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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, February 2009 O’Connor & Associates data indicates that Greater Houston apartment market occupancy has decreased 0.33 percentage points from the previous month and is currently 86.76% occupied, while overall rents edged up $0.001 to $0.872.  Class A rates enjoyed the largest increase over the month ($1.169) from January’s rate ($1.166), while Class B and C showed an increase of $0.001 from January’s rate, ending at $0.830 and $0.708, respectively. Class D rates held steady this month and are currently $0.614.  Pre-leasing is currently underway in forty-four communities (12,767 units) city-wide.  As these communities are completed and delivered to market, the construction pipeline will significantly decrease, displaying the effects of the constrained lending market.       ____________________ Note: The multifamily projects listed herein are followed by their representative identification number as they appear in the new O’Connor & Associates ApartmentLink 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).

The following chart illustrates historical apartment rental rates.

Apartment Sales Golden Bank NA (713-777-3838) foreclosed on Park Hollow Apartments (3960), from Demoss Interests (281-235-8311), a 171-unit Class C complex located at 4343 South Shaver in Pasadena (576G).  The 38-year-old complex was renovated in 2002 and is currently 93% leased with average rents at $0.76 per square foot.  back to top

Single-Family Housing

MLS home sales declined in January as 2,367 used homes were sold according to the Houston Association of Realtors (HAR).  Sales for January 2009 were down 19.6% from January 2008.  The median price of a used single-family home sold in November was $117,000, down 8.6% from the same time last year, while the average home price was $147,646, which was down 14.5% from the January 2008 level.  Note: MLS sales include primarily used 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 increased 64% in January to 1,196 from 725 in December, but are down 21% from January 2008.  Realtor co-op sales represented 61.0% of gross sales, up from 58% during January of last year.  Traffic decreased 19% from last year to 16,999 in January 2009.  The inventory of completed speculative homes (1,977) is down 2% from last year.  There are 1,192 spec homes under construction, which is down 28% from January 2008.  Overall, the 3,169 specs (both completed and under construction) are down 14% from January 2008.  Note: the 24 homebuilders in this survey account for approximately 60% of housing starts in Houston.
Nationwide sales of new single-family homes decreased in January to a seasonally adjusted annual rate of 309,000, 10.2% below the revised December sales rate of 344,000 and 48.2% below the January 2008 figure, according to a release by the U.S. Department of Commerce.  The median sales price in January was $201,100.  Privately owned housing starts were at a seasonally adjusted annual rate of 521,000 in January 2009, which is 4.8% below the revised December estimate, and 50.5% below the revisedJanuary 2008 rate.  Privately owned housing completions were at a seasonally adjusted annual rate of 776,000 in January, 24.2% below the revised December figure and 41.7% below the revised January 2008 figure.


The National Association of Home Builders/Wells Fargo Housing Market Index, a monthly measure of builder confidence, increased a point to 9 in February, 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 increased a point at 8, the index measuring sales expectations for the coming six months declined by two to 15 and the index measuring the traffic of prospective buyers is currently at 11, up three from the January.
According to the National Association of Realtors (NAR), 4,490,000 existing homes were sold in January 2009, down 5.3% from December sales and 8.6% from the 4,910,000 homes sold in January 2008.  The median sale price was $ 170,300, which represents a 14.8% decrease from sale prices last year.

The following chart illustrates historical used home sales.

Source: Houston Association of Realtors

• Choice Homes (281-377-5100) a Fort Worth-based Texas home builder is planning to shut down operations statewide.  Primarily an entry-level home builder, the current economic challenges proved to be too much for the company to overcome.  The builder has indicated that they will refund all deposits to contracted buyers that choose not to proceed with their purchases.  Moreover, the company will not look to file for bankruptcy.  Choice Homes is currently operating in 18 Houston area communities with prices ranging from the $100’s to $195’s.
  
  
• Vincent Kickerillo (281-752-4749) has cancelled plans for Central Park, a 750-acre master-planned community within Riverstone.  Questions and concerns over the amount of commercial and multi-family components ultimately created an additional barrier of timing that has sidelined the development.     

According to the O’Connor & Associates Fourth Quarter 2008 Houston Office Data Program, citywide occupancy for Houston area multi-tenant office buildings is 85.46% (Class A = 90.37%; Class B = 82.18%; Class C = 80.22%; Class D = 77.09%).  The citywide annual multi-tenant office rental rate is $24.29 per square foot (Class A = $31.40; Class B = $19.24; Class C = $15.05; Class D = $12.38). ________________ 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 HE Capital (281-287-5000) is re-developing and re-naming One Sugar Creek Place to The Lake Corporate Center (1481), a 515,000-square foot Class A office building located at 14141 Southwest Freeway in Sugar Land (568R).  The 27-year old building is currently fully occupied by Unocal/Chevron, but will be vacant in April 2010.  Improvements will be made to the lobby, entrance and elevators.  Chip Colvill and Michael Anderson of Colvill Office Properties have been retained to market the property. Office Sales Fuller Realty Partners (713-850-8400) purchased Bridgestone I (1270), a 137,000-square-feet Class B building located at 2600 North Loop in Houston (452S), from Christus Health (214- 492-8500).  The 32-year old facility is currently vacant with asking rents of $15.00 per square foot.   The buyer was represented by Jay Kyle of Colliers International, while Bob Parsley and Bill Byrd of Colliers International represented the seller. United Equities (713-772-6262) has purchased 5001 Bissonnet (18), an 18,500-square-foot Class C building located in Bellaire (531G), from Center America Property Trust (979-694-5341). Bill Corrigan of United Equities represented both the buyer and seller in the transaction.

Office Leases

• Carbo Ceramics (281-257-9100) leased 22,159 square feet at Energy Center II (2250), a 303,000-square-foot Class A building located at 575 N. Dairy Ashford in west Houston (488C) from Trammell Crow (713-963-1000).  The year-old building is 56% leased with asking rents at $23.00 per square foot. Mark Russell and Drew Morris of Studley represented the tenant, while the landlord was represented in-house by Adam Saphier.
  
  
• Dockwise USA (713-934-7300) has leased 20,666 square feet at Atrium @ Park Ten (1444), a 139,000-square-foot Class C building located at 16340 Park Ten Place in west Houston (447Y), from KBS Realty (949-417-6500).  The 28-year-old building is 50% leased with asking rents at $20 per square foot.  Michael Sieger and Steve Hesse of CB Richard Ellis represented the tenant, while the landlord was represented by Doug Little of PM Realty.
  
  
• Standard Automation & Control LP (281-334-3293) has renewed its lease of 12,900 square feet at Marina Plaza (243), an 18-year-old 109,000-square-foot Class B building located at 2450 South Shore in League City (619Y) from American National Insurance Co. (409-763-4661).  Anthony Fritsche of Fritsche Anderson represented the tenant, while Dena Wren of CB Richard Ellis represented the landlord.
  
  
• Diligent Delivery Systems (1-888-374-3354) has leased 11,670 square feet at 333 N. Sam Houston Parkway E (605), a 206,000-square-foot Class A building located in north Houston (373S), from Harvard Property Tr. (214-655-1600).  The 28-year-old building is 90% leased with asking rents at $19.00 per square foot.  John Richardson of Office Space Advisors represented the tenant, while the landlord was represented by Kristen Rabel and Louann Orlando of CB Richard Ellis.
  
  
• Mincron SBC Corp. (281-999-7010) has renewed its lease of 10,686 square feet at 333 N. Sam Houston Parkway E (605), a 206,000-square-foot Class A building located in north Houston (373S), from Harvard Property Tr. (214-655-1600).  The 28-year-old building is 90% leased with asking rents at $19.00 per square foot.  Randy Wilhelm and Mary Dabura of NAI Houston represented the tenant, while the landlord was represented by Kristen Rabel and Louann Orlando of CB Richard Ellis.

The following chart illustrates historical office rental rates.

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Retail Centers

According to the O’Connor & Associates Fourth Quarter 2008 Houston Retail Data Program, citywide occupancy for Houston area multi-tenant retail buildings is 84.13% (Regional = 86.82%; Community = 87.28%; Neighborhood = 82.43%; Strip = 79.48%).  Occupancy is down 0.22 points over the last quarter and down 0.06 points over the past 12 months.  The citywide monthly multi-tenant retail rental rate is $1.62 per square foot (Regional = $2.87; Community = $1.66; Neighborhood = $1.22; Strip = $1.24).  Overall rents are down from the last $0.01 quarter and down $0.02 from last year’s figure.                                         _ 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).

The following chart illustrates historical retail rental rates.

Retail Developments

• Everest Properties Ltd. (972-668-4017) has passed the first milestone in the planned mixed-use development of The Market Place at Sugar Land, located along US 90A near the Southwest Freeway (568M) in Sugar Land.  SpringHill Suites by Marriott (817-878-2554) has purchased two acres for a new hotel and plans to break ground in the spring.  The planned development will include office, retail and hotel components, and is forecasted to add approximately 200 new jobs to the area according to Ed Ford of Everest Properties Ltd.  Tentative plans call for groundbreaking in approximately six months as the master plan is finalized and approved by the City of Sugar Land.  The development is targeted as an upscale multi-use development. 

Retail Sales

• A Texas limited liability company has purchased Shops at Rocky Creek Crossing (2409), a 15,832-square-feet center located at 7270 Highway 6 in Missouri City (610Y), from Rocky Creek Ltd.   The buyer was represented in-house, while Jamie Bouterie and Sandy Aron of Huntington Properties represented the seller.

Retail Leases

• AutoZone (1-800-288-6966) has leased 37,870 square feet at Brazos Town Center (2224), a 1,000,000-square-foot power-center located at US 59 and FM 762/Reading Rd. in Rosenberg (605R), from NewQuest Properties (281-477-4300).  Edwin Williams represented the tenant, while the landlord was represented in-house by Eric Walker.
  
  
• Barnes & Noble Booksellers Inc. (713-349-0050) has renewed their lease of 30,257 square feet at Vanderbilt Square Shopping Center (155), a 133,000-square-foot center located at 3003 W. Holcombe Blvd. in Houston (532F), from Invesco Realty (972-715-7400).  This 13-year-old facility is 96% occupied with rents averaging $3.23 per square foot.  Tom Estus of Shelby Estus represented the tenant, while Matt Keener of CBRE represented the landlord.
  
  
• Spec’s Liquor (713-349-0050) has leased 24,772 square feet at Weslayan Plaza (44), a 356,000-square-foot center located at 5586 Weslayan St. in Houston (532A), from Regency Centers (904-598-7000).  This 39-year-old facility is 94% occupied with rents averaging $1.75 per square foot.  Both the landlord and tenant were represented in-house.

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Industrial Facilities

According to the O’Connor & Associates Fourth Quarter 2008 Houston Industrial Data Program, citywide occupancy for Houston area operating industrial facilities is 84.78% (Flex = 86.88%; Bulk = 85.83%; Manufacturing = 76.62%, Service = 83.17%, Distribution = 71.40%, R&D = 51.22%).  Occupancy is up 0.44 points from the last quarter and up 0.87 points over the last year.  The overall monthly rental rates decreased held steady at $0.45 per square foot (Flex = $0.48; Bulk = $0.40; Manufacturing = $0.36, Service = $0.54, Distribution = $0.41, R&D = $0.76). ______________________________ 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 monthly basis and accessible over the web (please contact us for more details). Industrial Developments Averas Co. (713-783-9600) and Cobalt Industrial REIT II (972-893-7000) have completed development of the Freeport Ninety Business Center (6612), a 349,000-square-foot distribution center located at 13833 N. Promenade Blvd. in Stafford (569Q).  The property consists of five buildings ranging in size from 15,000 to 130,000 square feet.  The Houston office of Holt Lunsford Commerical is handling the leasing and current asking rents are $0.62 per-square foot.

The following chart illustrates historical industrial rental rates.

Industrial Sales

• HBB Bradford purchased 801 N Highway 146 (36371), a 19,000-square-foot office/warehouse facility, located in Texas City (737D), from Southwest Stainless (713-943-3790).  Joel Michael and Chris Caudill of NAI Houston represented the buyer, while Gray Gilber of CB Richard Ellis represented the seller.
  
  
• STL Interest (1-888-411-2436) purchased 2701 Appelt Drive, Office Warehouse (36728), a 17-year-old 13,500-square-foot office/warehouse facility, located in southeast Houston (497M), from Rolling Creek Ltd. (713-664-3001).  Micheal Palmer and John Simons of CB Richard Ellis represented the buyer, while Glynn Mireless and Billy Gold of CB Richard Ellis represented the seller.

Industrial Leases

• DXP Enterprises (713-996-4700) has renewed their lease of 534,411 square feet at Northwest Place (5575), a 119,000-square-foot office/warehouse facility located at 7250 West 43rd in northwest Houston (450H), from BEEXT Holdings (832-767-4013).  The 13-year-old facility is fully occupied.  Clay People of Boyd Commercial represented the tenant, while the landlord was represented by Karyn Jackson Stephens of J Beard Real Estate Co.
  
  
• Integrated Airline Services (281-209-1711) has leased 140,000 square feet at West by Northwest Industrial Park 20 (5180), a 140,000-square-foot office/warehouse located at 10453 Okanella in far northwest Houston (409Z), from ProLogis (713-682-2292).  The 11-year-old facility is now fully occupied by Integrated Airline Services.  The tenant was represented by Tim Warren of Cypressbrook Co., while the landlord was represented by Ross Matthews of ProLogis.
  
  
• Sharps Compliance Corp (713-432-0300) has leased 65,000 square feet at Park 288 (6633), a 130,000-square-foot office/warehouse located at 2710 Reed Rd. in Houston (573A), from Transwestern (713-270-7700).  This year-old facility is 49%
  leased.  David David of Warehouse Associates represented the tenant, while the landlord was represented in-house by Darryl Noon.
  
  
• Derma Sciences Inc. (609-514-4744) has leased 52,770 square feet at the Hardy Distribution Center  Ph. 1 (6552), a 248,000-square-foot distribution center located at 1517 Greens Rd. in north Houston (373K) from Exel (614-865-8400).  The recently completed distribution center is xx% leased with rents quoted at $0.38 per square foot and is part of a larger two building distribution center that totals 500,000-square-feet of space.  Kyle Valentine, Justin Robinson and Chris Money of Stream Realty represented the landlord, Alexander Reilly of Boyd Commercial represented the tenant.
  
  
• Veritrust, Inc (713-263-9000) has leased 47,850 square feet at Hempstead Distribution Center 2 (5763), a 114,000-square-foot warehouse located in northwest Houston (451U), from ProLogis (713-682-2292).  The 23-year-old facility is fully leased.  The tenant was represented by Chris Kugle of NAI Houston, while the landlord was represented in-house by Holden Rushing.
  
  
• Triton Stone Houston leased 22,275 square feet at 7201 Pinemont Dr (5584), a 46,000-square-foot facility located at 7201 Pinemont Dr. in northwest Houston (450H), from Herzstein Investments (713-681-7868).  This 14-year-old facility is fully leased.  David Boyd and Greg Barra of Boyd Commercial represented the tenant, while Conrad Bernard of Boyd Commercial represented the landlord.
  
  
• Wind Composite Service Group (713-944-1300) leased 16,110 square feet at World Houston 26 (16493) a 59,000-square-foot office/warehouse facility located at 5151 World Houston Parkway East in blank Houston (374U), from EastGroup Properties (281-987-7200).  This year-old facility is now 27% occupied.  David Guion of Cushman Wakefield represented the tenant, while the landlord was represented by Clay Reichenbach of Insite Realty Partners.
  
  
• Ham-Let (512-927-8805) leased 14,965 square feet at Avera Commerce Center Sugar Land (36727), a 15,000-square-foot facility located at 12565 W. Airport Rd. in Sugar Land (568D), from Avera Properties (713-783-9600).  This year-old facility is currently 58% occupied.  Doug Nicholson and John Nicholson of Grubb & Ellis represented the tenant, while the landlord was represented in-house by Rick Kight.
  
  
• Sonardyne (281-890-2120) has leased 11,520 square feet at Willowbrook VI (4822), a 74,000-square-foot office/warehouse located at 8280 Willow Place in north Houston (532Y), from DCT Willowbrook LP (303-228-2200).  The 9-year-old built facility is full leased with average rents at $0.85 per square foot.  David Hummel of Coldwell Banker represented the tenant, while the landlord was represented by Alexander Reilly and Bo Pettit of Boyd Commercial.

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Vacant Land

• MacFarlane Co. (870-863-6060) has purchased 30 acres of land south of Lake Conroe on SH105 in Conroe (187K), from an undisclosed seller.  Jody James Czajkoski of Moody Rambin Interests represented the buyer, while the seller was represented by Cole Mallett.
  
  
• Elliot Electric has purchased 10 acres of land on Hickerson St. east of I-45 in Conroe (684N), from and undisclosed seller.  Elliot Electric plans to develop an office/warehouse on 2 acres in order to house its Montgomery County operations, while leaving the remaining open to be market for multi-family development.  Jody James Czajkoski of Moody Rambin Interests represented the buyer, while the seller was represented by Jay Garrison.
  
  
• 4XS Investments No. 3 purchased 6.5 acres in Westover Park at FM 518 and Westover Park Dr. in League City (657O), from Cypressbrook Westover Park (713-626-1010).  Ward Arnold of ReWard Realty represented the buyer, while the developer was represented by Denise Ksiazek of Cypressbrook Co.
  
  
• Averas Cos. (713-783-9300) has purchased 5.1 acres of land on Langfield Rd. at Northcourt in northwest Houston (410Z), from MAK Developer.  Plans for the site are for either a build-to-suit development, or inclusion into a larger, 40-acre speculative development.
  
  
• Frost National Bank (713-667-7000) has purchased 1.17 acres of land on FM 1960 near Northgate Forest Drive in northwest Houston (370D), from Cypress Woods Land Development (512-397-1550).  Denise Ksiazek of Cypressbrook Co. represented the buyer, while the seller was represented by Trever O’Connor of Richmond Honan.
  

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Economic & Financial News

The total number of nonagricultural wage and salary jobs in the ten-county Houston area increased by 16,000 jobs to 2,666,100 in December 2008, according to the U.S. Department of Labor.  This month’s total is 57,300 jobs more than the 2,608,800 jobs at this time last year.  Of nonagricultural employers, the Service Provider sector posted the largest gain over the month at 15,400 jobs also the year over year largest increase was the Service Provider sector, which had 57,300 jobs added.

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 January 2009 were $344.6 billion, an increase of 1.0% from December, but 9.7% below January 2008.  Retail trade sales in January were up 1.1% from December, but were 11.0% below last year’s level.

Personal income increased $44.8 billion, or 0.4%, and Disposable Personal Income (DPI) increased $183 billion, or 1.7%, in January 2009, according to the Bureau of Economic Analysis.  Personal Consumption Expenditures (PCE) increased $56.4 billion or 0.6% in January 2009. Meanwhile, the U.S. Department of Labor reports that the seasonally adjusted Consumer Price Index (CPI) for urban consumers increased 0.4% in January 2009 and is relatively unchanged from January 2008.

The latest Conference Board Survey indicates that the Consumer Confidence Index decreased to a new all time low of 25.0 in February 2009, down 12.4 points from 37.4 in January.  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 0.4% in January.  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 decreased 1.8% in January 2009 from December 2008 and is down 10.0% over the January 2008 level.  Output in the manufacturing sector decreased 2.5% in January; output of utilities increased 2.7% from last month and output at mines decreased 1.3%.  The rate of industrial capacity utilization was 72.0% in January, which is down 1.3% from the previous month’s level and is 1.3 points lower compared to the previous year’s level. 

Freddie Mac reports that the 30-year fixed-rate mortgage (FRM) averaged 5.13% in February 2009, up 0.7 points from January and down 0.79 points from one year ago.  The average for the 15-year FRM averaged 4.77% in February 2009, which is up 0.5 points from January and down 0.67 points from February 2008.

The U.S. Department of Commerce reports that advance estimates of the real GDP, the output of goods and services produced by labor and property in the United States, decreased at an annual rate of 6.2% in the fourth quarter of 2008, this decrease is due to negative contributions from exports, personal consumption expenditures, equipment and software, and residential fixed investment. 

The U.S. Department of Commerce reports that construction spending during January 2009 was estimated at a seasonally adjusted annual rate of $986.2 billion, which is 3.3% below the revised December 2008 estimate.  The current figure is 9.1% below the January 2008 estimate of $1,085.4 billion.  Private residential construction was at a seasonally adjusted annual rate of $682.6 billion in January, 3.7% below the revised December estimate of $709.0 billion.

The Baker Hughes count of active domestic rotary rigs stands at 1,243 for February 2009. The current rig count is down 31% from last year’s figure of 1,802 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) improved somewhat in January after rebounding from the lows of December.  January figures stood at 97.4, a full percentage point higher than that of December, but still well below 100.  The index is a monthly composite index that tracks the health and outlook for the U.S. restaurant industry.  This is the 15h consecutive month below 100.

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Potpourri

According to the monthly Monster Worldwide, Inc. employment index, online job demand had a 4-point increase in the month of February, the first increase since October 2008; however, the current index remains 26.0% below February 2008.  Online demand for workers increased in 25 of the 28 major metro markets, led by Houston and Pittsburgh.  Seasonal demand for accountants and tax professionals has created occupational gains in Business and Financial Operations.

According to the January 2009 Architecture Billings Index, developed by the American Institute of Architects, dropped to a historic low following a modest uptick in December.  January reported an index of 33.3 (any score above 50 indicates an increase in billings), down from 34.1 of the previous month.   The project inquiries index is 37.7.  The inquiries for new projects score was 43.5.


The Houston office of Hines has announced that the 717 Texas office building has received the silver level of LEED certification.  This is the first commercial office building in Houston’s CBD to achieve this designation.

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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