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Market Information: Houston

 

 

Economy:  First Quarter 2008

Continued Strength

Total payroll employment growth swelled to 95,300 jobs in Houston--a 3.9% rate of growth--for the 12 months ending January 2008.  The current job growth more than doubles Houston’s long-term average of 41,000 jobs.

The Houston metro unemployment rate was 4.2% in December 2007, up from 4.0% in December 2007, but down from a cyclical high of 7.6% in the summer of 2003. The national unemployment rate was 5.0% in December 2007.

 

Office Market:  First Quarter 2008

Office Market Conditions Hold Steady

The office market held steady in the Houston metro in the 1st quarter of 2008, with the overall vacancy rate of 10.9% below the national average of 11.3%. Vacancy remained unchanged from the previous quarter.  Houston’s job market grew at a robust 3.9% in the 12 months ending in January 2008, which helped drive demand for office space.

Highlights:

  • Net absorption of office space in the Houston metro area remained robust, totaling 838,000 SF in the 1st quarter 2008, representing the 10th consecutive quarter of positive absorption.
  • Available sublease space decreased by 209,000 SF in the Houston metro area during the 1st quarter 2008 and now represents just 0.6% of standing inventory.  
  • The overall office vacancy rate in the Houston metro was 10.9% at 1st quarter 2008, unchanged from the previous quarter but below the 11.5% vacancy recorded in the 1st quarter of 2007.  The direct vacancy rate was 10.3% at 1st quarter 2008. 
  • There is 7.6 million SF of office space under construction or renovation in the Houston metro area in the 1st quarter 2008, up from 6.5 million SF at year-end 2007 and 3.9 million SF a year ago.
  • Houston office deliveries (including renovations) totaled 934,000 SF in the 1st quarter of 2008, a 47% increase from the 636,000 SF at year-end 2007.  64% was leased upon delivery.
  • Class A office rents continued to produce strong gains and rose at an annualized rate of 16.3% in the 1st quarter 2008 and Class B rents rose an annualized 7.8%. Class A asking rents averaged $26.52/SF, full service; Class B asking rents averaged $18.73/SF, full service.
  • Office investment sales totaled $187 million in the 1st quarter 2008 – down from the $448 million sales volume recorded in the 1st quarter of 2007. Sales prices averaged $147/SF in the 1st quarter of 2008, down slightly from the $148/SF achieved in all of 2007.

 

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Industrial Market:  First Quarter 2008

1st Quarter Absorption Positive But Moderating

Highlights:

  • Net absorption of industrial space totaled 1.5 million SF in the 1st quarter of 2008, down from 3.7 million SF achieved the previous quarter, but up from 1.1 million SF absorbed in the same quarter one year earlier.    
  • The overall Houston metro industrial vacancy rate increased 30 basis points to 5.4% in the 1st quarter 2008, from 5.1% at year-end 2007, but is down 80 basis points from 6.2% a year ago
  • There is 7.4 million SF of industrial space under construction in metro Houston in the 1st quarter of 2008, up from 5.6 million SF at year-end 2007 and 5.8 million SF a year ago.  
  • Deliveries of industrial space in Houston totaled 1.5 million SF in the 1st quarter 2007, down from 2.9 million SF of deliveries a year ago.
  • Industrial rents have held steady thus far in 2008.
  • Industrial investment sales volume totaled $44 million in metro Houston in the 1st quarter 2008, far below the $282 million volume achieved one year ago. Industrial sale prices averaged $68/SF in the 1st quarter of 2008. 


Retail Market:  Mid-Year 2007

Population and Job Growth Continue to Fuel Retail Demand

Highlights:

  • The Houston metro area’s population grew from 4.74 million people in 2000 to 5.54 million in 2006, an increase of 16.9% in six years.
  • The Houston metro area has added 4,000 retail jobs in 2007.
  • The Houston metro area has 137 million square feet of retail inventory, or 24 SF per capita – well above the national average of 17 SF. 
  • Net absorption of retail space though mid-year 2007 was 918,000 SF.
  • Houston’s retail vacancy slightly increased to 14.6% in the 2nd quarter 2007.
  • Retail rents decreased for the first time in three quarters, dropping to $1.61/SF. 

To view and/or download the most recent snapshot report in an Adobe Acrobat file, click here.

To view and/or download a full sample report in an Adobe Acrobat PDF file, click here.

 

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