REDNews February 2012 : Page 36

Q4 2011 | OFFICE MARKET HOUSTON OFFICE MARKET SOUTHEAST TEX AS RESEARCH & FORECAST REPORT CBD VS. SUBURBAN CLASS A OFFICE VACANCY 20.0% 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% continued from page 34 Although suburban vacancy rates remained in double-digits, Class A vacancy actually dropped between quarters to 14.4% from 15.0%. Th e suburban Class B vacancy rate decreased between quarters to 16.6% from 16.7%. Citywide, a total of 46 offi ce properties had a minimum of 100,000 SF CBD VACANCY SUBURBAN VACANCY available for lease in both direct and sublease space, and 13 of those properties have over 200,000 SF available. ABSORPTION & CLASS A OFFICE RENTS DEMAND $40.00 Houston recorded positive $38.00 net absorption of 1,226,000 SF in the fourth quarter, $36.00 bringing the year-end $34.00 total to 2,643,000 SF. $32.00 Contributing to the quarter’s $30.00 positive gain was suburban $28.00 Class A space with a positive net absorption of 631,000 $26.00 SF, followed by suburban Class B space with positive net absorption of 269,000 SF, and CBD Class A space CBD RENTS SUBURBAN RENTS with positive net absorption of 175,000 SF. Th e majority of the CBD positive absorption was due to company expansions including Carrizo Oil & Gas, Burns & McDonnell and Eagle Rock Energy Partners. RENTAL RATES Citywide rental rates rose between quarters to $23.20 from $22.93 per square foot. Th e CBD Class A average quoted rental rate increased by $0.86 to $35.29 per square foot from $34.43, while the suburban Class A average rate increased $0.31 to $27.34 per square foot from $27.03. Th e CBD Class B average rate decreased by $0.04 to $23.65 per square foot from $23.69, while the suburban Class B average rate rose $0.08 to $18.30 per square foot from $18.22 between quarters. On a year-over-year basis the citywide average rental rate increased by $0.12 per square foot. The Houston metropolitan area has gained about 77,000 jobs through November 2011, representing a solid 3.0% growth rate. Available sublease space totaled 3.1 million SF, including 1.7 million SF of vacant space and 1.4 million SF of subleases available for occupancy over the next 18 months. Th e largest available sublease space is Devon Energy’s 198,478 SF space in Two Allen Center in the CBD. Braeswood Tower II has the largest suburban contiguous block of sublease space available, 146,392 SF. Q4 2011 SIGNIFICANT SALES TRANSACTIONS BUILDING NAME SUBMARKET RBA (SF) YEAR BUILT BUYER SELLER SALE PRICE $/SF CLOSED Hess Tower 2500 CityWest CBD Westchase 844,763 578,284 2010 1982 H&R REIT Crimson R E Fund JV Trammell Crow JV Thomas Properties JV $442.5M $132.5M $524 $231 12/2011 11/2011 36 FEBRUARY 2012

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