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COLLIERS INTERNATIONAL | HOUSTON OFFICE MARKET | 4TH QUARTER 2009

Office Market
HOUSTON | 4TH QUARTER | 2009

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COLLIERS INTERNATIONAL | HOUSTON OFFICE MARKET | 3RD QUARTER UPDATE 2009

Office Market
COLLIERS INTERNATIONAL | HOUSTON OFFICE MARKET | 4TH QUARTER 2009

Houston Office Market Vacancy Up, Rents Down in 2009


MARKET INDICATORS
Houston’s office market posted weak fundamentals at the end of 2009 with year-over-year higher
vacancy, lower
l rentall rates, andd negative net absorption
b ending
d the h previous five
f consecutive years off
4Q-08 4Q-09 gains in occupied space citywide. Against the ongoing uncertainty regarding the timing for recovery
YEAR-TO-DATE NET ABSORPTION from the worst economic recession in recent history, office tenants continued to delay and/or
indefinitely postpone leasing decisions while struggling to draw up new strategies for space
1,880,599 SF (1,161,953) SF
requirements. For their part, landlords were once again forced to lower quoted rental rates across
CITYWIDE AVERAGE VACANCY property classes citywide and increase lease concession packages in an effort to motivate tenants to
ALL CLASSES
make commitments and thereby boost lease activity. At the end of the fourth quarter, CBD Class A
13.5% 16.4% f ll
full-service
i quoted d rentall rates decreased
d d 22.7%
7% to $37
$37.36
36 per SF
SF, while
hil suburban
b b Class
Cl A full-service
f ll i
quoted rates fell 2.2% to $27.26 per SF.
CITYWIDE AVERAGE
GROSS QUOTED RENTAL RATE
ALL CLASSES Rising vacancy at year-end was characterized by large blocks of space – 100,000 SF or more – hitting
the market, with both direct and sublease options available. Citywide, a total of 62 office properties
$23.46/SF $23.00/SF
had over 100,000 SF available to lease at the end of the fourth quarter. Sublease space on the
CLASS A market reached 4.7 million SF, with much of this space being marketed at significantly reduced
GROSS QUOTED RENTAL RATE rates
t and d available
il bl on extended
t d d tterms off fi
five or more years, which
hi h will
ill only
l further
f th exacerbate
b t
CBD $38.41/SF $37.36/SF downward pressure on direct rental rates over the next twelve months.

SUBURBAN $27.88/SF $27.26/SF


A severe contraction in the local employment sector in 2009 was the single most important
CLASS A VACANCY challenge to the office market this year. Following several years of strong job growth outperforming
CBD 8.1% 7.8% the national average, Houston’s employment sector contracted by 3.4%, representing nearly 88,900
job losses, in the twelve months ending in November 2009. Although well below the losses
SUBURBAN 12.6% 18.7%
recorded by other major U U.S.
S metros during the same period,
period for Houston the shock of even a late
entry to the recession was nevertheless daunting on all fronts. Economists are forecasting an
JOB GROWTH & UNEMPLOYMENT improvement in 2010, albeit meager, with Houston’s net job gains projected to reach between 2,000
and 5,000 annually. With commercial real estate a lagging indicator, office market fundamentals
NOV. 08 NOV. 09 are expected to continue weakening for most, if not all, of 2010.

HOUSTON -3.4% JOB GROWTH ABSORPTION, NEW SUPPLY & VACANCY RATES
88,900 JOBS LOST
2,500,000
, ,
17%
UNEMPLOYMENT 5.4% 8.2% 2,000,000
15%
1,500,000
-2.5% JOB GROWTH
TEXAS 13%
272,100 JOBS LOST 1,000,000
11%
UNEMPLOYMENT 5.4% 7.9% 500,000

0 9%
-3.4%
3 4% JOB GROWTH
U.S. 7%
4,655,000 JOBS LOST -500,000

-1,000,000 5%
UNEMPLOYMENT 6.5% 9.4% Q4-07 Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q4-09

Absorption New Supply Vacancy

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COLLIERS INTERNATIONAL | HOUSTON OFFICE MARKET | 4TH QUARTER 2009

Occupancy & Availability Absorption & Demand


2009 TOP OFFICE LEASES
Houston’s office occupancy continued Weak tenant demand for office space in
falling at year-end with the citywide average 2009 reversed Houston
Houston’ss previous five
Hess Corporation
Hess Tower (formerly Discovery Tower), for all property classes at 83.6% in the consecutive years of positive net absorption.
CBD fourth quarter, down from 86.5% at this A dismal outlook for the local employment
Jan-09 844,763 SF time last year. Overall, suburban office sector in 2010 suggests continued losses in
properties recorded substantially larger occupied space over the next twelve
Technip decreases in occupancy compared to CBD months.
Energy Tower II, Katy Freeway
properties over the past twelve months.
Aug-09 378,375 SF Although Houston’s office market posted
Suburban Class A occupancy posted the
236,880 SF of positive net absorption
Locke Lord Bissell & Liddell* sharpest decline to 81.3% at the end of the
citywide in the fourth quarter, it was not
Chase Tower, CBD fourth quarter from 87.4% one year ago.
enough to offset the significant losses in
Aug-09 246,381 SF Suburban Class B occupancy also
occupied space recorded in the previous
increased, although more moderately to
NRG Texas three quarters, resulting in 1.2 million SF
82.7% from 85.2% in the fourth quarter
Houston Pavilions, CBD of negative net absorption for the year.
Jun-09 232,962 SF last year.
Citywide, Class B properties were the
IIn the
h CBD,
CBD Cl Class A office
ff properties h d hit
hardest h in 2009 with h 11.6
6 million
ll SF
Tax Masters
managed to hold occupancy above 90 negative net absorption, compared to Class
Dairy Ashford Plaza, Energy Corridor
Aug-09 107,890 SF percent, closing the fourth quarter at A properties with 212,900 SF positive net
92.2% occupancy marking a slight increase absorption.
from 91.9% twelve months earlier.
King & Spalding*
1100 Louisiana, CBD Boosting occupancy for top-tier properties
Jul-09 105,151 SF were several key leases, as office tenants Rental Rates
continued
i d to b benefit
fi ffrom market
k With supplyl continuing
ti i to t outpace
t tenant
t t
ConocoPhillips Chemical Company* conditions in their favor including lower demand, and pervasive uncertainty
Ashford 7, Katy Freeway rental rates and increased concessions. regarding the possibility of economic
Nov-09 104,615 SF recovery in 2010, landlords again lowered
Sublet space continued to increase with a
their quoted rental rates for all property
Southwestern Energy total of 4.7 million SF on the market at
classes. Also significant to effective office
One Commerce Green, North Belt year’s end, including 2.3 million SF of
May-09 101,330 SF rental rates in the fourth quarter was the
vacant space and an additional 2.4 million
increase in lease concessions,
concessions including free
SF of subleases available for occupancy in
Washington Group International rent and generous tenant improvement
2010. The largest sublease space being
Richmond Park, Westchase packages, as landlords aggressively
marketed is located downtown in the RRI
Feb-09 96,225 SF competed for tenants.
Energy Plaza building (1000 Main, CBD)
*Renewal where 432,662 SF is available for On a year-over-year basis, CBD Class A
occupancy in October 2010 (through average quoted rental rates fell 2.7% to
CBD VS. SUBURBAN $37.36 per SF (from $38.41), while
October 2018), and the 120,550 SF
CLASS A OFFICE VACANCY & RENTS
available (through January 2020) at Three suburban Class A rental rates dropped
19.5% $42
Allen Center (333 Clay Street, CBD). 2.2% to $27.26 per SF (from $27.88). In
18.0% $40
16.5% $37 Outside the CBD, major sublease contrast, CBD Class B average quoted
15.0% $35 assignments include the 119,107 SF rental rates plunged 16.4% to $23.91 per
13.5%
12.0%
$32 (through December 2013) available at 9700 SF (from $28.60), while suburban Class B
$30
10.5% Bissonnet (Southwest); 110,000 SF rates slipped 2.0% to $18.09 per SF (from
9.0% $27
$25 (through 2013) at San Felipe Plaza (5847 $18.46) on a full-service basis. A weak
7.5%
6.0% $22 San Felipe, San Felipe-Voss;, and 36,309 SF employment outlook for 2010, leading to
4Q-08 1Q-09 2Q-09 3Q-09 4Q-09
(through February 2012) at The Braeswood minimal (if any) gains in occupancy, is
CBD VACANCY SUBURBAN VACANCY Tower II (9009 West Loop South, West expected to drive further rental rate
CBD RENTS SUBURBAN RENTS
Loop/Galleria). decreases over the next six to nine months.

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COLLIERS INTERNATIONAL | HOUSTON OFFICE MARKET | 4TH QUARTER 2009

Top Performing Office Buildings


Five Houston Center Bankk off America Ctr. Wells
W ll Fargo
F Pl
Plaza
1401 McKinney Street 700 Louisiana 1000 Louisiana
CBD CBD CBD

RBA: 580,875 SF RBA: 1,268,480 SF RBA: 1,721,242 SF

Built: 2002 Built: 1983 Built: 1983

Leased: 91.0% Leased: 88.1% Leased: 84.9%

Available: 56,362 SF Available: 140,830 SF Available: 260,214 SF

Rents: $42.62/SF Rents: $37.96/SF Rents: $42.45/SF

Owner: Owner: Owner:


Wells REIT II The Novarti Group Metropolitan Life
Insurance Company

Marathon Oil Tower Wells Fargo Tower Five Post Oak Park
5555 San Felipe 1300 Post Oak Blvd. 4400 Post Oak Pkwy
Galleria/West Loop Galleria/West Loop Galleria/West Loop
RBA: 1,070,209 SF RBA: 491,254 SF RBA: 567,396 SF
Built: 1982 Built: 1983 Built: 1982
Leased: 85.4% Leased: 93.0% Leased: 90.4%
Available: 156,075/SF Available: 34,211 SF Available: 53,688 SF
Rents: $27.59/SF Rents: $34.55/SF Rents: $34.83/SF
Owner: Owner: Owner:
Hanover Real Estate TIAA-CREF Shorenstein Company
Partners
The Plaza at Enclave One Eldridge Place. One BriarLake Plaza
1254 Enclave Parkway 777 N. Eldridge Parkway 2000 W. Sam Houston
Energy Corridor Energy Corridor Pkwy
Westchase
RBA: 343, 541 SF RBA: 239,417 SF
RBA: 502, 410 SF
Built: 2008 Built: 1985/2001
Built: 2000
Leased: 82.5% Leased: 92.1%
Leased: 93.0%
Available: 59,998 SF Available: 18,800 SF
Available: 34,946 SF
Rents: $32.00/SF Rents: $31.22/SF
Rents: $40.50 /SF
Owner: Owner:
Core Real Estate Behringer Harvard Owner:
Behringer Harvard

11 Greenway Place Waterway Plaza


W Pl I Offices at Kensington
Offi K i
11 Greenway 10003 Woodloch 1600 Highway 6
Greenway Forest Sugar Land/
RBA: 745,956 SF Woodlands E. Fort Bend

Built: 1979 RBA: 223,483 SF RBA: 85,218 SF

Leased: 84.5% Built: 2000 Built: 1998

Available: 115,313 SF Leased: 98.4% Leased: 94.6%

Rents: $30.47/SF A l bl 3,557


Available: 3 557 SF Available:
l bl 4,588
5 SF

Owner: Rents: $34.00/SF Rents: $25.00/SF


Crescent RE Equities Owner: Owner:
Triple Net Properties KBS Real Estate
Investment Trust

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COLLIERS INTERNATIONAL | HOUSTON OFFICE MARKET | 4TH QUARTER 2009

Sales Activity Leasing Activity


Investment sales activity remained weak Houston’s office leasing activity reached 2.4
throughout 2009, with the lack of available million SF in the fourth quarter,
quarter compared
credit posing the greatest challenge to to 3.1 million SF in the fourth quarter of
closing a transaction. Transactions in the 2008. Despite the slowdown from twelve
twelve-month period totaled 86 with a total months earlier, the Houston market posted
dollar volume of $161.0 million, averaging seven office leases over 100,000 SF in 2009,
Bridgestone I* $56 per SF and an average 9.1% as credit-strong tenants capitalized on
2600 N. Loop Freeway capitalization rate. prevailing weak market conditions.
Northwest Submarket
Although
Al h h sales l transactions
i off properties
i Significant
S f non-renewall office
ff leases
l signed
d
RBA: 135,400 SF
Built: 1976 with less than 50,000 SF continued to through the fourth quarter included: Hess’
Buyer: Fuller Realty Partners predominate, several significant 844,763 SF lease at Hess Tower (formerly
Seller: CHRISTUS Health transactions over 100,000 SF closed in the Discovery Tower, CBD); Technip’s 378,375
Sale Date: February 2009 fourth quarter including: SF lease at Energy Tower II (Katy Freeway-
Energy Corridor); NRG Texas’ 232,962 SF
Fausset Neely Inc. purchased the 126,015
lease at Houston Pavilions (CBD); Tax
SF Northwest One located at 13100
M
Masters’ ’ 107
107,890
890 SF llease at Dairy
D i Ashford
A hf d
Northwest Freeway (Northwest) for
Plaza (Katy Freeway-Energy Corridor); and
approximately $5.1 million, or $40 per SF,
Washington Group International’s 96,225
from RPD Catalyst. Built in 1982, the
SF lease at Richmond Park Westchase
property was 44% occupied at sale.
(Westchase).
Khosbin Properties purchased the 121,997
Key office lease renewals signed in 2009
SF 6001 Savoy Drive property from BGK
included Locke Lord Bissell & Liddell’s
Equities for approximately $4.4
$4 4 million or
246,381 SF lease at Chase Tower (CBD);
West Pointe Center* $36 per SF. This Southwest submarket
9420 W. Sam Houston Parkway King & Spalding’s 105,151 SF at 1100
property was 50% occupied at sale.
Northwest Submarket Louisiana (CBD); and ConocoPhillips’
Key office properties under contract at year 104,615 SF lease at Ashford 7 (Katy Freeway-
RBA: 170,823 SF
Built: 2009 end included the 162,900 SF One Park Energy Corridor).
Buyer: Undisclosed Ten Plaza (94% leased) and 130,822 SF
Seller: White Rock Commercial For other significant office lease transactions
Timberway II (97% leased), both located in
Sale Date: May 2009 signed in 2009,
2009 please see the list noted on
the
h Katy Freeway-Energy Corridor
d
page 3.
submarket.
*Colliers International sales transaction

HOUSTON OFFICE MARKET SUMMARY (CBD, SUBURBAN, & CITYWIDE)


Existing Properties Absorption Rent
Total Direct Direct Sublease Sublease Total Q4 Net YTD Net Wgtd. Avg.
Q4 Vacancy Q3 Vacancy
Class Inventory Vacant Vacancy Vacant Vacancy Vacant Absorption Absorption Quoted
Rate Rate
Sq. Ft. Sq. Ft. Rate Sq. Ft. Rate Sq. Ft. Sq. Ft. Sq. Ft. Rate

CENTRAL BUSINESS DISTRICT


A 27,837,503 1,858,659 6.7% 323,065 1.2% 2,181,724 7.8% 8.5% 188,132 67,959 $37.36
B 8,476,935 1,845,132 21.8% 91,324 1.1% 1,936,456 22.8% 23.0% 14,442 (222,825) $23.91
C 1,521,580 718,054 47.2% 0 0.0% 718,054 47.2% 48.5% 19,758 64,099 $15.95
Total 37,836,018 4,421,845 11.7% 414,389 1.1% 4,836,234 12.8% 13.4% 222,332 (90,767) $28.27
SUBURBAN TOTAL
A 69,289,235 11,887,352 17.2% 1,039,726 1.5% 12,927,078 18.7% 18.1% (78,402) 144,962 $27.26
B 69,573,370 11,226,177 16.1% 787,637 1.1% 12,013,814 17.3% 17.2% (39,389) (1,408,754) $18.09
C , ,
19,823,164 2,392,235
, , 12.1% 28,603
, 0.1% 2,420,838
, , 12.2% 12.9% 132,339
, 192,606
, $15.24
$
Total 158,685,769 25,505,764 16.1% 1,855,966 1.2% 27,361,730 17.2% 17.0% 14,548 (1,071,186) $22.09
GRAND TOTAL
A 97,126,738 13,746,011 14.2% 1,362,791 1.4% 15,108,802 15.6% 15.3% 109,730 212,921 $28.63
B 78,050,305 13,071,309 16.7% 878,961 1.1% 13,950,270 17.9% 17.8% (24,947) (1,631,579) $18.91
C 21,344,744 3,110,289 14.6% 28,603 0.1% 3,138,892 14.7% 15.4% 152,097 256,705 $15.40
Total 196,521,787 29,927,609 15.2% 2,270,355 1.2% 32,197,964 16.4% 16.3% 236,880 (1,161,953) $23.00

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COLLIERS INTERNATIONAL | HOUSTON OFFICE MARKET | 4TH QUARTER 2009

HOUSTON SUBURBAN OFFICE MARKET

Total Direct Direct Sublease Sublease Total Q4 Net YTD Net Wgtd. Avg.
Q4 Vacancy
Cl
Class I
Inventory
t V
Vacant
t V
Vacancy V
Vacant
t V
Vacancy V
Vacant
t Ab
Absorption
ti Ab
Absorption
ti Q t d
Quoted
Rate
Sq. Ft. Sq. Ft. Rate Sq. Ft. Rate Sq. Ft. Sq. Ft. Sq. Ft. Gross Rate

Suburban Total
A 69,289,235 11,887,352 17.2% 1,039,726 1.5% 12,927,078 18.7% (78,402) 144,962 $27.26
B 69,573,370 11,226,177 16.1% 787,637 1.1% 12,013,814 17.3% (39,389) (1,408,754) $18.09
C 19,823,164 2,392,235 12.1% 28,603 0.1% 2,420,838 12.2% 132,339 192,606 $15.24
Total 158,685,769 25,505,764 16.1% 1,855,966 1.2% 27,361,730 17.2% 14,548 (1,071,186) $ 22.09

Baytown
B 525,544 5,400 1.0% 0 0.0% 5,400 1.0% 0 (850) $17.74
C 60,396 4,787 7.9% 0 0.0% 4,787 7.9% (1,040) (1,661) $14.78
Total 585,940 10,187 1.7% 0 0.0% 10,187 1.7% (1,040) (2,511) $ 16.35
Bellaire
A 1,390,034 97,229 7.0% 17,905 1.3% 115,134 8.3% 20,668 (9,112) $23.19
B 945,345 50,567 5.3% 0 0.0% 50,567 5.3% 25,090 (4,639) $17.66
C 567,560 32,201 5.7% 0 0.0% 32,201 5.7% (7,622) 1,395 $15.25
Total 2,902,939 179,997 6.2% 17,905 0.6% 197,902 6.8% 38,136 (12,356) $ 20.22
Conroe
A 60,000 0 0.0% 0 0.0% 0 0.0% 0 0 -
B 287,739 23,421 8.1% 0 0.0% 23,421 8.1% 315 (5,345) $15.18
C 157,335 4,275 2.7% 0 0.0% 4,275 2.7% (4,275) (4,275) $15.00
Total 505,074 27,696 5.5% 0 0.0% 27,696 5.5% (3,960) (9,620) $ 15.15
E.Fort Bend/Sugarland
A 3,382,755 507,315 15.0% 5,339 0.2% 512,654 15.2% 8,881 51,315 $28.88
B 1,907,135 296,005 15.5% 4,228 0.2% 300,233 15.7% (9,068) (9,281) $18.74
C 174,013 6,492 3.7% 0 0.0% 6,492 3.7% (4,319) (5,692) $15.45
Total 5,463,903 809,812 14.8% 9,567 0.2% 819,379 15.0% (4,506) 36,342 $ 25.07
FM 1960
A 2,341,171 1,541,677 65.9% 23,511 1.0% 1,565,188 66.9% (9,899) 11,668 $26.96
B 5,142,610 1,637,343 31.8% 78,132 1.5% 1,715,475 33.4% 55,464 (27,189) $16.14
C 828,120 85,638 10.3% 13,619 1.6% 99,257 12.0% 4,893 22,731 $14.25
Total 8,311,901 3,264,658 39.3% 115,262 1.4% 3,379,920 40.7% 50,458 7,210 $ 21.20
Greenway
G
A 6,069,998 892,027 14.7% 144,181 2.4% 1,036,208 17.1% 75,210 (67,963) $30.38
B 2,745,088 244,909 8.9% 3,500 0.1% 248,409 9.0% 23,778 18,597 $21.05
C 954,859 247,055 25.9% 0 0.0% 247,055 25.9% (5,481) (30,090) $16.35
Total 9,769,945 1,383,991 14.2% 147,681 1.5% 1,531,672 15.7% 93,507 (79,456) $ 26.22
Gulf Freeway/Pasadena
A 88,000 44,000 50.0% 0 0.0% 44,000 50.0% 0 44,000 $16.50
B 1,561,870 159,629 10.2% 4,294 0.3% 163,923 10.5% 64,669 25,860 $18.48
C 1,144,329 136,919 12.0% 0 0.0% 136,919 12.0% 6,291 (29,671) $14.41
Total 2,794,199 340,548 12.2% 4,294 0.2% 344,842 12.3% 70,960 40,189 $ 14.46
I-10 East
B 318,516 90,474 28.4% 9,260 2.9% 99,734 31.3% (9,260) 5,527 $15.21
C 165,473 16,748 10.1% 0 0.0% 16,748 10.1% 0 0 $8.70
Total 483,989 107,222 22.2% 9,260 1.9% 116,482 24.1% (9,260) 5,527 $ 14.19
Katy Freeway
A 11,193,349 2,452,879 21.9% 154,772 1.4% 2,607,651 23.3% (289,428) 718,334 $28.30
B 6,869,739 1,012,747 14.7% 115,578 1.7% 1,128,325 16.4% 3,053 (227,911) $19.07
C 1,812,915 209,946 11.6% 0 0.0% 209,946 11.6% 6,935 (27,478) $14.93
Total 19,876,003 3,675,572 18.5% 270,350 1.4% 3,945,922 19.9% (279,440) 462,945 $ 24.99
Kingwood/Humble
A 134,000 25,904 19.3% 0 0.0% 25,904 19.3% 0 0 $27.50
B 2,489,582 213,243 8.6% 8,400 0.3% 221,643 8.9% 134 (13,276) $19.71
C 746,003 31,033 4.2% 0 0.0% 31,033 4.2% (9,787) 325 $16.55
Total 3,369,585 270,180 8.0% 8,400 0.2% 278,580 8.3% (9,653) (12,951) $ 20.09
NASA/Clear Lake
A 699,707 32,594 4.7% 9,152 1.3% 41,746 6.0% (3,079) (12,974) $23.62
B 3,038,159 262,669 8.6% 13,609 0.4% 276,278 9.1% 38,507 25,861 $20.75
C 1,227,256 125,141 10.2% 13,047 1.1% 138,188 11.3% 12,277 1,846 $14.11
Total 4,965,122 420,404 8.5% 35,808 0.7% 456,212 9.2% 47,705 14,733 $ 19.00
Neartown/Allen Parkway
A 1,613,358 239,370 14.8% 133,930 8.3% 373,300 23.1% 11,559 (172,300) $24.06
B 2,583,793 148,586 5.8% 36,600 1.4% 185,186 7.2% (19,397) 81,580 $20.63
C 1,191,545 402,997 33.8% 0 0.0% 402,997 33.8% (4,597) (23,843) $19.20
Total 5,388,696 790,953 14.7% 170,530 3.2% 961,483 17.8% (12,435) (114,563) $ 20.94
Greenspoint/North Belt
A 5,060,046 355,182 7.0% 80,739 1.6% 435,921 8.6% 70,848 (41,494) $19.88
B 4,747,096 1,090,002 23.0% 63,063 1.3% 1,153,065 24.3% 16,319 (313,592) $16.72
C 1,384,999 253,009 18.3% 1,937 0.1% 254,946 18.4% 6,033 36,559 $13.14
Total 11,192,141 1,698,193 15.2% 145,739 1.3% 1,843,932 16.5% 93,200 (318,527) $ 16.85

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COLLIERS INTERNATIONAL | HOUSTON OFFICE MARKET | 4TH QUARTER 2009

HOUSTON SUBURBAN OFFICE MARKET

Total Direct Direct Sublease Sublease Total Q4 Net YTD Net Wgtd.
g Avg.
g
Q4 Vacancy
V
Class Inventory Vacant Vacancy Vacant Vacancy Vacant Absorption Absorption Quoted
Rate
Sq. Ft. Sq. Ft. Rate Sq. Ft. Rate Sq. Ft. Sq. Ft. Sq. Ft. Gross Rate

Northeast
A 0 0 #DIV/0! 0 #DIV/0! 0 #DIV/0! 0 0 $0.00
B 291,773 50,291 17.2% 0 0.0% 50,291 17.2% 0 4,612 $17.02
C 143,647 15,851 11.0% 0 0.0% 15,851 11.0% 1,196 36,172 $11.95
Total 435,420 66,142 15.2% 0 0.0% 66,142 15.2% 1,196 40,784 $ 15.80
Northwest
A 3,522,529 1,370,682 38.9% 27,944 0.8% 1,398,626 39.7% 16,678 134,754 $23.18
B 6,532,260 1,327,052 20.3% 42,690 0.7% 1,369,742 21.0% (132,691) (252,983) $15.66
C 1,584,361 107,491 6.8% 0 0.0% 107,491 6.8% 18,921 15,935 $12.31
Total 11,639,150 2,805,225 24.1% 70,634 0.6% 2,875,859 24.7% (97,092) (102,294) $ 19.21
Northwest Outlier
A 89,750 0 0.0% 0 0.0% 0 0.0% 0 89,750 -
B 135,457 7,572 5.6% 0 0.0% 7,572 5.6% 3,276 (2,512) $13.80
C 0 0 0 0 0 0 -
Total 225,207 7,572 3.4% 0 0.0% 7,572 3.4% 3,276 87,238 $13.80
Richmond/Fountainview
A 0 0 0.0% 0 0.0% 0 0.0% 0 0 $0.00
B 643,051 62,902 9.8% 0 0.0% 62,902 9.8% 8,167 18,990 $13.84
C 794,419 123,802 15 6%
15.6% 0 0 0%
0.0% 123,802 15 6%
15.6% 10,213 2,329 $12 63
$12.63
Total 1,437,470 186,704 13.0% 0 0.0% 186,704 13.0% 18,380 21,319 $ 13.04
San Felipe/Voss
A 1,741,228 219,194 12.6% 29,895 1.7% 249,089 14.3% (5,560) (71,381) $31.26
B 3,389,806 312,288 9.2% 22,723 0.7% 335,011 9.9% 11,592 (53,156) $19.51
C 161,393 21,900 13.6% 0 0.0% 21,900 13.6% 2,554 (6,099) $12.46
Total 5,292,427 553,382 10.5% 52,618 1.0% 606,000 11.5% 8,586 (130,636) $ 23.89
South
A 105,869 105,869 100.0% 0 0.0% 105,869 100.0% (869) (869) $26.92
B 396,450 32,614 8.2% 0 0.0% 32,614 8.2% 15,536 (6,348) $23.60
C 223,029 42,220 18.9% 0 0.0% 42,220 18.9% (6,000) 7,942 $16.68
T t l
Total 725 348
725,348 180 703
180,703 24 9%
24.9% 0 0 0%
0.0% 180 703
180,703 24 9%
24.9% 8 667
8,667 725 $ 23 93
23.93
South Main/Med Center
A 4,287,933 370,028 8.6% 0 0.0% 370,028 8.6% 16,335 169,470 $30.98
B 3,751,688 247,543 6.6% 4,800 0.1% 252,343 6.7% (34,477) 42,888 $20.45
C 2,745,096 153,505 5.6% 0 0.0% 153,505 5.6% 65,165 58,807 $18.26
Total 10,784,717 771,076 7.1% 4,800 0.0% 775,876 7.2% 47,023 271,165 $ 25.07
Southeast/Outlier
A 159,304 0 0.0% 0 0.0% 0 0.0% 0 0 -
B 461,945 71,479 15.5% 0 0.0% 71,479 15.5% 0 (10,492) $22.28
C 22,783 0 0.0% 0 0.0% 0 0.0% 9,036 9,036 $15.00
Total 644,032 71,479 11.1% 0 0.0% 71,479 11.1% 9,036 (1,456) $ 22.28
Southwest
A 726,310 207,624 28.6% 20,719 2.9% 228,343 31.4% (12,089) (167,133) $18.28
B 6,964,376 1,434,019 20.6% 164,450 2.4% 1,598,469 23.0% (19,107) (141,842) $15.37
C 2,475,639 258,469 10.4% 0 0.0% 258,469 10.4% 11,254 142,215 $12.49
Total 10,166,325 1,900,112 18.7% 185,169 1.8% 2,085,281 20.5% (19,942) (166,760) $ 15.30
Southwest Outlier
A 87,710 10,116 11.5% 0 0.0% 10,116 11.5% 10,577 9,196 $27.42
B 372,488 59,798 16.1% 0 0.0% 59,798 16.1% (396) (5,734) $26.65
C 150,735 5,500 3.6% 0 0.0% 5,500 3.6% 250 9,100 $16.08
Total 610,933 75,414 12.3% 0 0.0% 75,414 12.3% 10,431 12,562 $ 25.98
West Loop
p
A 16,245,407 1,584,553 9.8% 226,984 1.4% 1,811,537 11.2% (57,937) (521,650) $28.91
B 5,460,106 1,230,281 22.5% 50,800 0.9% 1,281,081 23.5% (32,578) (368,156) $22.09
C 426,332 23,394 5.5% 0 0.0% 23,394 5.5% (36) (17,467) $16.50
Total 22,131,845 2,838,228 12.8% 277,784 1.3% 3,116,012 14.1% (90,551) (907,273) $ 25.85
Westchase
A 7,994,528 1,245,505 15.6% 122,685 1.5% 1,368,190 17.1% (5,814) (204,845) $27.56
B 5,004,398 739,488 14.8% 92,797 1.9% 832,285 16.6% (4,519) (178,037) $19.70
C 509,131 58,785 11.5% 0 0.0% 58,785 11.5% 20,478 (1,745) $15.04
Total 13,508,057 2,043,778 15.1% 215,482 1.6% 2,259,260 16.7% 10,145 (384,627) $ 24.36
Woodlands
A 2 296 249
2,296,249 585 604
585,604 25 5%
25.5% 41 970
41,970 1 8%
1.8% 627 574
627,574 27 3%
27.3% 75 517
75,517 186 196
186,196 $28 75
$28.75
B 3,007,356 415,855 13.8% 72,713 2.4% 488,568 16.2% (43,796) (11,326) $20.39
C 171,796 25,077 14.6% 0 0.0% 25,077 14.6% 0 (3,765) $19.60
Total 5,475,401 1,026,536 18.7% 114,683 2.1% 1,141,219 20.8% 31,721 171,105 $ 25.14

6
COLLIERS INTERNATIONAL | HOUSTON OFFICE MARKET | 4TH QUARTER 2009

Office Development Pipeline


Houston s development activity slowed significantly at the end of 2009,
Houston’s 2009 with 400
400,800
800 SF of new office space added in the fourth quarter
(bringing the year-end total to 4.5 million SF). Citywide, the Energy Corridor/Katy Freeway submarket dominated new development
activity accounting for 47% or 2.1 million SF of the total 4.5 million SF of new office space added this year. Among the most significant
office buildings delivered in the Energy Corridor this year were MacHaik’s 428,831-SF Energy Tower II (11720 Katy Freeway),
Transwestern’s 350,000-SF Eldridge Oaks (1080 Eldridge Parkway), MetroNational’s 336,000-SF Cemex Center (920 Memorial City
Way) and Behringer Harvard’s 305,528-SF Three Eldridge Place (737 Eldridge Parkway). Other key submarkets adding inventory this
year included The Woodlands submarket with 702,990 SF in five new buildings (16% of the citywide total), the Northwest with 597,435
SF in four new buildings (13% of the total),
total) and Westchase with 514
514,703
703 SF in four new office buildings (12% of the total).
total)
Of the 2.2 million SF of office space under construction at the end of 2009, two new buildings in the CBD - Hines’ 972,474-SF Main
Place (slated for delivery in 2011) and Trammell Crow Company’s Hess Tower (formerly Discovery Tower, scheduled for completion in
2010) – account for 82% of the total development underway. Outside the CBD, two new office projects are located in the Sugar Land-
East Fort Bend County submarket: Planned Community’s 157,619 SF office addition to the mixed-use Sugar Land Town Center and
Midway Companies’ 152,619 SF Eco Center at Lake Pointe, both scheduled to be completed by the end of the first quarter 2010. After
a short hiatus, Trademark Property’s is back on track to deliver approximately 80,000 SF of office space as part of their mixed-use High
Street project located 4410 Westheimer (inside Loop 610) in the West Loop/Galleria submarket. Weak market fundamentals have
contributed to slow lease-up of the speculative projects under construction, with the notable exception of Trammell Crow Company’s
Hess Tower (formerly Discovery Tower) 100% preleased to Hess Corporation.

Select Under Construction Office Buildings


Estimated
Submarket Building Name Building Address Sq. Ft. % Leased Developer Delivery
CBD MainPlace 811 Main St 972,474 11.2 Hines Holdings Inc. Feb-11
CBD Hess Tower 1501 McKinney St 844,763 100 TCC Development May-10
E Fort Bend Co/Sugar Land Sugar Land Town Center 2245 Texas Dr 157,619 0 Planned Community Development Co. Mar-10
E Fort Bend Co/Sugar Land Eco Centre at Lake Pointe 16750 Creek Bend Dr 152,619 0 Midway Companies Feb-10
West Loop/Galleria High Street 4410 Westheimer Rd 78,966 0 Trademark Property Oct-10

Total office properties under construction listed above 2,206,441


Grand total office properties under construction over 20,000 sq. ft. 2,206,441

Select Year-to-Date Office Building Deliveries


Submarket Building Name Building Address Sq. Ft. % Leased Developer Delivered
Katy Freeway Energy Tower II 11720 Katy Fwy 428,831 98.27 MacHaik Management Aug-09
Katy Freeway Eldridge Oaks Phase 1 1080 Eldridge Pky 350,000 0 Transwestern Sep-09
Katy Freeway Cemex Center 920 Memorial City Way 336,000 70.32 MetroNational Sep-09
Katy Freeway Energy Center II 575 N Dairy Ashford 305,585 74.09 Trammell Crow Company Jan-09
Katy Freeway Three Eldridge Place 737 Eldridge Pky 305,528 0 Behringer Harvard Sep-09
Westchase Westchase Park 3700 W Sam Houston Pky S 272,361 38.09 Simmons Vedder Partners Sep-09
Northwest GE Oil & Gas 4424 W Sam Houston Pky N 250,000 68.04 Dienna Nelson Augustine Company Feb-09
Woodlands Waterway Square 4 Waterway Square 232,364 30.57 The Woodlands Development Company Feb-09
Woodlands US Oncology 10101 Woodloch Forest Pl 204,000 100 The Woodlands Land Development Feb-09
Woodlands The Reserve at Sierra Pines 1585 Sawdust Rd 180,000 7.61 Stream Realty Partners, L.P. Jul-09
Northwest Beltway Lakes II 5875 N Sam Houston Pky W 162,416 0 The Radler Limited Partnership Apr-09
Westchase One Oak Park 6002 Rogerdale Rd 153,342 37.39 MK Equity Partners, LP Apr-09
Katy Freeway Reserve at Park Ten - Phase I 15721 Park Row 150,000 0 Yancey-Hausman Jun-09
Katy Freeway CityCentre Two 811 Town & Country Way 129,200 56.25 Midway Companies Apr-09
Northwest Two Westway 11025 Equity Dr 95,269 0 Opus Corporation Dec-09
Northwest Outlier Det Norkse Veritas 22535 Colonial Pky 89,750 100 Duke Realty Mar-09
Gulf Freeway/Pasadena Deerwood Glen Office Park 4400 Highway 225 88,000 50 Clay Development & Construction Sep-09
South Shadow Creek Business Center 11233 Shadow Creek Pky 80,000 6.88 Wallace Bajjali Development Aug-09
Westchase 3131 Briarpark Office Building 3131 Briarpark Dr 69,000 74.28 PGAL Jun-09
West Loop/Galleria Blvd Place 6 1800 Post Oak Blvd 66,408 76.9 Wulfe & Co. Feb-09
Woodlands Woodlands 45 Corporate Center 24624 I-45 N 64,822 59.54 PHA/Houston LLC Mar-09
Greenspoint/North Belt 15109 Heathrow Office Building 15109 Heathrow Forest Pky 63,621 0 Transwestern Jun-09
FM 1960 Wortham Green 13100 Wortham Ctr 62,608 30.78 Panattoni Mar-09
FM 1960 Stress Engineering Office Bldg. 13606 Westland East Blvd 55,468 100 Westfair East Ltd. Jul-09

Total office properties delivered year-to-date listed above 4,194,573


Grand total delivered year-to-date (including properties below 50,000 sq. ft. not listed above) 4,487,644

7
COLLIERS INTERNATIONAL | HOUSTON OFFICE MARKET | 4TH QUARTER 2009

294 Offices Worldwide

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AMERICA
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94 USA
22 CANADA
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64 ASIA/PACIFIC
97 EUROPE/MIDDLE COLLIERS INTERNATIONAL
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Houston, Texas 77056

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REVENUE Fax: 713.830.2118
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