Transcript WHO’S YO DADDY?

O’CONNOR
OFFICE FORECAST LUNCHEON
January 25, 2012
ATLANTA  AUSTIN  HOUSTON  DALLAS  ORANGE COUNTY  SAN ANTONIO
AT L A N TA
L O O K I N G B A C K AT 2 0 11
TOP CLIENTS
Occupancy
by
Submarket
AT L A N TA
L O O K I N G B A C K AT 2 0 11
Office Trends
•
Flight to quality/efficiency
•
Consolidations/Relocations – Exxon, Noble, BG Group, Schlumberger, BBVA, Nexxen
•
Significant Growth – BP, GE Oil & Gas, Cameron, Worley Parsons, Weatherford, Talisman,
FMC Technologies
•
Long-term commitments from global companies – Shell, Hess, DOW Chemical, BBVA, BP
•
Increasing depth of demand through natural growth and new tenants to the market
•
Record sales prices in the CBD and Energy Corridor – Hess Tower, 1254 Enclave, DNA II
AT L A N TA
L O O K I N G B A C K AT 2 0 11
Large Leases Executed
Tenant
Shell Oil*
BP*
BG Group
Nexen Petroleum
Chevron*
BP
Lyondell*
Williams*
NRG
AMEC Paragon*
Fulbright & Jaworski*
BBVA Compass
Talisman Energy
ExxonMobil*
Plains All American*
Calpine*
ConocoPhillips*
Aker Solutions*
GE Oil & Gas
Energy Transfer
SBM Atlantia*
Schlumberger*
ENI
SF
1,222,425
724,341
354,000
331,513
311,000
305,885
300,000
253,497
240,000
230,000
229,676
155,000
218,000
214,857
212,293
200,000
190,000
186,000
180,000
171,000
170,000
155,324
141,770
Building Name
One & Two Shell Plaza
Three & Four WestLake
BG Group Place
945 Bunker Hill Rd
1600 Smith
Three Eldridge Place
Two Houston Center
Williams Tower
Houston Pavilions
10777 Clay Rd
Fulbright Tower
2200 Post Oak Blvd
Research Forest Lakeside
3 Greenway Plaza
Three Allen Center
717 Texas Ave
Two WestLake
3010 Briarpark
Westway III
1300 Main St
1255 Enclave Pky
1325 Dairy Ashford
Two Allen Center
Submarket
CBD
Energy Corridor
CBD
Katy Freeway East
CBD
Energy Corridor
CBD
Galleria/Uptown
CBD
Westway
CBD
Galleria/Uptown
The Woodlands
Greenway Plaza
CBD
CBD
Energy Corridor
Westchase
Westway
CBD
Energy Corridor
Energy Corridor
CBD
*Renewals or
Expansions
AT L A N TA
L O O K I N G B A C K AT 2 0 11
Notable Office Sales - 2011
Hess Tower
1254 Enclave
Class A
Built in 2011
844,763 SF
100% Leased
Buyer – H&R Reit
Seller – Principal/Trammell
Crow
Closed December 2011
Westway II
Class A, LEED
Built in 2008
381,327 SF
100% Leased
Buyer – Azrieli Group
Seller – CORE/Baynorth
Closed Jan 2012
CityCentre One
Class A , LEED
Built in 2009
242,000 SF
100% Leased
Buyer – Wells REIT
Seller – DNA
Closed Sept 2011
Class A
Built in 2008
119,195 SF
100% Leased
Buyer – Stockbridge
Seller – L&B / Midway Cos
Closed Jan 2012
AT L A N TA
L O O K I N G B A C K AT 2 0 11
Houston Economy
• Houston ranked as North America’s fastest growing metropolitan areas (19th in the world) by
the Brookings Institute when comparing gross domestic product, employment, income and
population rate.
• Houston added 75,800 jobs in 2011 and the 10-county Houston-Sugar Land-Baytown
Metropolitan Statistical Area surpassed its pre-recession employment peak in the fall,
according to estimates released by the Texas Workforce Commission (TWC). Nonfarm
payroll employment is now at the highest point in Houston’s history.
• A record 17.7 million tons of container cargo moved through the Port of Houston in 2011,
officials said we had our highest volume ever recorded.
• Houston led the nation with a 149 percent increase in technology job growth in 2011,
according to CyberCoders, an Irvine, Calif.-based tech recruiter
AT L A N TA
L O O K I N G B A C K AT 2 0 11
AT L A N TA
L O O K I N G B A C K AT 2 0 11
Population Growth
•
Houston gaining more residents over the past decade than any of the nation's other 365
cities, according to a new study by Kinder Institute for Urban Research at Rice University.
•
Between 2000 and 2010, the Greater Houston metropolitan area grew by a whopping 1.2
million people, increasing by more than 123,000 individuals per year over the decade
•
Houston's growth represents more people than the population growth in the New York and
Chicago metropolitan areas combined during the past decade
AT L A N TA
H I S T O R I C A L A N A LY S I S
TOP CLIENTS
Occupancy
& Absorption vs. Employment Growth
100.00%
6,000,000
95.00%
4,000,000
90.00%
3,000,000
85.00%
2,000,000
80.00%
1,000,000
75.00%
0
70.00%
Occupancy %
Rentable SF Absorbed
5,000,000
(1,000,000)
(2,000,000)
(3,000,000)
1999
2000
2001
2002
2003
Total Occupancy %
2004
2005
2006
Direct Net Absorption
2007
2008
2009
2010
2011
2012
Source: CoStar
AT L A N TA
H I S T O R I C A L A N A LY S I S
TOP CLIENTS
Average
Annual Rates, Class A & B
$35.00
$30.00
$25.00
$20.00
$15.00
$10.00
$5.00
$0.00
1999
2000
2001
2002
2003
2004
2005
Class A
2006
Class B
2007
2008
2009
2010
2011
2012 YTD
Source: CoStar
AT L A N TA
H I S T O R I C A L A N A LY S I S
CLIENTS
NetTOP
Absorption,
by Submarket
2,000,000
1,500,000
1,000,000
500,000
0
2004
2005
2006
2007
2008
2009
2010
2011
2012 YTD
(500,000)
(1,000,000)
(1,500,000)
CBD
Galleria
Greenway
Energy Corridor
Westchase
North Belt
Woodlands
Source: CoStar
AT L A N TA
H I S T O R I C A L A N A LY S I S
CLIENTS
NetTOP
Absorption,
Old vs. New Product
5,000,000
4,000,000
RSF Net Absorption
3,000,000
2,000,000
1,000,000
0
(1,000,000)
(2,000,000)
(3,000,000)
(4,000,000)
(5,000,000)
1999
2000
2001
2002
2003
2004
OLDER PRODUCT
Buildings Built 1998 and prior
2005
2006
2007
2008
NEW PRODUCT
Buildings Built 1999 to Present
2009
2010
2011
2012 YTD
Source: CoStar
AT L A N TA
OFFICE FORECAST FOR 2012
•
Absorption through expansion - Tenants are in less space than they expect to be over the
next 36 months
•
Concessions expected to leave the market
•
Rental Rate Increases
•
Pre-leased Developments
•
Large Tenants Currently in the Market – Phillips 66, Repsol, Transcanada, PWC, Bechtel,
BHP, Samsung Engineering
•
The Greater Houston Partnership has forecasted 84,600 new jobs in 2012