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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, Third Quarter 2008 O’Connor & Associates data indicates that Greater Houston apartment market occupancy has remained stable (decreased only 0.26 points) since third quarter 2007 and overall rents continue to steadily increase with current per square foot rates up 1.6% from third quarter 2007 ($0.847) to third quarter 2008 ($0.861). All classes have enjoyed steady rate increases since third quarter 2007 as Class A is up 1.9% from $1.133 to $1.155, Class B is up 0.9% from $0.820 to $0.828, Class C is up 1.2% from $0.696 to $0.704, and Class D is up 1.0% from $0.606 to $0.612.  With a continued supply of Class A and Class B complexes entering the market over the coming year, overall occupancy will continue to slip as new projects lease-up.       ____________________ 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). Phillips Development & Realty (813-868-3100) has decided to lease the South Tower of the Mosaic on Hermann and rename the tower the Montage (17019), a 394-unit Class A tower located at 5925 Almeda Rd. in Houston’s Medical Center (533B).  There are one- and two-bedroom units with square footages ranging from 672 square feet to 5,654 square feet.

• The Woodlands Development Co. (281-719-6100 and Dinerstein Cos. (832-209-1221) propose the Millennium Woodlands (18393), a 393-unit Class A complex located at Waterway Ave. in The Woodlands (251H).  The one- and two-bedroom units monthly rents will range from $1,100 to $2,500.  Construction is expected to begin by years end, with completion planned in 2010.  
  
  
• Alliance Communities (713-599-0280) broke ground on the Broadstone Voss Time Square (18169), a 307-unit Class A complex located at 2525 S. Voss in Houston’s Galleria area (490V).  There will be one-, two- and three-bedroom units with sizes ranging from 632 square feet to 1,445 square feet. 

Apartment Sales

• Concierge Asset Mgmt. (713-439-1773) purchased El Dorado Ranch (4530) from TriVest Residential, LLC (972-448-5800) a 324-unit Class C complex located at 265 El Dorado Blvd., Webster, TX 77598 in Webster (617Z).  The 28-year-old complex is 96% leased with average rents at $0.88 per square foot.  David Wylie and Russell Jones of Apartment Realty Advisors represented the buyer, while the seller was represented in-house.

• Adams Lasalle Realty (312-983-7090) purchased The Lodge at Baybrook (4050) from MBS Cos. (504-836-5075) a 322-unit Class C complex located at 19100 Glenwest Dr. in Friendswood (617Z).  The 9-year-old complex is 90% leased with average rents at $1.13 per square foot.  The buyer was represented in-house, while Craig LaFollette, Todd Stewart, Todd Marix and Tre Banks of CB Richard Ellis represented the seller.

• HK Capital Management (713-522-3132) purchased St. Cloud (3289) from Essex Property Trust (650-494-3700) with a sale price of $8,800,000. The 302-unit Class C complex is located at 6525 Hillcroft in southwest Houston (531E).  The 41-year-old complex is 93% leased with average rents at $0.60 per square foot.  The buyer and seller were both represented in-house.

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Single-Family Housing

MLS home sales had the biggest year-to-year decline in October, as 4,962 used homes were sold according to the Houston Association of Realtors (HAR).  Sales for October 2008 were down 21.6% from October 2007.  The median price of a used single-family home sold in October was $142,000, down 2.7% from the same time last year, while the average home price was $194,607, which was down 1.6% from the October 2007 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 54% in October to 1,066 from 659 in September but down 34% from October 2007.  Realtor co-op sales represented 61.0% of gross sales, down 3% from October of last year.  Traffic decreased 34% from last year to 14,547 in October 2008.  The inventory of completed speculative homes (1,955) is down 7% from last year.  There are 1,915 spec homes under construction, which is down 13% from October 2007.  Overall, the 3,870 specs (both completed and under construction) are down 10% from October 2007.  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 October to a seasonally adjusted annual rate of 433,000, 5.3% below the revised September sales rate of 457,000 and 41.1% below the October 2007 figure, according to a release by the U.S. Department of Commerce.  The median sales price in October was $218,000.  Privately owned housing starts were at a seasonally adjusted annual rate of 791,000 in October 2008, which is 4.5% below the revised September estimate, and 38.0% below the revised October 2007 rate.  Privately owned housing completions were at a seasonally adjusted annual rate of 1,043,000 in October, 10.2% below the revised September figure and 25.6% below the revised October 2007 figure.

The National Association of Home Builders/Wells Fargo Housing Market Index, a monthly measure of builder confidence, fell to 14 in October, 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 also fell to 14, the index measuring sales expectations for the coming six months had a nine-point loss to 19 and the index measuring the traffic of prospective buyers fell to 11.

According to the National Association of Realtors (NAR), 4,980,000 existing homes were sold in October 2008, down 3.1% from September sales and down 1.6% from the 5,060,000 homes sold in October 2007.  The median sale price was $ 183,300, which represents a 11.3 decrease from sale prices last year.

The following chart illustrates historical used home sales.

Source: Houston Association of Realtors

According to the O’Connor & Associates Third 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 Planned Community Developers (281-242-2000) is developing Sugar Land Town Square Bldg. A-2 (1519), an office building with approximately 166,561-square-feet located at 2245 Texas Dr. in  Sugar Land (568X).  Construction is underway with an estimated completion date occurring first quarter 2010.    Midway Cos. (713-629-5200) is developing Eco Centre at Lake Pointe (10916), a multi-tenant office building with approximately 150,000-square-feet located at 16750 Creek Bend Dr. in Sugar Land  (568T).  Construction is expected to begin by years end, with an estimated completion date occurring in late 2009.   Gulf Coast Regional Blood Center (713-790-1200) is developing the Blood Center Mobile Operations Complex (10915), an office building with approximately 84,707-square-feet located at 9990 Fannin in south Houston (532H).  Construction is underway with an estimated completion date occurring 2009.

The following chart illustrates historical office rental rates.

Office Sales

• Behringer Harvard (214-655-1600) purchased One BriarLake Plaza (2007) from Crescent Real Estate Equities (817-321-2100), a 502,000-square-feet Class A building located at 2000 S. Sam Houston Pkwy. W. in the Westchase area of Houston (489V).  The buyer was represented in-house, while Robert Williamson and Jeff Hollinden of HFF represented the seller.
  
  
• Donerail Corp. (212-808-7618) purchased Two Riverway (487) from Coventry Fund X, LTD  (713-626-7100), a 371,000-square-feet Class A building located in the Galleria area of Houston (491L).  Marty Hogan, Trent Agnew, Dan Miller and Robert Williamson of HFF represented the seller in the deal. Ryan Bishop and Adam Jackson of Stream Realty have received the contract to lease the property. 

• Grubb & Ellis Realty Investors, LLC (714-667-8252) purchased Oak Park Office Center III (10917) from Myers & Crow Co. (214-520-7800), a 158,000-square-feet Class A building located at 6001 Rogerdale in southwest Houston (529G).  Both the buyer and the seller were represented in-house.

Office Leases

• Continental Airlines, Inc. renewed their lease of 450,000 square feet at Continental Center I (107), a 1,100,000-square-foot Class A building located at 1600 Smith in Clear Lake (493Q) from Brookfield Properties (212-417-7000).  The 24-year-old building is 94% leased with average rents at $38.68 per square foot. The tenant was represented in-house, while Paul Frazier of Brookfield Properties represented the landlord.

• DHL Express (USA) Inc. leased 98,649 square feet at One Commerce Green (588), a 345,000-square-foot Class A building located at 515 W. Greens Rd. in the Greenspoint area of Houston (372Q) from Parkway Portfolio I, LLC (601-948-4091).  The 25-year-old Class A building is 97 leased with average rents at $25.00 per square foot.  Kelley Parker, III of Cushman & Wakefield represented the tenant, while Kim Lankford of Parkway Properties represented the landlord.

• Foxconn leased 40,000 square feet at Centre At Cypress Creek Ph I (317), a 232,000-square-foot Class B building located at 20455-20475 Tomball Pkwy. in the northwest Houston (329Y), from Greenwood Corp. (281-655-7400).  The 22-year-old building is 17% leased with average rents at $18.00 per square foot.  Brad Marnitz of NAI Houston represented the tenant, while Michelle Wogan, Dani Allison and Jennifer Leroy of Transwestern Commercial represented the landlord.

• KBC Advanced Technologies, Inc. leased 28,500 square feet at Energy Crossing I (2330), a 232,000-square-foot Class A building located at 15021 Katy Fwy. in west Houston (488A), from Opus West Corp. (713-9531331).  The under construction building is 12% pre-leased with average rents at $19.50 per square foot.  Anthony Squillante of Jackson Cooksey represented the tenant, while John Pruitt of CB Richard Ellis represented the landlord.

• Amerigroup Corp. leased 26,500 square feet at 3800 Buffalo Speedway (736), a 149,000-square-foot Class A building located in the Greenway Plaza area of Houston (492X), from Crescent Real Estate Equities (817-321-2100).  The 32-year-old building is 93% leased with average rents at $19.22 per square foot.  Keith Lloyd of Grubb & Ellis represented the tenant, while Ryan Bishop of Stream Realty represented the landlord.

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Retail Centers

According to the O’Connor & Associates Third Quarter 2008 Houston Retail Data Program, citywide occupancy for Houston area multi-tenant retail buildings is 84.65% (Regional = 86.82%; Community = 87.53%; Neighborhood = 83.35%; Strip = 80.60%).  Occupancy is down slightly (0.15 points) over the last quarter and down 0.03 points over the past 12 months.  The citywide monthly multi-tenant retail rental rate is $1.60 per square foot (Regional = $2.87; Community = $1.58; Neighborhood = $1.20; Strip = $1.22).  Overall rents are unchanged from the last quarter but 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). Retail Developments Inwood Properties (713-439-0788) is developing The Shops at Stone Park (14732), a 200,000-square-foot retail center located at the northeast corner of E. Sam Houston Pkwy. N. and Wallisville Rd. in northeast Houston (457U).  The under construction retail center is 86% pre-leased. Fidelis Realty Partners (713-623-6800) has proposed the Woodcreek Commons Retail (44777), a 123,000-square-foot retail center located at the southeast corner of Katy Frwy. and FM 1463 in Katy (486C).  There is no set date to begin construction. Mody Group, LTD (713-772-6200) is developing Mody Plaza (44778), a 67,000-square-foot retail center located at 1611 Hwy 6 in Sugar Land (568T).  The retail center is currently under construction with completion expected in early 2009.

The following chart illustrates historical retail rental rates.

Retail Sales

• DALHO CORP/UPS purchased 84 Lumber Store (3222) from 84 Lumber (800-664-1984), a 22,725-square-feet building located at 701 East Blvd. in southeast Houston (538K).  The seller was represented in-house.

Retail Leases

• 99 Ranch Market leased 84,000 square feet at the Blalock Market Shopping Center (1555), a 97,000-square-foot retail center located at 1005 Blalock in west Houston (490C) from Weingarten Realty (713-866-6000).  John Wise of Weingarten Realty represented the landlord.

• Studio Movie Grill leased 37,940 square feet at CityCentre (1912), a 539,000-square-foot center located at 800 W. Sam Houston Pkwy. N. in west Houston (489D) from Midway Companies (713-629-5200).  The under construction center is 50% leased.  The tenant was represented in-house, while Shawn Merecki of Midway Companies represented the landlord.

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Industrial Facilities

According to the O’Connor & Associates Third Quarter 2008 Houston Industrial Data Program, citywide occupancy for Houston area operating industrial facilities is 84.88% (Flex = 81.56%; Bulk = 85.88%; Manufacturing = 75.56%, Service = 81.56%, Distribution = 73.34%, R&D = 51.22%).  Occupancy is up 1.24 points from the last quarter and up 1.44 points over the last year.  The overall monthly rental rates decreased slightly to $0.45 per square foot (Flex = $0.48; Bulk = $0.40; Manufacturing = $0.36, Service = $0.56, 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 Panattoni Development Co. (713-273-8989) broke ground on the Airtex Industrial Center Bldg. A (26344), a 487,000-square-foot warehouse facility located at the intersection of Airtex Dr. at I-45 in north Houston (372C).  Completion is scheduled for April of 2009. PinPoint Commercial, LP (713-425-5400) has secured $3.4 million in joint venture equity for the Satsuma Station Build to Suit (26345), a 315,000-square-foot industrial facility located at close to the intersection of Hwy. 290 and Hwy. 6 in northwest Houston (408C).  The building is scheduled for completion summer of 2009.

The following chart illustrates historical industrial rental rates.

Industrial Sales

• Lind Investments, LLC (713-467-9560) purchased 14350 Chrisman Rd. (262), a 41,000-square-foot facility, located in north Houston (373Y), from Ed Rammrath & Brad Davis (713-484-8900).  Andrew Sowell of Boyd Commercial represented the buyer in the deal, while Barrett Gibson or Gibson & Granello represented the seller.

Industrial Leases

• Lawndale Property (845-356-0204) purchased Loop 610 East Business Park (1856), an 120,000-square-foot office/warehouse facility in east Houston (535G), from Loop 610 Business Park I (713-522-4242).  The 29-year-old-facility is 85% occupied.  Henry Hagendorf of Sperry Van Ness represented the buyer, while the seller was represented in-house.

• General Investment & Development Cos. (617-973-9680) purchased Bammel Business Park Bldg. 6 & 7 (26343), a 110,000-square-foot facility located at 4702-4802 N. Sam Houston Pkwy. W. in north Houston (371S), from First Industrial Realty Trust (713-681-0885).  The newly constructed-facility is vacant.  The buyer was represented in-house, while Michael Parker of HFF represented the seller in the deal.

• RuhRPumpen, Inc. (918-627-8400) purchased 10010 Gulf Frwy. (2014), a 30,000-square-foot warehouse facility located in southeast Houston (575D), from PEJ Real Estate Interests, LP (713-944-9852).  The 31-year-old-facility is fully leased.  The buyer was represented Rob Stillwell and Jay Jenckes of Grubb & Ellis, while B. Kelley Parker, III, John F. Littman, Coe Parker and Jon Farris of Cushman & Wakefield represented the seller. 

• Delta Petroleum Company, Inc. leased 129,000 square feet at 10521 Sheldon Rd. (1052), a 204,000-square-foot manufacturing facility located in northeast Houston (418T), from Beitler Commercial (310-820-2955).  The 28-year-old facility is fully leased.  Ryan Fuselier of Jones Lang LaSalle represented the buyer, while B. Kelley Parker, III of Cushman & Wakefield represented the landlord in the deal.

• NGI Electronics, LLC leased 7230 Empire Central (6503), a single-tenant 34,000-square-foot research & development facility located in northwest Houston (410N), from Americo Real Estate (214-521-5310).  Stephen Kuper of NAI Houston represented both the tenant and the landlord in this deal.
  
  
• Global Tech Motors purchased 30,000 square feet at 2510 Beltway 8 (26346), a single tenant warehouse located in Pasadena (537V) from Pasadena Piping Products (281-991-7179). The 38-year-old facility is fully leased. John Clark of NAI Houston represented the buyer, while Greg Williams of Qualified Properties represented the seller in the deal.
  

• Jack's Carpet, Inc. leased 29,306 square feet at Griggs Rd. 1 & 2 (2529), a 225,000-square-foot warehouse located at 5990 Griggs Rd. in south Houston (534K), from Cobalt Capital Partners (972-893-7000).  The 43-year-old facility is 86% occupied.  Jon Michael of NAI Houston represented the landlord in this deal.

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Vacant Land

• Proterra Stratford I-10, LTD (713-773-5537) purchased 463 acres of land on Katy Fwy. between FM 1463 and Pederson Rd. in west Houston (483D), from Beeson Properties (713-622-5595).  Both the seller and buyer were represented in-house.

• An undisclosed buyer purchased 21.2 acres of land from Janis Tomlinson and 10.8 acres of land from Geral and Susan Fauss.  Both parcels on located on Hwy. 105 W. at FM 2854 in Montgomery County (123U).  John Ferruzzo of NAI Houston represented the seller.

• KT Greenhouse, LTD and WI Greenhouse, LLC purchased 16 acres of land at the intersection of Katy Fwy. and Greenshouse Rd. in Katy (486D), from Barker Venture, LTD.  Both the seller and buyer were represented in-house.
  

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Economic & Financial News

The total number of nonagricultural wage and salary jobs in the ten-county Houston area increased by 7,600 jobs to 2,634,900 in October 2008, according to the U.S. Department of Labor.  This month’s total is 52,300 jobs more than the 2,582,600 jobs at this time last year.  Of nonagricultural employers, the Service Provider sector posted the largest gain over the month at 7,000 jobs, followed by the Government with 6,200 jobs gained.  Over the year, the Service Provider sector had the largest increase in employment, adding 40,600 jobs, followed by the Goods Producing sector, which added 11,700 jobs.

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

Source: U.S. Department of Labor

Advance estimates reported by the U.S. Department of Commerce show that seasonally adjusted national retail and food services sales for October 2008 were $363.7 billion, a decrease of 2.8% from September and down 4.1% from October 2007.  Retail trade sales in October were down 3.1% from September and were 5.0% below last year’s level. Personal income increased $42.4 billion, or 0.3%, and Disposable Personal Income (DPI) increased $45.1 billion, or 0.4%, in October 2008, according to the Bureau of Economic Analysis.  Personal Consumption Expenditures (PCE) decreased $102.8 billion, or 1.0% in October 2008. Meanwhile, the U.S. Department of Labor reports that the seasonally adjusted Consumer Price Index (CPI) for urban consumers decreased 1.0% in October 2008 but is 3.7% higher than in October 2007.

The latest Conference Board Survey indicates that the Consumer Confidence Index decreased to an all time low of 38.8 in October 2008, down 22.4 points from 61.4 in September.  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 0.8% in October.  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 1.3% in October 2008 from September 2008 and is down 4.1% over the October 2007 level.  Output in the manufacturing sector increased 0.6% in October; output of utilities increased 0.4% over the month and output at mines increased 6.1%.  The rate of industrial capacity utilization was 76.4% in October, which is unchanged from the previous month’s level but is 1.6 points higher compared to the previous year’s level. 

Freddie Mac reports that the 30-year fixed-rate mortgage (FRM) averaged 6.20% in October 2008, which is 0.16 points up from September but down 0.18 points from one year ago.  The average for the 15-year FRM averaged 5.89% in October 2008, which is up 0.25 points from September but down 0.15 points from October 2007.

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 0.5% in the third quarter of 2008, this decrease is due reflected negative contributions from personal consumption expenditures (PCE), residential fixed investment, and equipment and software.

The U.S. Department of Commerce reports that construction spending during October 2008 was estimated at a seasonally adjusted annual rate of $1,072.6 billion, which is 1.2% below the revised September 2008 estimate.  The current figure is 4.6% below the October 2007 estimate of $1,124.2 billion.  Private residential construction was at a seasonally adjusted annual rate of $338.8 billion in October, 3.5% below the revised September estimate of $351.2 billion.

The Baker Hughes count of active domestic rotary rigs stands at 1,971 during the week ending October 31, 2008. The current rig count is up 11.99% from last year’s figure of 1,760 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) remained soft in October with a rating of 97.1.  The index is a monthly composite index that tracks the health and outlook for the U.S. restaurant industry.  This is up 0.4% from September’s lowest level on record of 96.7.

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Potpourri

According to the monthly Monster Worldwide, Inc. employment index, online job demand had a ten-point decrease in the month of October and remains down 20.0% from October 2007.  Of 23 occupational categories only 1, the Education, Training, and Library category posted an increase over the month.  Real estate, leisure and hospitality and retail trade industries register strongest monthly declines in online job availability, while opportunities in mining and utility industries show continued expansion.

According to the February 2008 Architecture Billings Index, developed by the American Institute of Architects, demand for non-residential construction plummeted to its lowest level since the survey began in 1995.  July reported an index of 36.2 (any score above 50 indicates an increase in billings).   The project inquiries index is 39.9.

DineEuity, Inc. (866-995-3463) has agreed to sell 22 Houston area Applebee’s Neighborhood Grill & Bar restaurants to Wellington D. Yu. Yu is the President of Kansas-based Peterson Group, Inc. (913-764-7764), a real estate development and management firm. This is part of DineEquity’s plan to sell 66 Applebees’s in the Houston, Dallas and Albuqerque, NM areas.

Circuit City (804-486-4000) to close 155 stores nationwide, 2 in the Houston area. This equates to about 20% of the U. S. stores.  Included in the closings are the League City and Sharpstown locations.

The Christus Foundation for HealthCare (713-652-3100) has broken ground on the new Christus Health Center in Midtown. The 55,000 square foot center will provide more patient space and additional health services to the uninsured and underserved residents of Houston. The newly named John S. Dunn Building will offer primary health care services as well as eighteen specialties.

Please direct any questions regarding content in the Houston Real Estate Trends to Stuart Showers at 713-375-4356 or sshowers@poconnor.com.

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