue – 30,938 SF • Gulf Freeway Plaza | 9333 Bryant Street – 29,750 SF • BPM Airport | 8031 Airport Boulevard – 28,058 SF
TOP LEASE TRANSACTIONS • Dr. Mai Medical has signed a 4K SF lease in 3339 Fairview Street. • Dedicated Texas Holdings has signed a 3K SF lease in Broadway Plaza. • Premier Renal Clinic has signed a 2K SF lease in the Pasadena Professional Building.
• Bank of America East Freeway | 12605 East Freeway – 27,914 SF • Land Park | 11821 East Freeway – 27,613 SF • Vibe Hobby | 8866 Gulf Freeway – 25,622 SF • EaDo | 2339 Commerce Street – 25,549 SF • Original US Schlumberger HQ (1938) | 2720 Leeland Street – 25,500 SF • 4400 Highway 225 – 24,877 SF
DEALS IN THE MARKET • Bank of America East Freeway | 12605 East Freeway – an 86K SF class B office building • Atrium 10 Tower | 11811 East Freeway – an 85K SF class B office building
• The 1200 Building | 1200 Highway 146 South – 24,195 SF • 2327 Commerce Street – 23,067 SF • Bayshore Medical Building | 3333 Bayshore Boulevard – 22,659 SF • Vibe Hobby | 8876 Gulf Freeway – 18,813 SF
• 1001 Shaw Avenue – an 80K SF class B office building
• 11550 Fuqua Street – 18,265 SF
• 12650 North Featherwood Drive – a 58K SF class B office building
• 12600 North Featherwood Drive – 17,240 SF
• 12727 Featherwood Drive – a 50K SF class B office building
• The Fuqua Professional Center | 12505-12563 Gulf Freeway – 16,877 SF
• Gulf Freeway Building | 9920 Gulf Freeway – 16,928 SF
• East Houston MOB | 1140 Westmont Drive – a 49K SF class B office building • 1702 Strawberry Road – a 22K SF class B office building
26
26
WEST SUBMARKETFARINTELLIGENCE Absorption (63,992) Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
28,748
18,472
vs. Prev. Qtr
vs. 12 Mths Ago
VITAL STATS 12.0% 20.0%
250,000 150,000
200,000 11.0% 18.0% 100,000
19.0%
17.5%
15.8%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
34,749 Delivered SF Quoted Rates $30.74
37,133
46,501
vs. Prev. Qtr
vs. 12 Mths Ago
-
30,000
vs. Prev. Qtr
vs. 12 Mths Ago
$30.68
$27.74
150,000
10.0% 16.0%
9.0%
8.0%
50,000 100,000
14.0%
0
50,000 0
12.0%
(50,000)
(50,000) 10.0%
7.0% 1Q 16
(100,000) 1Q 18
2Q 16
2Q 18
3Q 16
3Q 18
4Q 18
4Q 16
Absorption
1Q 19
1Q 17
2Q 19
2Q 17
Absorption
3Q 19
3Q 17
4Q 19
4Q 17
Deliveries
Deliveries
1Q 20
1Q 18
2Q 20
2Q 18
3Q 20
3Q 18
4Q 20
4Q 18
1Q 21
Vacancy
(100,000) 1Q 19
Vacancy
Source: CoStar 1Q 2021 Office Report
HLC OUTLOOK HLC’s Far West office submarket includes CoStar’s Katy Freeway/Grand Parkway submarket about 25 miles west of Houston’s CBD. Growth among all product types in West Houston has been a common theme and the office sector has been no exception as it is located close to Houston’s fastest-growing population center and the expanded Grand Parkway. Nearly 80% of the metro’s population growth since 2010 has occurred in the unincorporated areas of Harris County covering parts of this and neighboring submarkets. At the close of 1Q 2021, the Far West submarket had a vacancy rate of 19.0% which was nearly 2.0% higher than 4Q 2020. Absorption turned negative with 64K SF of space given back. Leasing activity was similar to 4Q 2020 with just 35K SF of deals completed. Currently, 87K SF is under construction in this submarket.
DEALS IN THE MARKET • PetroSkills | 25403 Katy Mills Parkway – a 32K SF class B office building
NEW DEVELOPMENTS • Katy Asian Town III Building C | 22939 Colonial Parkway – a 40K SF class B office building
• 2088 North Mason Road – a 25K SF class B office building
• Katy Asian Town III Building A | 23015 Colonial Parkway – a 22K SF class B office building
27
LARGE EXISTING VACANCIES • Katy Ranch Phase II | 24279 Katy Freeway – 128,401 SF • Mason Creek Office Center II | 21700 Merchants Way – 127,955 SF
• The Offices at Greenhouse | 19219 Katy Freeway – 93,527 SF
• Det Norske Veritas Phase 2 | 1400 Ravello Drive – 70,031 SF
• Katy MOB II | 707 South Fry Road – 69,177 SF • Greenhouse at Park Row | 2051 South Greenhouse Road – 53,753 SF
• New Park Drilling Fluids | 21920 Merchants Way – 51,256 SF
• Offices at 410 | 410 West Grand Parkway South – 42,054SF
• 2002 West Grand Parkway North – 37,396 SF • Horizon Medical Plaza 2 | 19002 Park Row – 32K SF • Westgreen Professional Building | 750 Westgreen Boulevard – 27,940 SF
• Katy Ranch Phase I | 24275 Katy Freeway – 25,276 SF • Katy Medical Plaza I | 23510 Kingsland Boulevard – 25,021 SF
• Kingsland Medical Plaza | 777 South Fry Road – 22,950 SF
• 25807 Westheimer Parkway – 21,892 SF • 23960 Katy Freeway – 18,696 SF • Katy MOB I | 705 South Fry Road – 18,136 SF
27
KINGWOOD SUBMARKET INTELLIGENCE Absorption
VITAL STATS
vs. Prev. Qtr
vs. 12 Mths Ago
11,803
51,175
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
14.0%
11.5%
13.0%
11.1%
12.0% 12.0%
vs. 12 Mths Ago
10.0%
272,992
Leasing Act. 23,351 Delivered SF 270,000 Quoted Rates $25.05
vs. Prev. Qtr 32,682 vs. Prev. Qtr
34,529 vs. 12 Mths Ago
-
55,000
vs. Prev. Qtr
vs. 12 Mths Ago
$25.44
$25.44
18.0% 16.0%
300,000600,000
16.0%
250,000500,000
14.0%
400,000
200,000 150,000
300,000 200,000
10.0%
100,000
8.0%
100,000 50,000
6.0%
8.0%
0 0
4.0%
(100,000)
6.0%
(50,000)
2.0% 0.0%
(200,000)
4.0%
1Q 16
(100,000) 1Q 18
2Q 16
2Q 18
3Q 3Q 18
16
4Q 4Q18
16
Absorption
1Q 1Q19
17
Absorption
2Q 19 2Q
17
3Q 19 3Q
17
4Q 19 4Q
17
1Q 201Q
Deliveries
Deliveries
18
2Q 3Q 20 2Q 20
18
3Q 18
4Q 20
1Q 4Q 21
18
Vacancy
(300,000)
1Q 19
Vacancy
Source: CoStar 1Q 2021 Office Report
HLC OUTLOOK HLC’s Kingwood office submarket is located in Northeast Houston and situated between the Sam Houston Tollway and the Grand Parkway. This smaller outlying office submarket has seen a recent boost in development thanks to the Grand Parkway, Houston’s third loop. The submarket currently contains just over 2M SF of class A and B office space. At the close of 1Q 2021, the Kingwood submarket had a vacancy rate of 11.5% which was 1.5% lower than 4Q 2020. Absorption remained positive with 273K SF of space absorbed, significantly more than the 12K of positive absorption in 4Q 2020. Leasing activity consisted of 23K SF of deals completed. Currently, no office space is under construction in this submarket.
LARGE EXISTING VACANCIES • Northeast Medical Tower II | 18980 North Memorial Drive North – 73,043 SF
• Kingwood West Tower | 22999 Highway 59 North – 31,906 SF
• Four Kingwood Place | 900 Rockmead Drive – 27,760 SF
• Three Kingwood Place | 800 Rockmead Drive – 21,926 SF
• Two Kingwood Place | 700 Rockmead Drive – 20,646 SF • Humble Medical Office Building | 1485 FM 1960 Bypass East – 18,856 SF
• BRB Medical Office Building | 22751 Professional Drive – 16,641 SF
• Kings Harbor | 4501 Magnolia Cove Drive – 16,514 SF • 22710-22720 Professional Drive – 14,468 SF • Kingwood Medical Plaza I | 22698 Professional Drive – 12,940 SF
• Woodforest National Bank Building | 1710 West Lake Houston Parkway – 11,063 SF
• 215 Kingwood Executive Drive – 10K SF • Citizens Bank Building | 8811 FM 1960 Bypass Road – 9,629 SF
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SUBURBAN OUTLIERS SUBMARKET INTELLIGENCE Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
(34,555)
(82,540)
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
12.7%
13.1%
11.8%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
78,624
24,036 Delivered SF 39,650 Quoted Rates $27.66
46,057
119,093
vs. Prev. Qtr
vs. 12 Mths Ago
134,133
49,672
vs. Prev. Qtr
vs. 12 Mths Ago
$27.00
$25.79
VITAL STATS 12.0%16.0%
150,000 250,000
11.0%
100,000
10.0%
50,000
200,000 14.0%
150,000 100,000
12.0% 0
9.0%
50,000 0
10.0%
(50,000)
8.0%
(50,000) 7.0%
8.0%
(100,000) 1Q
1Q 18 16
2Q
2Q 18 16
3Q
3Q18 16
4Q
4Q18 16
Absorption Absorption
1Q
19 1Q 17
2Q
19 2Q 17
3Q
19 3Q 17
4Q 19 4Q
17
1Q 201Q
Deliveries Deliveries
18
2Q 202Q
18
3Q 4Q 1Q 20 3Q 20 4Q 21 1Q
18
18
Vacancy Vacancy
(100,000)
19
Source: CoStar 1Q 2021 Office Report
HLC OUTLOOK HLC’s Suburban Outliers office submarket consists of the remaining submarkets outside of the major Houston submarkets such as the CBD, Greenway Plaza, Westchase, and The Woodlands. These smaller submarkets are located on the outskirts of Houston and include just under 10.5M SF of class A and B office buildings.
NEW DEVELOPMENTS • Towne Lake Office Condos | 10242 Greenhouse Road – 50K SF of class B office condos • 11200 Broadway Street – a 48K SF class A office building • I45 & Crescent Campus Boulevard – a 45K SF class B office building • 2080 Central Pine Street – a 42K SF class B office building
At the close of 1Q 2021, the Suburban Outliers submarket had a vacancy rate of 12.7% which was slightly lower than 4Q 2020. Absorption turned positive with 79K SF of space absorbed, much higher than the 35K SF of space given back in 4Q 2020. Leasing activity remained steady with 24K SF of deals completed. Currently, 270K SF is under construction in this submarket.
• 400 West Davis Street – a 33K SF class B office building • Conroe Medical Plaza | 603 South Conroe Medical Drive – a 27K class B office building • 12280 Broadway Street – a 25K SF class A office building
LARGE EXISTING VACANCIES • 4005 Technology Drive – 257,399 SF
TOP LEASE TRANSACTIONS • Action Behavior Center has signed an 8K SF lease in 24130 State Highway 249.
• Emancipation Center | 3131 Emancipation Avenue – 55,814 SF • Westland Bunker | 550 Club Drive – 54,071 SF • Cypress Medical Office Building | 27700 Highway 290 – 49,057 SF • UT Physicians Facilities | 1517 Thompson Road – 42,551 SF
DEALS IN THE MARKET
• 4001 Technology Drive – 40,681 SF
• Primary Medical Tower II | 2800 Garth Road – a 129K Class B office building
• 2765-2785 Gulf Freeway South – 39,112 SF
• Magnolia Landmark Building | 18230 FM 1488 Road – a 65K SF class B office building
• Pearland Medical Plaza 1 | 10905 Memorial Hermann Drive – 35,088 SF
• Umar Syed Medical Tower | 2802 Garth Road – a 62K SF class B office building
• Sealy Business Continuity Center | 3063 Outlet Center Drive – 31,629 SF
• 301 South First Street – a 59K SF class B office building
• Umar Syed Medical Tower | 2802 Garth Road – 31,417 SF
• The Offices at Greatwood | 6514-6548 Greatwood Parkway – a 43K SF class B office building
• 750 Fish Creek Thoroughfare – 31,117 SF
• Bank of America | 4000 Garth Road – a 33K SF class B office building
• NOV | 10586 Highway 75 North – 30K SF
• Sealy Business Continuity Center | 3063 Outlet Center Drive – a 32K SF class B office building
• Oakbend Professional Building | 1601 Main Street – 36,105 SF
• 2401 Termini Street – 30,262 SF • 7830 West Grand Parkway South – 27,612 SF • 1920 Country Place Parkway – 27,284 SF
• NOV | 10586 Highway 75 North – a 30K SF class B office building
• 10970 Shadow Creek Parkway – 27K SF
• Hughes Court Professional Building | 3828 Hughes Court – a 23K SF class B office building
• Magnolia Landmark Building | 18230 FM 1488 Road – 24,666 SF
• Baker Road Professional Building | 1010 Baker Road – a 22K SF class B office building
• Conroe 500 Medical Office Building | 500 Medical Center Boulevard – 24,245 SF
• Tomball Medical Plaza | 506 Graham Drive – 24,545 SF
• 455 School Street – a 22K SF class B office building • Northpoint Crossing Office Building | 24445 State Highway 249 – a 21K SF class B office building • 3100 Gulf Freeway - a 21K SF class B office building • Baylor St. Luke’s Emergency Center | 4019 Interstate 45 North – a 20K SF class B office building
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DALLAS
5950 Berkshire Lane Suite 900 Dallas, Texas 75225 T 972.241.8300 F 972.241.7955
FORT WORTH
1200 Summit Avenue Suite 300 Fort Worth, Texas 76102 T 817.710.1110 F 817.810.9017
www.holtlunsford.com
HOUSTON
11451 Katy Freeway Suite 300 Houston, Texas 77079 T 713.850.8500 F 713.850.8550