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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, March 2009 O’Connor & Associates data indicates that Greater Houston apartment market occupancy has decreased 0.01 percentage points from the previous month and is currently 88.05% occupied, while overall rents edged up $0.003 to $0.871. Class A rates enjoyed the largest increase over the month ($1.163) from February’s rate ($1.160), while Class C and D showed an increase of $0.002 from February’s rate, ending at $0.710 and $0.618, respectively. Class B rates increased by $0.001 this month and are currently $0.832. Pre-leasing is currently underway in forty-two communities (12,122 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).

Apartment Developements

The following chart illustrates historical apartment occupancy.

Apartment Sales Forest Pointe Apartments LLC purchased Forest Pointe LLC (1458), a 270-unit Class C complex located at 13030 Northborough in the Champions area (372L), from Whittaker Lauderdale Reef, LLC (760-771-5121). The 26-year-old complex is 58% occupied with average rents at $0.67 per square foot. The buyer was represented by Trevelyn Dennis of Lifestyles Realty, while Craig LaFollette of CB Richard Ellis represented the seller. Brandon Brown of LMI Capital arranged the financing for the transaction. Houston Aspen Ridge LLC purchased Aspen Ridge Apartment (2174), a 256-unit Class C complex located at 10555 Spice Lane in Alief (529Q), from GFI Realty Service (832-242-5655). The 32-year-old complex is 91% occupied with average rents at $0.66 per square foot. The buyer was represented by Trevelyn Dennis of Lifestyles Realty, while Cliff McDaniel of Apartment Realty Advisors represented the seller. Brandon Brown of LMI Capital arranged the financing for the transaction.  back to top

Single-Family Housing

MLS home sales declined in February as 2,829 existing homes were sold according to the Houston Association of Realtors (HAR). Sales for February 2009 were down 22.9% from February 2008. The median price of an existing single-family home sold in February was $128,000, down 8.5% from the same time last year, while the average home price was $165,897 was down 11.6% from the February 2008 level.
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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 14% in February to 1,366 from 1,196 in January, but are down 26% from February 2008. Realtor co-op sales represented 63.0% of gross sales for the month, up 1% from the previous year. Traffic decreased 29% from last year to 16,066 in February 2009. The inventory of completed speculative homes (1,743) is down 1% from last year. There are 1,145 spec homes under construction, which is down 44% from February 2008. Overall, the 2,888 specs (both completed and under construction) are down 28% from February 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 January to a seasonally adjusted annual rate of 337,000, 4.7% above the revised January sales rate of 322,000, but 41.1% below the February 2008 figure, according to a release by the U.S. Department of Commerce. The median sales price in February was $200,900. Privately owned housing starts were at a seasonally adjusted annual rate of 583,000 in February 2009, which is 22.2% above the revised January estimate, but 47.3% below the revised February 2008 rate. Privately owned housing completions were at a seasonally adjusted annual rate of 785,000 in February, 2.3% above the revised January figure, but 37.3% below the revised February 2008 figure.

The National Association of Home Builders/Wells Fargo Housing Market Index, a monthly measure of builder confidence, remained at 9 in March, 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 stayed even at 7, the index measuring sales expectations for the coming six months remained at 15 and the index measuring the traffic of prospective buyers is declined by two points and is currently at 9.

According to the National Association of Realtors (NAR), 4,720,000 existing homes were sold in February 2009, up 5.1% from January sales, but down 4.1% from the 4,950,000 homes sold in February 2008. The median sale price was $ 165,400, which represents a 15.5% decrease from sale prices last year.

According to the most recent report by RealtyTrac, 290,631 foreclosure filings — default notices, auction sale notices, and bank repossessions — were reported during the month of February. This figure is up 6% from January, and nearly 30% from February 2008. Texas remains among the nation’s 27 highest states in total foreclosure filings in February 2009.

The following chart illustrates historical existing home sales.

Source: Houston Association of Realtors

• Black Diamond Cos. (713-532-8849) and Abercrombie Builders (713-680-2424) have begun developing Greyton Lane, a high-end residential community comprised of 19-lots on 11 wooded acres in the Memorial Villages area. The lots range in size from 20,000 square feet to 27,000 square feet and are priced from $825,000 to $925,000. Homes are anticipated to range in size from 5,000 to 8,000 square feet with build-out expected to take approximately four years.

According to the O’Connor & Associates First Quarter 2009 Houston Office Data Program, citywide occupancy for Houston area multi-tenant office buildings is 84.67% (Class A = 88.98%; Class B = 81.86%; Class C = 79.47%; Class D = 77.08%). The citywide annual multi-tenant office rental rate is $21.13 per square foot (Class A = $25.06; Class B = $18.71; Class C = $15.07; Class D = $12.35). ________________ 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 PHA/Houston LLC (602-452-2570) has completed Woodlands 45 Corporate Center (2405), a 64,822-square-foot Class A office building located at 24624 I-45 North in north Houston (252A). The building is currently 42% leased with asking rents of $25.00 a square foot. Monte Calvert and Brad Sinclair of Transwestern are handling the leasing for the property. Tom Pisula Development (281-419-2581) has completed Tomball Medical Plaza (17215), a 55,000- square foot Class A building located at 506 Graham St. Tomball in northwest Houston (288K). The development is designed to obtain the silver level of LEED certification for the U.S. Green Building Council. Office Sales SALA (713-771-0188) has purchased 1726 Augusta (431), a 34,000-square-foot Class-B office building located in southwest Houston (491P), from Clay Development & Construction (713-789-2529). Tony Patronella and Marc Drumwright with Southwest Realty Advisors handled the transaction for both parties.

Office Leases

• Carbo Ceramics, Inc. (713-934-7300) and Northern Offshore Drilling Services U.S., Inc. (713-739-7686) have combined to lease 31,672 square feet at Energy Center II (2250), a 303,000-square-foot Class A building located at 575 North Dairy Ashford in west Houston (488C), from Trammell Crow Co. (713-963-1000). The newly built building is 57% leased with asking rents at $23.00 per square foot. Mark Russell and Drew Morris of Studley represented Carbo Ceramics, Jon Silberman and Griff Bandy of NAI Houston represented Northern Offshore Drilling, while Steve Rocher of CB Richard Ellis represented the landlord in both transactions.

• Dockwise USA (713-934-7300) has leased 20,666 square feet at Atrium @ Park Ten (1444), a 139,000-square-foot Class B building located at 16340 Park Ten Place in west Houston (447Y), from KBS Realty (949-417-6500). The 28-year-old building is 51% leased with asking rents at $20.00 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.

• Cima Energy (713-209-1112) has leased 20,254 square feet at SCI Building (1048), a 120,000-square-foot Class B building located at 100 Waugh in west Houston (492M), from SCI Management Corp. (713-525-2839). The 36-year-old building is fully leased with market rents of $12.50 per square foot. Jason Wittington and John Silberman of NAI Houston represented the tenant, while the landlord was represented by Greg Tilton of Transwestern.

The following chart illustrates historical office occupancy.

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Retail Centers

According to the O’Connor & Associates First Quarter 2009 Houston Retail Data Program, citywide occupancy for Houston area multi-tenant retail buildings is 83.69% (Regional = 86.72%; Community = 86.55%; Neighborhood = 82.04%; Strip = 79.16%). Occupancy is down 0.15 points over the last quarter and down 0.57 points over the first quarter 2008. 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).                                         _ 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 occupancy.

Retail Developments

• Space Center Blvd. Land Development, LP (713-650-6700) is developing Village at Clearpoint Crossing (14739), a 15,000-square-foot retail center located on Space Center Blvd. at the intersection of Genoa-Red Bluff and Space Center Blvd. in east Houston (578N). The retail center is currently under construction and is scheduled for completion by first quarter 2009.

Retail Sales

• Dunhill Partners (214-373-7500) has purchased South Shore Marketplace Shopping Center (53449), a 109,000-square-foot shopping center located at 2640 E League City Pkwy in League City (658T), from Regency Centers Corp. (713-599-3502). This 2-year-old shopping center is 95% leased. Bill Huchinson of Dunhill Partners represented the buyer, while the seller was represented in-house by Amy Silvey.

Retail Leases

• The Chair King (281-893-7130) has renewed its lease at 5402 FM 1960 (53448), a 14,000 square-foot building located at Champion Forest Drive in the Northwest of Houston (370D), from Jim R. Smith & Co. (713-622-9933). The 33-year-old building is fully occupied by The Chair King. Katherine Wildman of Wulfe & Co. represented the tenant, while the landlord was represented by in house by Jim R. Smith (713-622-9933).

• Beneshty leased 10,112 square feet in The Waterside Commons Shopping Center (1889), a 148,000-square-foot shopping center located on the Grand Parkway at Mason road in west Houston (526W), from Wile Interests (713-337-3350). Plans call for an Ace Hardware at the location. This newly built shopping center is currently 97% leased. Don Avera of Re/Max Southwest represented the tenant, while the landlord was represented in-house by Anderson Smith and Rebecca Nguyen.

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Industrial Facilities

According to the O’Connor & Associates Fourth Quarter 2009 Houston Industrial Data Program, citywide occupancy for Houston area operating multi-tenant industrial facilities is 84.49% (Flex = 85.68%; Bulk = 84.79%; Manufacturing = 78.51%, Service = 87.20%, Distribution = 72.97%, R&D = 51.97%). Occupancy is up 0.15 points from the last quarter and up 0.51 points over the last year. The overall quarterly rental rates decreased $0.02 ending at $0.44 per square foot (Flex = $0.48; Bulk = $0.38; Manufacturing = $0.36, Service = $0.52, Distribution = $0.38, R&D = $0.78). ______________________________ 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). Industrial Developments Trammell Crow Co. (713-963-4070) has completed Lakeview Business Park (6384, 6383, 6382). The business park consists of 3 buildings totaling 240,959-square feet buildings at 14511, 14523, 14623 Fairway Pines Drive in Missouri City in southwest Houston (570N), and has 10 drive-in-bays and 62 loading docks. All buildings are designed to be LEED Certified at the silver level by the U.S. Green Building Council. Joseph Smith, Faron Wiley and Stephen King of CB Richard Ellis are handling leasing at the property. Industrial Sales Cesar Yabar (936-539-4004) has purchased S Frazier, 628 (6568), a 41-year-old 23,840 square foot warehouse facility located at 628 S. Frazier in Conroe (187H), from Ray–Mart (936- 539-3341). Alexander Reilly and Bo Pettit of Boyd Commercial represented the seller, while Juan Sanchez and Richard Foulkes of Houston International Realty represented the buyer. Adams Valves (713-973-2490) has purchased Adams Valves Facility (36764), a 21,000 square foot Design-Build facility located within Cutten Road Business Park at 12454 Cutten Rd in northwest Houston (370L), from Clay Development (713-789-2529). John Ferruzzo and Joel Micheal of NAI Houston represented the buyer and Clay Development was represented by Charles Christ.

The following chart illustrates historical industrial occupancy .

Industrial Leases

• Cadeco Industries (713-671-3355) has leased 145,000 square feet at Portwall Distribution Center (954), a 145,000-square-foot warehouse facility located at 530 Portwall St in north Houston (495B), from Warehouse Associates (713-461-9696). This 30-year building is now fully leased. John Nicholson and Doug Nicholson of Grubb & Ellis Co. represented the tenant, while the landlord was represented in-house.

• Sharp Compliance Corp. (713-432-0300) has leased a 65,371 square feet at Park 288. (6633), a 130,000 square feet office/warehouse building located at 2710 Reed Road in south Houston (573A) from Transwestern (713-270-7700). This recently constructed building is now fully leased. David R. David of Warehouse Associates represented the tenant, while the landlord was represented in-house by Daryl Noon, Brian Gammill and Jude Filippone.

• Goedis Wilson Projects USA, (281-442-4744) has leased 61,790 square feet at Port North Cargo Park (6237), a 158,940-square-foot warehouse building located at 8210 Humble-Westfield Road in north Houston (335S), from Duke Properties (713-353-3200). This recently completed building is 38% leased with asking rents at $0.44 per square foot. Patrick Rollin of CB Richard Ellis represented the tenant, while the landlord was represented in-house by Cory Driskell.

• Excalibur Minerals (281-872-4539) has leased 39,150 square feet at Wallisville Warehouse (960), a 127,000-square-foot distribution center located at 8811 Wallisville Rd in near east Houston (455Y), from Granite Properties (713-781-8000). The 29-year-old building is 90% leased with asking rents at $0.30 per square foot. Patrick Rollins of CB Richard Ellis represented the tenant, while the landlord was represented in-house by Steve Carter.

• SLM-IQ Logistics (512-474-2002) has leased 27,401 square feet at World Houston IBC building (6350), a 129,000-square-foot warehouse facility located at 4660 N. Sam Houston Parkway East in northeast Houston (374U), from EastGroup Properties (281-987-7200). This 9-year-old building is 92% leased with an asking rate of $0.50 per-square-foot. John Ferruzzo and Chirs Kugle of NAI Houston represented the tenant and River Nolen of InSite Realty Partners represented the landlord.

• Flowline, (713-643-9400) has renewed its lease of 16,800 square feet at Wallisville Industrial Park (960), a 127,000-square-foot distribution center building at 8801 Wallisville Road in near east Houston (455Y), from Granite Properties (713-781-8000). The 29-year-old building is 90% leased with asking rents at $0.30 per square foot. Jim Vann of Moody Rambin Interests represented the tenant, while the landlord was represented in-house by Steve Carter.

• Cruzin Cooler (713-956-2665) has leased 16,200 square feet space at Pine Timbers Distribution Center (5548), a 143,000-square-foot office/warehouse building located at 4647 Pine Timbers in northwest Houston (450G), from Prologis (713-476-9040). This 30-year-old property is now fully leased. The tenant was represented by E D Ayres of Houston Realty Advisors, while the landlord was represented in-house by Kevin Wittler of Prologis.

• Synergy Services (713-666-6665) has fully leased Aldine Westfield Rd, 18501 (629), a 13,800-square-foot warehouse building in north Houston (373C), from MCS Ltd Partnership (713-926-2235). The 30-year-old building is fully leased with asking rents at $0.50 per square foot. Clay Pritchett of Holt Lansford Commercial represented the tenant, while the landlord was represented by James Foreman, Beau Kaleel, Cape Bell and Joseph Peddie of Cushman & Wakefield.

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Vacant Land

• Clay Venture Fund #3 (713-722-1250) has purchased 157 acres at the northwest corner of Clay and Katy Hockly road in Katy (444G). Amy Silvey of Clay Venture Fund #3 represented the buyer, while Ronald Dagley and Karl Willmann of The Betz Cos. represented the seller.

• Frank Flores has purchased 14.1 acres of land near FM 521 and FM 1462 in Rosharon, from Keith Jaehne. General Property & Services represented the seller in this transaction.

• Alpha Fabricators, Inc. (713-694-1392) purchased 9.6 acres in the Charles Stephens Survey, Abstract No. 482 (Gene Campbell Boulevard) in Montgomery County, from the East Montgomery County Improvement District (281-354-4419). Joyce Sterling of Cypressbrook Co. represented the buyer, while Frank McCrady represented the seller.

• Bayport North (936-709-7751) purchased 5 acres of land in Bayport North Industrial Park Phase II, located in far southeast Houston (579E), from GSL Industrial Partners (713-952-7000). Kelly Parker, John Littman and Coe Parker of Cushman & Wakefield represented the seller, while Barrett Gibson of Gibson & Granello Realty and Partners and John Clark of NAI Houston represented the buyer.
  

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Economic & Financial News

The total number of nonagricultural wage and salary jobs in the ten-county Houston area decreased by 2,300 jobs to 2,574,500 in February 2009, according to the U.S. Department of Labor. This month’s total is 6,300 fewer jobs than the 2,580,800 jobs at this time last year. Of nonagricultural employers, the Leisure and Hospitality sector posted the largest gain over the month at 4,900 jobs, while the largest year over year increase occurred in the Mining and Logging 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 January 2009 were $346.8 billion, a decrease of 0.1% from January, and 8.6% below February 2008. Retail trade sales in February were down 0.1% from January, and were 9.8% below last year’s level.

Personal income decreased $29.1 billion, or 0.2%, and Disposable Personal Income (DPI) decreased $10.5 billion, or 0.1%, in February 2009, according to the Bureau of Economic Analysis. Personal Consumption Expenditures (PCE) increased $17.2 billion or 0.2% in February 2009. Meanwhile, the U.S. Department of Labor reports that the seasonally adjusted Consumer Price Index (CPI) for urban consumers increased 0.5% in February 2009 and is 0.2% higher than February 2008.

The latest Conference Board Survey indicates that the Consumer Confidence Index increased to 26.0 in March 2009, up 0.7 points from the historic low in February. 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 decreased 0.4% in February. 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 1.4% in February 2009 from January 2008 and is down 11.2% from the February 2008 level. Output in the manufacturing sector decreased 0.7% in February; output of utilities decreased 7.7% from last month and output at mines decreased 0.4%. The rate of industrial capacity utilization was 70.9% in January, which is down 1.0% from the previous month’s level and is 1.0 points lower compared to the previous year’s level.

Freddie Mac reports that the 30-year fixed-rate mortgage (FRM) averaged 5.00% in March 2009, down 0.13 points from February and down 0.97 points from one year ago. The average for the 15-year FRM averaged 4.64% in March 2009, down 0.13 points from February and down 0.78 points from March 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 6.3% 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 February 2009 was estimated at a seasonally adjusted annual rate of $967.5 billion, which is 0.9% below the revised January 2009 estimate. The current figure is 10.0% below the February 2008 estimate of $1,075.3 billion. Private residential construction was at a seasonally adjusted annual rate of $665.9 billion in February, 1.6% below the revised January estimate of $676.9 billion.

The Baker Hughes count of active domestic rotary rigs stands at 1,105 for March 2009. The current rig count is down 38.5% from last year’s figure of 1,797 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 slightly in February, increasing by 0.1 over the previous month. The January figure stood at 97.5, still significantly below the 100 and signifying continued contraction. The index is a monthly composite index that tracks the health and outlook for the U.S. restaurant industry. This is the 16h consecutive month below 100.

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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 March, erasing the gains from the previous month. The index currently stands at 118 and is 49 points below March 2008, a decrease of 29%. Online demand for workers decreased in all of the 28 major metro markets.

According to the February 2009 Architecture Billings Index, developed by the American Institute of Architects, February reported an index of 35.3, a 2 point increase over the historic low in January (any score above 50 indicates an increase in billings). Both the project inquiries index and the inquiries for new projects score was 49.5.

Houston is set to start a program intended to provide a stimulus boost to some of the city’s largest real estate developments. The plan is intended to keep some of the city’s larger projects from being placed on hold by providing millions in incentives if the companies begin building soon and agree to make improvements to city infrastructure.

Centex Homes and Pulte Homes have agreed to a merger, which will result in making Pulte the nation’s largest home builder. In the move, Pulte Homes acquires Centex in a stock swap valued at $1.3 billion dollars. Shareholders of Centex will receive 0.975 shares for each share of Centex they own. The move immediately boosted Centex’s trading price by over 20%, while Pulte’s shares decline by approximately 7%.

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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