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Apartments Single-Family Housing Permit Issuance Office Buildings Retail Centers Industrial Facilities Vacant Land Economic & Financial News Potpourri Click here for a PDF (printable) version of this report.

Apartments

According to www.oconnordata.com, December 2009 O’Connor & Associates data indicates that Greater Houston apartment market occupancy has decreased 0.03 percentage points from the previous month and is currently 85.80% occupied, while overall rents edged up $0.001 to $0.881 per square foot.  Class A ($1.164) and D ($0.628) showed an increase of $0.001 each from November’s rates.  Class C rates have not changed this month and are currently $0.720, while Class B ($0.836) showed a decrease of $0.001 from November’s rates.  Pre-leasing is currently underway in twenty-three communities (6,856 units) city-wide. The rate of decline in overall occupancy is slowed down as the supply pipeline continues to diminish through both deliveries and new projects being placed on hold. However, given historic absorption levels for the Houston metro area, it could be years until we reach 90% again.

Apartment Developments

• No apartment developments were recorded for the month of December.
  
  

The following chart illustrates historical apartment rental rates.

Apartment Sales

• Brickhaven Apartments LP, an entity of the Houston-based Pryzant Management (713-295-7800), has purchased a 32-year-old, three-property, 780-unit multifamily portfolio, located at 8800-9000 Fondren Road in Sharpstown/Westwood submarket (530R), from the Atlanta-based Trimont Real Estate Advisors (404-420-5600). Brickhaven I (3167) is a 24-building, 242-unit Class B apartment complex, currently 60% occupied with average rents of $0.70 per square foot.  Brickhaven II (3174) is a 24-building, 272-unit Class-B apartment complex, currently 60% occupied with average rents of $0.69 per square foot.  Brickhaven III (16991) is a 24-building, 266-unit Class-B apartment complex, currently 60% occupied with average rents of $0.71 per square foot.  David Wylie of Apartment Realty Advisors arranged the deal between the buyer and seller.
  

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Single-Family Housing

MLS home sales decreased further in November as 3,721 existing homes were sold, compared to 4,049 homes sold last month, according to the Houston Association of Realtors (HAR).  Nevertheless, sales for November 2009 were significantly up 34.8% from November 2008.  The median price of an existing single-family home sold in November was $142,000, up 13.6% from the same time last year, while the average home price – $182,883 – was up 12.3% from the November 2008 level.
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Note: MLS sales include primarily existing home sales throughout the Houston region. Historical comparisons are offered solely for informational purposes and may not truly reflect growth in sales

According to American MetroStudy, net sales of new homes dropped in November to 537, and are down 15% from November 2008.  Realtor co-op sales represented 65.1% of gross sales for the month, but are down 25% from October.  Traffic declined 16% from last year to 11,501 in November 2009.  The inventory of completed speculative homes (1,061) is down nearly 42% from September last year.  There are 346 spec homes under construction, which is up nearly 2% from November 2008.  Overall, the 1,407 specs (both completed and under construction) are down 64% from November 2008.
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Note: the 23 homebuilders in this survey account for approximately 55% of housing starts in Houston.

Nationwide sales of new single-family homes decreased in November to a seasonally adjusted annual rate of 355,000 – 11.3% below the revised October sales rate of 400,000 and 9.0% below the November 2008 figure – according to a release by the U.S. Department of Commerce.  The median sales price in November was $235,000.  Privately owned housing starts were at a seasonally adjusted annual rate of 574,000 in November 2009, which is 8.9% above the revised October estimate but 12.4% below the revised November 2008 rate.  Privately owned housing completions were at a seasonally adjusted annual rate of 810,000 in November, 8.7% above the revised October figure but 25.3% below the revised November 2008 figure.

The National Association of Home Builders/Wells Fargo Housing Market Index, a monthly measure of builder confidence, decreased to 16 in December, on a scale where any number greater than 50 indicates that builders view sales as more good than poor.  The index measuring current sales of new single-family homes decreased to 16, the index measuring sales expectations for the coming six months decreased to 26, and the index measuring the traffic of prospective buyers is currently at 13, unchanged from the revised November figure.

According to the National Association of Realtors (NAR), 6,540,000 existing homes were sold in November 2009, up 7.4% from October sales and up 44.1% from the 4,540,000 homes sold in November 2008.  The median sale price was $172,600, which represents a 4.3% decrease from sale prices last year.

According to the most recent report by RealtyTrac, 306,627 foreclosure filings — default notices, auction sale notices, and bank repossessions — were reported during the month of November 2009.  This figure is down 8% from the previous month but up 18% from November 2008.  Texas is among the nation’s 24 highest states in total foreclosure filings in November 2009.

The following chart illustrates historical existing home sales.

Source: Houston Association of Realtors

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Permit Issuance

The City of Houston issued permits to build 262 private single-family houses and 3 private multifamily buildings in December.  Demolition permits were issued for 95 private single-family houses and 81 multifamily structures.  In addition, 128 permits were issued for privately owned non-residential construction totaling $58,661,721 and 11 permits were issued for public non-residential construction.  Additions, alterations, and conversions totaled $114,502,408 for the private sector and $16,167,185 for the public sector.

Cost of Construction*
	2007	2008	2009
Month of December	$440,852,134	$315,128,152	$262,739,126
Year-to-Date	$5,539,413,158	$5,527,723,836	$3,728,401,102

*The figures in this section include all categories of buildings and non-building structures

*The figures in this section include all categories of buildings and non-building structures

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Office Buildings

According to the O’Connor & Associates Third Quarter 2009 Houston Office Data Program, citywide occupancy for Houston area multi-tenant office buildings is 82.91% (Class A = 84.75%; Class B = 82.07%; Class C = 79.69%; Class D = 76.29%).  The citywide quarterly multi-tenant office rental rate is $19.75 per square foot (Class A = $22.60; Class B = $17.87; Class C = $14.22; Class D = $10.78).
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Note: The office buildings listed herein are followed by their representative sector code and identification number as they appear in the O’Connor & Associates OfficeLink Online Data platform and are provided for subscriber cross-referencing. The property information contained within this database is updated on a monthly basis and accessible over the web. (Please contact us for more details.)

Office Developments

• No office developments were recorded for the month of December.
  

The following chart illustrates historical office rental rates.

Office Sales

• Fausset-Neely Northwest One LLC (805-643-9358) has purchased Northwest One Bldg (1295), a 125,000-square-foot Class A office building located at 13100 Northwest Freeway in the North Loop submarket (450D), from Los Angeles-based RPD Catalyst LLC (310-557-1311).  The 27-year-old, six-story building is currently 44% leased with asking rents at $17.00 per square feet.  Rudy Hubbard and Leah Gallagher of Transwestern Commercial Services brokered the deal.
  
  
• Y & Y Pasadena Holdings LLC has purchased Pasadena Medical/Surgical Clinic (1654), a 35-year-old, 30,000-square-foot medical office building located at 524 Pasadena Boulevard in Pasadena (536M), from GSL Investments Inc (713-952-7000).  Jonathan Adler of Realty Associates represented the buyer, while Marshall Clinkscales and Coy Davidson of Colliers International represented the seller.
  
  
• Moheb Mohammad et al has purchased Houston Business Park 1 (1360), a 37-year-old, 26,000-square-foot medical office building located at 8829 Long Point Road in North Loop (450V), from Gusma Properties (713-461-4161).  The buyer was self-represented, while Maury Bronstein of The Situs Cos represented the seller.
  

Office Leases

• Vitruvian Exploration LLC (713-346-2500) has leased 15,333 square feet at 4 Waterway Square (2461), a 216,000-square-foot Class A office building located at 4 Woodloch Forest Drive in The Woodlands (251H), from The Woodlands Development Co. (281-719-6273).  The nine-story, newly built building is about 30% leased with asking rents at $26.00 per square foot.  Frank Onorato of Grubb & Ellis represented the tenant, while Dennis Conine of Conine & Associates represented the landlord in the negotiations.
  

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Retail Centers

According to the O’Connor & Associates Third Quarter 2009 Houston Retail Data Program, citywide occupancy for Houston area multi-tenant retail buildings is 82.98% (Regional = 87.77%; Community = 86.15%; Neighborhood = 80.79%; Strip = 77.17%).  Occupancy is down 0.33 points over the last quarter and down 0.89 points over the third quarter 2008.  The citywide quarterly multi-tenant retail rental rate is $1.64 per square foot (Regional = $2.91; Community = $1.66; Neighborhood = $1.24; Strip = $1.27).
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Note: The retail centers listed herein are followed by their representative identification number as they appear in the new O’Connor & Associates RetailLink Online Data platform and are provided for subscriber cross-referencing. The property information contained within this database is updated on a monthly basis and accessible over the web. (Please contact us for more details.)

Retail Developments

• Sharpstown Mall Texas LLC (713-777-5391) and manager Grupo Zocalo, a subsidiary of Houston-based Boxer Property Management Corp (713-777-7368) have announced a $10-million revitalization and rebranding plan for their Sharpstown Mall (1938), a 48-year-old, 638,000-square-foot regional shopping center located at 7500 Bellaire Boulevard near southwest Houston (530G).  As part of the plan, the center is being renamed as “PlazAmericas” to reflect the area’s community.  Post-revitalization, the center will include new signs, a children’s play area and an 83,000-square-foot Mercado (marketplace) featuring stores, small businesses, multiple stages for live entertainment, a large family lounge, and play area.
  

The following chart illustrates historical retail rental rates.

Retail Sales

• Pacific Retail Capital Partners LLC (310-641-8060) has purchased West Oaks Mall (1291), a 25-year-old, 1,070,000-square-foot regional shopping center located at 14700 Westheimer in far west Houston (487V), from special servicer LNR Partners Inc (305-695-5500).  Robert Williamson and Rusty Tamlyn of Holliday Fenoglio Fowler arranged the deal between the buyer and seller.
• Roberts Carpets and Fine Floors (713-926-7200) has purchased Circuit City (316), a 15-year-old, 23,000-square-foot retail center located at 20465 Eastex Freeway in Humble (335Q), from CC Acquisitions LP, an entity of New York Life Insurance Co (212-576-7000).  Mike Frankoff of Center Real Estate Group represented the buyer, while Matt Keener of CB Richard Ellis represented the seller.
  

Retail Leases

• Tuesday Morning (972-387-3562) has leased 19,916 square feet at Westheimer Commons (1299), a 249,000-square-foot community shopping center located at 2575 S Diary Ashford Street in far west Houston (488V), from Centro Properties Group (713-660-4328).  The 25-year-old center is over 66% occupied with asking rents of $1.10 per square foot.  Greg Bracchi of Edge Realty Partners represented the tenant, while Kay Walker represented the landlord in-house.
  

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Industrial Facilities

According to the O’Connor & Associates Third Quarter 2009 Houston Industrial Data Program, citywide occupancy for Houston area operating multi-tenant industrial facilities is 81.80% (Flex = 80.32%; Bulk = 81.04%; Manufacturing = 85.11%, Service = 85.23%, Distribution = 73.97%, R&D = 72.97%).  Occupancy is down 0.17 points over the last quarter and down 1.40 points over the third quarter 2008.  The overall quarterly rental rates decreased $0.03 ending at $0.40 per square foot (Flex = $0.44; Bulk = $0.34; Manufacturing = $0.40, Service = $0.52, Distribution = $0.31, R&D = $0.94).
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Note: The industrial facilities listed herein are followed by their representative identification number as they appear in the O’Connor & Associates IndustrialLink Online Data platform and are provided for subscriber cross-referencing. The property information contained within this database is updated on a quarterly basis and accessible over the web. (Please contact us for more details.)

The following chart illustrates historical industrial rental rates.

Industrial Developments

• No Industrial developments were recorded for the month of December.
  

Industrial Sales

• Monmouth Real Estate Investment Corp. (732-577-9996) has purchased 16211 Air Center Blvd (651), a 91,295-square-foot office/warehouse facility located in far north Houston (373L), for $8.1 million from InSite CG LP (713-339-1300).  The 12-year-old facility is fully leased to the subsidiary of National Oilwell Varco (713-375-3700).  Darren Sides of Porthaven Partners brokered the deal between the buyer and seller.
  
  
• Undisclosed buyer has purchased Parkans International Inc. (1422), a 54-year-old, 26,000-square-foot office/warehouse facility located at 5521 Armour Drive near southeast Houston (494Q), from Woodward Barry, an entity of Tire Source Inc. (713-674-7550).  Dan Nip of PMI Inc. represented the buyer, while Travis Land and Michael Keegan of NAI Houston represented the seller in the transaction.
  
  
• Steelvest 9600 (713-672-7595) has purchased Truck Parts Specialists (145), a 37-year-old, 24,000-square-foot warehouse located at 9600 N Loop E near north Houston (495C), from Kastleman Lester Trustee (713-963-0077).  Fred Sklar of Sklar Realty Services represented the buyer, while the seller was represented in-house.
• J-Kraft (281-876-2535) has purchased a 16-year-old, 19,200-square-foot warehouse facility (TBA) located at 3040 Greens Road in far Houston (374N), from Bico Drilling Tools (281- 590-6694).  Mike Spears of The National Realty Group represented the buyer, while Rich Norris of Greenbriar Real Estate represented the seller.
  

Industrial Leases

• GMI Mann Warehouse (713-675-1701) has leased 38,400 square feet at Market-McCarty Dist. Ctr (1635), a 31-year-old, 355,404-square-foot warehouse located at 8000 Market Street near southeast Houston (495E), from Teachers Insurance and Annuity Association of America – TIAA-CREF (832-681-7400).  Blake Gibson of Colliers International represented the tenant, while Edward Bane and John Kruse of Holt Lunsford Commercial represented the landlord.
  
  
• Mascorp Ltd. (713-465-0304) has renewed and expanded its lease to a total of 43,298 square feet at Clay-Campbell 2 (5449), a 27-year-old, 58,846-square-foot warehouse located at 4300-4320 Campbell Road near northwest Houston (450F), from EastGroup Properties (281-987-7200).  John Ferruzzo and Chris Kugle of NAI Houston represented the tenant, while Rives Nolen of InSite Commercial Realty represented the landlord.
  

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Vacant Land

• Pointsmith (281-582-1200) has purchased 10 acres of land, located north of Interstate 10 along Mason Road within PrimeWest Business Park in west Harris County (445V), from The Situs Cos (713-328-4400).  The Urban Cos. (832-214-2288) is going to design and build a 241,625-square-foot building at this location to serve as the buyer’s new Houston headquarters for its advertising and promotional services business.  Jonathan D. Farris of Cushman & Wakefield represented the buyer, while Martin Bronstein and John S. Wall Jr. represented the seller in-house.
  
  
• Fairbanks Ventures Inc has purchased 4 acres of land, located at 6942 Fairbanks in north Houston (453D), from the Estate of Levi A. Guhn.  Rigo Juarez of Global Investment Realty represented the buyer, while Chris Kugle and John Ferruzzo of NAI Houston represented the seller.
  

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Economic & Financial News

The total number of nonagricultural wage and salary jobs in the ten-county Houston area increased by about 9,300 jobs to 2,534,900 in November 2009, according to the U.S. Department of Labor.  This month’s total is 88,900 fewer jobs than the 2,623,800 jobs at this time last year.  Of nonagricultural employers, the Trade, Transportation, and Utilities sector posted the largest gain over the month at 10,100 jobs, while the largest year over year increase occurred in the Education and Health Services sector, which added 6,900 jobs.

The following chart illustrates total non-agricultural employment in the Houston MSA.

Source:  Bureau of Labor Statistics (BLS)

Advance estimates reported by the U.S. Department of Commerce show that seasonally adjusted national retail and food services sales for November 2009 were $352.1 billion, an increase of 1.3% from October and 1.9% above November 2008.  Retail trade sales in November were up 1.4% from October and 2.2% above last year’s level.

Personal income increased $49.7 billion, or 0.4%, and Disposable Personal Income (DPI) increased $54.1 billion, or 0.5%, in November 2009, according to the Bureau of Economic Analysis.  Personal Consumption Expenditures (PCE) increased $47.9 billion, or 0.5%, in November 2009.  Meanwhile, the U.S. Department of Labor reports that the seasonally adjusted Consumer Price Index (CPI) for urban consumers increased 0.4% in November 2009 and is 1.8% higher than November 2008.  The year-over-year increase in November 2009 is the first positive change since February 2009.

The latest Conference Board Survey indicates that the Consumer Confidence Index increased further to 52.9 in December 2009, up 2.3 points from November.  The index is an indicator of consumers’ overall assessment of current conditions, relative to a figure of 100 in 1985, the base year.  The Index of Leading Economic Indicators increased 0.9% in November, following a 0.3% increase in October and 1.2% in September.  The index is an indicator of direction the economy is expected to take in coming months, relative to a figure of 100 in 1996, the base year.

According to the Federal Reserve, industrial production increased 0.8% in November 2009 from previous month but is down 5.1% from the November 2008 level.  Output in the manufacturing sector increased 1.1% and output at mines increased 2.1%, while output of utilities decreased 1.8% in November.  The rate of industrial capacity utilization was 71.3% in November, which is up 0.7% from October’s revised level but down 0.9 points compared to the previous year’s level.

Freddie Mac reports that the 30-year fixed-rate mortgage (FRM) averaged 4.93% in December 2009, up 0.05 points from November but down 0.36 points from one year ago.  The average for the 15-year FRM averaged 4.39% in November 2009, up 0.05 points from November but down 0.65 points from December 2008.

The Bureau of Economic Analysis (U.S. Department of Commerce) reports that third estimates of the real GDP, the output of goods and services produced by labor and property in the United States, increased at an annual rate of 2.2% in the third quarter of 2009.  This increase in GDP in the third quarter primarily reflected positive contributions from personal consumption expenditure (PCE), exports, residential fixed investment, private inventory investment, and federal government spending.

The U.S. Department of Commerce reports that construction spending during November 2009 was estimated at a seasonally adjusted annual rate of $900.1 billion, which is 0.6% below the revised October 2009 estimate ($905.6 billion).  The current figure is 13.2% below the November 2008 estimate of $1,037.3 billion.  Private residential construction was at a seasonally adjusted annual rate of $250.7 billion in November, 1.6% below the revised October estimate of $254.9 billion.

The Baker Hughes count of active domestic rotary rigs stands at 1,172 for December 2009.  The current rig count is down nearly 34.3% from last year’s figure of 1,782 rigs.  The rotary rig count is a census of the number of drilling rigs actually exploring for or developing oil or natural gas in the United States.

The National Restaurant Association’s Restaurant Performance Index (RPI) stood at 97.8 in November, down 0.2 percent from the previous month.  The index is a monthly composite index that tracks the health and outlook for the U.S. restaurant industry.  This is the 25th consecutive month below 100, indicating contraction in the index of key industry indicators.

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Potpourri

According to the monthly Monster Worldwide, Inc employment index, online job demand decreased by 4 points in the month of December.  The index currently stands at 115 and is 16 points below December 2008, a decrease of nearly 12.21%.  Nevertheless, online demand for workers increased in 26 of the 28 major U.S. metro markets.

According to the November 2009 Architecture Billings Index, developed by the American Institute of Architects, November reported an index of 42.8, down 3.3 points from the previous month (any score above 50 indicates an increase in billings).  Both the project inquiries index and the inquiries for new projects score remained unchanged at 58.5.

1100 Louisiana (64), a 1,407,375-square-foot, Class A office tower developed and owned by Hines Interests (713-237-5657), has been awarded LEED™ Gold certification for Existing Buildings: Operations and Maintenance Green Building Rating System™ by the U.S. Green Building Council.  Sustainable features currently at the property include reduced heat island effect, reduced nighttime light pollution, comprehensive commissioning, a 31.5 percent reduction in indoor potable water use, building waste diversion of 50%, and green cleaning.  This 55-story, 29-year-old multi-tenant property, located in Central Business District (493Q), was designed by Skidmore, Owings & Merrill (312-554-9090) and last renovated in 2001.  The property is managed and leased by Hines, while the EcoServices group of Kirksey Architecture (713-850-9600) provided expert assistance to Hines in managing the administrative aspects of the certification process.  It is currently 98% leased to tenants including Enterprise Products, Forest Oil Company, King & Spalding, Enbridge Midcoast Energy, and Vitol Inc.

The Houston office of SpawMaxwell (713-222-0900) has completed the first phase of expansion/renovation works at Julia Ideson Library, an 83-year-old, 66,000-square-foot historic landmark building, located at 500 McKinney Street in Central Business District (493L), for the City of Houston.  The primary additions to the building in this phase include: a four-story, 21,500-square-foot archival wing with a research room on the first floor and high-density shelving space for the Houston Metropolitan Research Center on the remaining floors; and a two-story loggia that offers an open-air seating, an outdoor reading room, and a garden.  This new wing is expected to be opened for the public in the first quarter of 2010 as soon as the archives are moved into it.  Second and final phase construction will begin with completion of the entire $32 million project scheduled for spring 2011.  Subsequently, the project will be applying for LEED™ Silver certification.  The project’s architect is Gensler (713-844-0000), while landscape architectural services are being provided by TBG Partners Inc. (713-439-0027).

Kimberly Hickson and Lisa Pope Westernman have joined the architecture firm Gensler (713-844-0000) as Project Director and Regional Education Practice Area Leader and Design Director, respectively, in the firm’s Houston hospitality and retail studios.  The Situs Cos (713-328-4400) has appointed Jan Sternin as Global Managing Director of Business Development.

Please direct any questions regarding content in the Houston Real Estate Trends to Scott Sherrill at 713-375-4264 or ssherrill@poconnor.com.

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