Download as PDF, PPTX
Uploaded byColliers International | Houston
TRENDS 2017 Houston Slides
This document contains multiple charts and graphs summarizing real estate market trends in Houston, Texas from 2001 to 2016. It shows that drilling permits and rig counts in Texas peaked in the late 2000s and declined sharply after 2014. Houston gained over 100,000 jobs annually from 2009 to 2013 but saw job losses in the energy sector after 2014. Office vacancy rates doubled during the 1980s with an increase in inventory but have since declined. The industrial, retail, and multifamily sectors have been more stable with steady absorption and occupancy rates. The outlook for 2017 is for leveling vacancy rates in office and flat or increasing rents across property types.
More Related Content
More from Colliers International | Houston
TRENDS 2017 Houston Slides
- 2. 2017 0 5,000 10,000 15,000 20,000 25,000 30,000 2001 2002 20032004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Texas Drilling Permits Energy
- 3.
- 4. 2017 “For every oilfieldjob created – two jobs are created in Houston” - Dr. Ray Perryman, the Perryman Group - 2012 Jobs -111 49,800 83,200 118,600 89,800 117,800 15,200 14,800 -20,000 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 2009 2010 2011 2012 2013 2014 2015 2016 Houston-Sugar Land-Baytown Annual Job Growth
- 5. 2017 -5.0% -1.7% -7.5% -2.0 -1.3% -0.3% 0.8% 2.3% 1.6% 3.7% -15,000 -10,000 -5,0000 5,000 10,000 15,000 20,000 Construction Professional and Business Services Mining and Logging Manufacturing Other Services Information Financial Activities Government Trade, Transportation and Utilities Education and Health Services Houston 2016 Annual Job Growth Energy An estimated 80,000+ energy industry jobs lost after 2014 Jobs
- 6. 2017 Houston Office –230.8M SF Houston’s office inventory doubled between 1982-1988 causing the vacancy rate to soar from 5.7% to 28.4% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% $0 $20 $40 $60 $80 $100 $120 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD2016 Houston Office Vacancy WTI Crude Oil Annual Average Price Avg. Annual WTI Crude Oil Price Houston Historical Office Vacancy doubled office inventory
- 7. 2017 Office Big Picture– End of Q4 • Total Market – 230,820,000 SF • Vacancy up 40 basis points Q3 – Q4 • Vacancy up 220 basis points Y-Y • Negative net absorption decreased Q3 to Q4 from -300,000 SF to -100,000 SF • Available sublease space contracted Q3 – Q4 • Construction pipeline increased marginally Q3 – Q4 but decreased significantly Y-Y • No deliveries in Q4
- 8. 2017 Houston Office –230.8M SF 11.4M SF of Available Sublease Space Q4 2016 available sublease space decreased for the first time since Q2 2014
- 9. 2017 Houston Office –230.8M SF Forecast Vacancy rates should level off in 2017 and rents will remain flat
- 10. Confidential – ColliersInternational 2016 2017 Average Class A Vacancy: 18.1% Houston Office Class A Submarket Vacancy Q4 2016 Vacancy Rate 0.0% - 16.1% 16.2% - 18.1% 18.2% - 20.1% 20.2% - >
- 11. Confidential – ColliersInternational 2016 20172017 Average Cap Rate (Yield)Average Price ($) Per SF Data Source: Houston Office – 230.8M SF Sales by Total ($) (mil) 0 1,000 2,000 3,000 4,000 5,000 6,000 Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14 Q4 '15 Q4 '16 Rolling 12-mo. Total Quarterly Vol. 0 50 100 150 200 250 300 Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14 Q4 '15 Q4 '16 Houston United States 3% 5% 7% 9% 11% Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14 Q4 '15 Q4 '16 Houston United States
- 12. Confidential – ColliersInternational 2016 20172017 Industrial Big Picture – End of Q4 • Total Market – 534,962,373 SF • Vacancy low at 5.6% up 10 bps Q3 – Q4 ; • Vacancy up 60 bps Y - Y • 9.1M SF absorbed in 2016. Daikin Applied America + 3.9M SF in the NW corridor. • Several large B2S distribution facilities under construction – FedEx 800,000 SF in the NW Outlier corridor Two 500,000 SF buildings for Ikea in the ESE Far corridor.
- 13. Confidential – ColliersInternational 2016 20172017 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% $5.00 $5.50 $6.00 $6.50 $7.00 $7.50 Houston Average Rent Houston Average Vacancy Houston Industrial – 534.9M SF Forecast
- 14. Confidential – ColliersInternational 2016 2017 Average Industrial Vacancy: 5.6% Houston Industrial Submarket Vacancy Q4 2016 Vacancy Rate 0.0% - 3.6% 3.7% - 5.6% 5.7% - 7.6% 7.7% - >
- 15. Confidential – ColliersInternational 2016 20172017 Sales by Total $ (mil) Data Source: Average Cap Rate (Yield)Average Price ($) Per SF Houston Industrial – 534.9M SF 0 500 1,000 1,500 2,000 2,500 Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14 Q4 '15 Q4 '16 Rolling 12-mo. Total Quarterly Vol. 0 20 40 60 80 100 Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14 Q4 '15 Q4 '16 Houston United States 3% 5% 7% 9% 11% Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14 Q4 '15 Q4 '16 Houston United States
- 16. Confidential – ColliersInternational 2016 20172017 Retail Big Picture – End of Q4 • Total Market – 281,610,093 SF • Absorption down due to limited (quality) available space • 2.4M SF under construction, 75% pre-leased • Galleria upscale renovation sparked by high-end tenants moving to River Oaks District.
- 17. Confidential – ColliersInternational 2016 20172017 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% Houston Average Vacancy Houston Retail – 281.6M SF Forecast
- 18. Confidential – ColliersInternational 2016 20172017 Retail Under Construction 2.4M SF 75% Pre-Leased Grand Parkway Dominant Largest Projects: Fairfield Town Center Simon 374,000 SF 100% Pre-Leased Paragon Outlets Lightstone 300,000 SF
- 19. Confidential – ColliersInternational 2016 2017 Active Larger (Anchor) Tenants
- 20. Confidential – ColliersInternational 2016 20172017 Sales by Total $ (mil) Average Cap Rate (Yield)Average Price ($) Per SF Data Source: Houston Retail – 281.6M SF 0 500 1,000 1,500 2,000 2,500 Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14 Q4 '15 Q4 '16 Rolling 12-mo. Total Quarterly Vol. 0 50 100 150 200 250 Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14 Q4 '15 Q4 '16 Houston United States 3% 5% 7% 9% 11% Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14 Q4 '15 Q4 '16 Houston United States
- 21. Confidential – ColliersInternational 2016 20172017 Multifamily Projects Under Construction 15,933 units in 61 projects #1 - 2016 #3 - 2017
- 22. Confidential – ColliersInternational 2016 20172017 Multifamily Big Picture – End of Q4 Total Market – 626,027 Units Absorption is down – Demand is stabilizing Under Construction – Inner Loop Hot Spot Developers pushing new projects to 2018
- 23. Confidential – ColliersInternational 2016 20172017 80.0% 85.0% 90.0% 95.0% 100.0% $600 $700 $800 $900 $1,000 Houston Average Rent Houston Average Occupancy Houston Multifamily – 626.0K Units Forecast
- 24. Confidential – ColliersInternational 2016 20172017 Data Source: Average Cap Rate (Yield)Average Price ($) Per Unit Sales by Total $ (mil) Houston Multifamily 537.8K Units 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14 Q4 '15 Q4 '16 Rolling 12-mo. Total Quarterly Vol. 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14 Q4 '15 Q4 '16 Houston United States 3% 5% 7% 9% 11% Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14 Q4 '15 Q4 '16 Houston United States
- 25. Confidential – ColliersInternational 2016 20172017 • Consultants back log continues to dwindle. • Some firms are branching out supporting markets outside Houston while others are supplementing national account requirements with local personnel. • The general contracting community chasing new markets to supplement the lack of new ground up projects as well as the tenant improvement sector. • Sublease office tenant improvement market has limited significant construction allowances. • Residential construction continues to thrive in “premium” locations. Medical and retail have not been adversely affected by the current downturn. • The number of proposals received in individual trades has increased, pointing to increased interest in upcoming work. • Companies are looking to trim costs without affecting production. This has not translated to any significant decrease in recognized cost. • Long lead delivery times for critical path material and equipment continues to drive completion dates. Construction Comments
- 26. Confidential – ColliersInternational 2016 2017 Office Retail Industrial Apartment Phase I Recovery Phase II Expansion Phase IV Recession Phase III Oversupply Rent Increasing Rents Decreasing Above Long- Term Avg. Occupancy Below Long-Term Avg. Occupancy SELL HOLD BUY Houston Commercial Real Estate Market Cycle
- 27. Thank you, havea great 2017.