houston office market -1q 2010

Houston Office MarketF I R S T Q U A R T E R 2 0 1 0

The CoStarOffice Report

Houston Office Market

©2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT A

FIRST QUARTER 2010 – HOUSTON

Table of ContentsTable of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A

Methodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C

Terms & Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D

Market Highlights & Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

CoStar Markets & Submarkets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Employment & Tenant Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Employment & Unemployment AnalysisTenant Profiles

Inventory & Development Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Construction Activity MapInventory & Development AnalysisSelect Top DeliveriesSelect Top Under Construction Properties

Figures at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Figures at a Glance by Class & MarketFigures at a Glance by Class & SubmarketFigures at a Glance Grouped by CBD vs SuburbanHistorical Figures at a Glance

Leasing Activity Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20Leasing Activity MapLeasing Activity AnalysisSelect Top Lease Transactions

Sales Activity Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23Sales Activity AnalysisSelect Top Sales TransactionsSelect Same Building SalesSelect Land Sales

Analysis of Individual CoStar Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26Austin County MarketBellaire MarketDowntown MarketE Fort Bend Co/Sugar Land MarketFM 1960 MarketGreenway Plaza MarketGulf Freeway/Pasadena MarketI-10 East MarketKaty Freeway MarketKingwood/Humble MarketNASA/Clear Lake MarketNorth Belt MarketNortheast Near MarketNorthwest MarketRichmond/Fountainview MarketSan Felipe/Voss MarketSan Jacinto County MarketSouth MarketSouth Hwy 35 MarketSouth Main/Medical Center MarketSouthwest MarketWest Loop MarketWestchase Market


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HOUSTON – FIRST QUARTER 2010


©2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT C


Table of Contents (Continued)

Woodlands Market


B THE COSTAR OFFICE REPORT ©2010 COSTAR GROUP, INC.



©2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT C


Methodology

The CoStar Office Report, unless specifically stated otherwise, calculates office statistics using CoStar Group’s entire database of existing and under construction office buildings in each metropolitan area. Included are office, office condominium, office loft, office medical, all classes and all sizes, and both multi-tenant and single-tenant buildings, including owner-occupied buildings. CoStar Group's national database includes approximately 69.1 billion square feet of coverage in 2.8 million properties. All rental rates reported in the CoStar Office Report have been converted to a Full Service equivalent rental rate.

© Copyright 2010 CoStar Group, Inc. All Rights Reserved. Although CoStar makes efforts to ensure the accuracy and reliability of the information contained herein, CoStar makes no guarantee, representation or warranty regarding the quality, accuracy, timeliness or completeness of the information. The publication is provided ‘as is’ and CoStar expressly disclaims any guarantees, representations or warranties of any kind, including those of MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

CoStar Group, Inc.

2 Bethesda Metro Center • Bethesda, MD USA 20814 • (800) 204-5960 • www.costar.com • NASDAQ: CSGP

For information on subscribing to CoStar’s other products and services, please contact us at

1-877-7COSTAR, or visit our web site at www.costar.com


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©2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT E


Terms & DefinitionsAvailability Rate: The ratio of available space to total rentable space, calculated by dividing the total available square feet by the total rentable square feet.

Available Space: The total amount of space that is currently being marketed as available for lease in a given time period. It includes any space that is available, regardless of whether the space is vacant, occupied, available for sublease, or available at a future date.

Build-to-Suit: A term describing a particular property, developed specifically for a certain tenant to occupy, with structural features, systems, or improvement work designed specifically for the needs of that tenant. A build-to-suit can be leased or owned by the ten-ant. In a leased build-to-suit, a tenant will usually have a long term lease on the space.

Buyer: The individual, group, company, or entity that has pur-chased a commercial real estate asset.

Cap Rate: Short for capitalization rate. The Cap Rate is a calcula-tion that reflects the relationship between one year’s net operating income and the current market value of a particular property. The Cap Rate is calculated by dividing the annual net operating income by the sales price (or asking sales price).

CBD: Abbreviation for Central Business District. (See also: Central Business District)

Central Business District: The designations of Central Business District (CBD) and Suburban refer to a particular geographic area within a metropolitan statistical area (MSA) describing the level of real estate development found there. The CBD is characterized by a high density, well organized core within the largest city of a given MSA.

Class A: A classification used to describe buildings that generally qualify as extremely desirable investment-grade properties and command the highest rents or sale prices compared to other buildings in the same market. Such buildings are well located and provide efficient tenant layouts as well as high quality, and in some buildings, one-of-a-kind floor plans. They can be an archi-tectural or historical landmark designed by prominent architects. These buildings contain a modern mechanical system, and have above-average maintenance and management as well as the best quality materials and workmanship in their trim and interior fit-tings. They are generally the most attractive and eagerly sought by investors willing to pay a premium for quality.

Class B: A classification used to describe buildings that generally qualify as a more speculative investment, and as such, command lower rents or sale prices compared to Class A properties. Such buildings offer utilitarian space without special attractions, and have ordinary design, if new or fairly new; good to excellent design if an older non-landmark building. These buildings typical-ly have average to good maintenance, management and tenants. They are less appealing to tenants than Class A properties, and may be deficient in a number of respects including floor plans, condition and facilities. They lack prestige and must depend chiefly on a lower price to attract tenants and investors.

Class C: A classification used to describe buildings that gener-ally qualify as no-frills, older buildings that offer basic space and command lower rents or sale prices compared to other buildings in the same market. Such buildings typically have below-average maintenance and management, and could have mixed or low tenant prestige, inferior elevators, and/or mechanical/electrical systems. These buildings lack prestige and must depend chiefly on a lower price to attract tenants and investors.

Construction Starts: Buildings that began construction during a specific period of time. (See also: Deliveries)

Contiguous Blocks of Space: Space within a building that is, or is able to be joined together into a single contiguous space.

Deliveries: Buildings that complete construction during a specified period of time. In order for space to be considered delivered, a certificate of occupancy must have been issued for the property.

Delivery Date: The date a building completes construction and receives a certificate of occupancy.

Developer: The company, entity or individual that transforms raw land to improved property by use of labor, capital and entrepre-neurial efforts.

Direct Space: Space that is being offered for lease directly from the landlord or owner of a building, as opposed to space being offered in a building by another tenant (or broker of a tenant) trying to sublet a space that has already been leased.

Existing Inventory: The square footage of buildings that have received a certificate of occupancy and are able to be occupied by tenants. It does not include space in buildings that are either planned, under construction or under renovation.

Flex Building: A type of building designed to be versatile, which may be used in combination with office (corporate headquarters), research and development, quasi-retail sales, and including but not limited to industrial, warehouse, and distribution uses. A typi-cal flex building will be one or two stories with at least half of the rentable area being used as office space, have ceiling heights of 16 feet or less, and have some type of drive-in door, even though the door may be glassed in or sealed off.

Full Service Rental Rate: Rental rates that include all operating expenses such as utilities, electricity, janitorial services, taxes and insurance.

Gross Absorption: The total change in occupied space over a given period of time, counting space that is occupied but not space that is vacated by tenants. Gross absorption differs from leasing Activity, which is the sum of all space leased over a certain period of time. Unless otherwise noted Gross Absorption includes direct and sublease space.

Growth in Inventory: The change in size of the existing square footage in a given area over a given period of time, generally due to the construction of new buildings.

Industrial Building: A type of building adapted for such uses as the assemblage, processing, and/or manufacturing of products from raw materials or fabricated parts. Additional uses include warehousing, distribution, and maintenance facilities. The pri-mary purpose of the space is for storing, producing, assembling, or distributing product.

Landlord Rep: (Landlord Representative) In a typical lease trans-action between an owner/landlord and tenant, the broker that represents the interests of the owner/landlord is referred to as the Landlord Rep.

Leased Space: All the space that has a financial lease obligation. It includes all leased space, regardless of whether the space is currently occupied by a tenant. Leased space also includes space being offered for sublease.

Leasing Activity: The volume of square footage that is commit-ted to and signed under a lease obligation for a specific building or market in a given period of time. It includes direct leases, subleases and renewals of existing leases. It also includes any pre-leasing activity in planned, under construction, or under renovation buildings.

Market: Geographic boundaries that serve to delineate core areas that are competitive with each other and constitute a generally accepted primary competitive set of areas. Markets are building-type specific, and are non-overlapping contiguous geographic designations having a cumulative sum that matches the boundar-ies of the entire Region (See also: Region). Markets can be further subdivided into Submarkets. (See also: Submarkets)


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©2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT E


Multi-Tenant: Buildings that house more than one tenant at a given time. Usually, multi-tenant buildings were designed and built to accommodate many different floor plans and designs for different tenant needs. (See also: Tenancy).

Net Absorption: The net change in occupied space over a given period of time. Unless otherwise noted Net Absorption includes direct and sublease space.

Net Rental Rate: A rental rate that excludes certain expenses that a tenant could incur in occupying office space. Such expenses are expected to be paid directly by the tenant and may include janitorial costs, electricity, utilities, taxes, insurance and other related costs.

New Space: Sometimes called first generation space, refers to space that has never been occupied and/or leased by a tenant.

Occupied Space: Space that is physically occupied by a tenant. It does not include leased space that is not currently occupied by a tenant.

Office Building: A type of commercial building used exclusively or primarily for office use (business), as opposed to manufactur-ing, warehousing, or other uses. Office buildings may sometimes have other associated uses within part of the building, i.e., retail sales, financial, or restaurant, usually on the ground floor.

Owner: The company, entity, or individual that holds title on a given building or property.

Planned/Proposed: The status of a building that has been announced for future development but not yet started construction.

Preleased Space: The amount of space in a building that has been leased prior to its construction completion date, or certificate of occupancy date.

Price/SF: Calculated by dividing the price of a building (either sales price or asking sales price) by the Rentable Building Area (RBA).

Property Manager: The company and/or person responsible for the day-to-day operations of a building, such as cleaning, trash removal, etc. The property manager also makes sure that the vari-ous systems within the building, such as the elevators, HVAC, and electrical systems, are functioning properly.

Quoted Rental Rate: The asking rate per square foot for a par-ticular building or unit of space by a broker or property owner. Quoted rental rates may differ from the actual rates paid by tenants following the negotiation of all terms and conditions in a specific lease.

RBA: Abbreviation for Rentable Building Area. (See also: Rentable Building Area)

Region: Core areas containing a large population nucleus, that together with adjacent communities have a high degree of eco-nomic and social integration. Regions are further divided into market areas, called Markets. (See also: Markets)

Relet Space: Sometimes called second generation or direct space, refers to existing space that has previously been occupied by another tenant.

Rentable Building Area: (RBA) The total square footage of a building that can be occupied by, or assigned to a tenant for the purpose of determining a tenant’s rental obligation. Generally RBA includes a percentage of common areas including all hall-ways, main lobbies, bathrooms, and telephone closets.

Rental Rates: The annual costs of occupancy for a particular space quoted on a per square foot basis.

Sales Price: The total dollar amount paid for a particular property at a particular point in time.

Sales Volume: The sum of sales prices for a given group of build-ings in a given time period.

Seller: The individual, group, company, or entity that sells a par-ticular commercial real estate asset.

SF: Abbreviation for Square Feet.

Single-Tenant: Buildings that are occupied, or intended to be occupied by a single tenant. (See also: Build-to-suit and Tenancy)

Sublease Space: Space that has been leased by a tenant and is being offered for lease back to the market by the tenant with the lease obligation. Sublease space is sometimes referred to as sublet space.

Submarkets: Specific geographic boundaries that serve to delin-eate a core group of buildings that are competitive with each other and constitute a generally accepted primary competitive set, or peer group. Submarkets are building type specific (office, industrial, retail, etc.), with distinct boundaries dependent on different factors relevant to each building type. Submarkets are non-overlapping, contiguous geographic designations having a cumulative sum that matches the boundaries of the Market they are located within (See also: Market).

Suburban: The Suburban and Central Business District (CBD) designations refer to a particular geographic area within a metro-politan statistical area (MSA). Suburban is defined as including all office inventory not located in the CBD. (See also: CBD)

Tenancy: A term used to indicate whether or not a building is occupied by multiple tenants (See also: Multi-tenant) or a single tenant. (See also: Single-tenant)

Tenant Rep: Tenant Rep stands for Tenant Representative. In a typical lease transaction between an owner/landlord and tenant, the broker that represents the interests of the tenant is referred to as a Tenant Rep.

Time On Market: A measure of how long a currently available space has been marketed for lease, regardless of whether it is vacant or occupied.

Under Construction: The status of a building that is in the process of being developed, assembled, built or constructed. A building is considered to be under construction after it has begun construc-tion and until it receives a certificate of occupancy.

Vacancy Rate: A measurement expressed as a percentage of the total amount of physically vacant space divided by the total amount of existing inventory. Under construction space generally is not included in vacancy calculations.

Vacant Space: Space that is not currently occupied by a tenant, regardless of any lease obligation that may be on the space. Vacant space could be space that is either available or not avail-able. For example, sublease space that is currently being paid for by a tenant but not occupied by that tenant, would be considered vacant space. Likewise, space that has been leased but not yet occupied because of finish work being done, would also be con-sidered vacant space.

Weighted Average Rental Rate: Rental rates that are calculated by factoring in, or weighting, the square footage associated with each particular rental rate. This has the effect of causing rental rates on larger spaces to affect the average more than that of smaller spaces. The weighted average rental rate is calculated by taking the ratio of the square footage associated with the rental rate on each individual available space to the square footage associated with rental rates on all available spaces, multiplying the rental rate by that ratio, and then adding together all the resulting numbers. Unless specifically specified otherwise, rental rate averages include both Direct and Sublet available spaces.

Year Built: The year in which a building completed construction and was issued a certificate of occupancy.

YTD: Abbreviation for Year-to-Date. Describes statistics that are cumulative from the beginning of a calendar year through what-ever time period is being studied.



©2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 1

OVERVIEW

Houston’s Vacancy Decreases to 14.4% Net Absorption Positive 569,759 SF in the Quarter

The Houston Office market ended the first quarter 2010 with a vacancy rate of 14.4%. The vacancy rate was down over the previous quarter, with net absorption

totaling positive 569,759 square feet in the first quarter. Vacant sublease space decreased in the quarter, ending the quarter at 2,390,899 square feet. Rental rates ended the first quarter at $23.12, a decrease over the previous quarter. A total of eight buildings delivered to the market in the quarter totaling 137,742 square feet, with 2,194,537 square feet still under construction at the end of the quarter.

AbsorptionNet absorption for the overall Houston office market was

positive 569,759 square feet in the first quarter 2010. That com-pares to positive 66,865 square feet in the fourth quarter 2009, negative (52,577) square feet in the third quarter 2009, and posi-tive 73,242 square feet in the second quarter 2009.

Tenants moving out of large blocks of space in 2010 include: Philip Industrial Services (Usa); Inc moving out of 800,000 square feet at Sage Plaza; Sverdrup Technology moving out of 170,576 square feet at 2224 Bay Area Blvd; and Franklin Bank Corp. moving out of 44,046 square feet at 9800 Richmond Ave.

Tenants moving into large blocks of space in 2010 include: Tax Masters, Inc. moving into 107,890 square feet at Dairy Ashford Plaza; D’Amico’s Italian Restaurant moving into 50,000 square feet at 5510 Morningside; and Willis of Texas moving into 45,766 square feet at Cemex Center.

The Class-A office market recorded net absorption of posi-tive 189,488 square feet in the first quarter 2010, compared to negative (112,969) square feet in the fourth quarter 2009, nega-tive (184,374) in the third quarter 2009, and positive 75,632 in the second quarter 2009.

The Class-B office market recorded net absorption of posi-tive 252,452 square feet in the first quarter 2010, compared to positive 107,360 square feet in the fourth quarter 2009, positive 8,727 in the third quarter 2009, and positive 109,295 in the sec-ond quarter 2009.

The Class-C office market recorded net absorption of posi-tive 127,819 square feet in the first quarter 2010 compared to positive 72,474 square feet in the fourth quarter 2009, positive 123,070 in the third quarter 2009, and negative (111,685) in the second quarter 2009.

Net absorption for Houston’s central business district was negative (204,980) square feet in the first quarter 2010. That compares to positive 123,866 square feet in the fourth quarter 2009, positive 9,210 in the third quarter 2009, and negative (138,543) in the second quarter 2009.

Net absorption for the suburban markets was positive 774,739 square feet in the first quarter 2010. That compares to negative (57,001) square feet in fourth quarter 2009, negative (61,787) in the third quarter 2009, and positive 211,785 in the second quarter 2009.

VacancyThe office vacancy rate in the Houston market area

decreased to 14.4% at the end of the first quarter 2010. The vacancy rate was 14.6% at the end of the fourth quarter 2009, 14.4% at the end of the third quarter 2009, and 13.6% at the end of the second quarter 2009.

Class-A projects reported a vacancy rate of 15.4% at the end of the first quarter 2010, 15.6% at the end of the fourth quarter 2009, 15.0% at the end of the third quarter 2009, and 13.1% at the end of the second quarter 2009.

Class-B projects reported a vacancy rate of 14.7% at the end

Vacancy Rates by Class 1999-2010

Source: CoStar Property®

Absorption & Deliveries U.S. Vacancy ComparisonPast 7 Quarters Past 7 Quarters

Source: CoStar Property• Source: CoStar Property•

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2 THE COSTAR OFFICE REPORT ©2010 COSTAR GROUP, INC.


Houston Office MarketFIRST QUARTER 2010 – HOUSTON



OVERVIEW

of the first quarter 2010, 14.8% at the end of the fourth quarter 2009, 14.9% at the end of the third quarter 2009, and 14.7% at the end of the second quarter 2009.

Class-C projects reported a vacancy rate of 11.2% at the end of the first quarter 2010, 11.5% at the end of fourth quarter 2009, 11.6% at the end of the third quarter 2009, and 12.0% at the end of the second quarter 2009.

The overall vacancy rate in Houston’s central business dis-trict at the end of the first quarter 2010 increased to 11.6%. The vacancy rate was 11.2% at the end of the fourth quarter 2009, 11.4% at the end of the third quarter 2009, and 11.5% at the end of the second quarter 2009.

The vacancy rate in the suburban markets decreased to 15.0% in the first quarter 2010. The vacancy rate was 15.3% at the end of the fourth quarter 2009, 15.1% at the end of the third quarter 2009, and 14.1% at the end of the second quarter 2009.

Largest Lease SigningsThe largest lease signings occurring in 2010 included: the

695,800-square-foot lease signed by Kellogg Brown & Root Llc at KBR Tower in the Downtown market; the 291,536-square-foot deal signed by Kellogg Brown & Root at 500 Jefferson Bldg in the Downtown market; and the 187,687-square-foot lease signed by Kellogg Brown & Root Llc at KBR Tower in the Downtown market.

Sublease VacancyThe amount of vacant sublease space in the Houston market

decreased to 2,390,899 square feet by the end of the first quarter 2010, from 2,402,897 square feet at the end of the fourth quarter 2009. There was 2,416,550 square feet vacant at the end of the third quarter 2009 and 2,245,252 square feet at the end of the second quarter 2009.

Houston’s Class-A projects reported vacant sublease space of 1,352,712 square feet at the end of first quarter 2010, down from the 1,376,690 square feet reported at the end of the fourth

quarter 2009. There were 1,470,808 square feet of sublease space vacant at the end of the third quarter 2009, and 1,341,430 square feet at the end of the second quarter 2009.

Class-B projects reported vacant sublease space of 991,945 square feet at the end of the first quarter 2010, down from the 998,829 square feet reported at the end of the fourth quarter 2009. At the end of the third quarter 2009 there were 890,711 square feet, and at the end of the second quarter 2009 there were 854,219 square feet vacant.

Class-C projects reported increased vacant sublease space from the fourth quarter 2009 to the first quarter 2010. Sublease vacancy went from 27,378 square feet to 46,242 square feet dur-ing that time. There was 55,031 square feet at the end of the third quarter 2009, and 49,603 square feet at the end of the second quarter 2009.

Sublease vacancy in Houston’s central business district stood at 507,653 square feet at the end of the first quarter 2010. It was 414,389 square feet at the end of the fourth quarter 2009, 471,445 square feet at the end of the third quarter 2009, and 473,913 square feet at the end of the second quarter 2009.

Sublease vacancy in the suburban markets ended the first quarter 2010 at 1,883,246 square feet. At the end of the fourth quarter 2009 sublease vacancy was 1,988,508 square feet, was 1,945,105 square feet at the end of the third quarter 2009, and was 1,771,339 square feet at the end of the second quarter 2009.

Rental RatesThe average quoted asking rental rate for available office

space, all classes, was $23.12 per square foot per year at the end of the first quarter 2010 in the Houston market area. This rep-resented a 0.2% decrease in quoted rental rates from the end of the fourth quarter 2009, when rents were reported at $23.16 per square foot.

The average quoted rate within the Class-A sector was $29.19 at the end of the first quarter 2010, while Class-B rates stood at $18.90, and Class-C rates at $15.64. At the end of the fourth quarter 2009, Class-A rates were $29.03 per square foot, Class-B rates were $18.74, and Class-C rates were $15.60.

The average quoted asking rental rate in Houston’s CBD was $30.38 at the end of the first quarter 2010, and $21.81 in the suburban markets. In the fourth quarter 2009, quoted rates were $30.59 in the CBD and $21.67 in the suburbs.

Deliveries and ConstructionDuring the first quarter 2010, eight buildings totaling

137,742 square feet were completed in the Houston market area. This compares to eight buildings totaling 607,878 square feet that were completed in the fourth quarter 2009, 23 buildings totaling 2,409,093 square feet completed in the third quarter 2009, and 1,188,676 square feet in 24 buildings completed in the second quarter 2009.





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OVERVIEW

There were 2,194,537 square feet of office space under con-struction at the end of the first quarter 2010.

Some of the notable 2010 deliveries include: 1111 Medical Plaza Dr, a 30,000-square-foot facility that delivered in first quar-ter 2010 and is now 76% occupied, and 1235 Lake Pointe Pky, a 26,594-square-foot building that delivered in first quarter 2010 and is now 8% occupied.

The largest projects underway at the end of first quarter 2010 were MainPlace, a 972,474-square-foot building with 11% of its space pre-leased, and Hess Tower, an 844,763-square-foot facility that is 100% pre-leased.

InventoryTotal office inventory in the Houston market area amounted

to 259,984,615 square feet in 4,851 buildings as of the end of the first quarter 2010. The Class-A office sector consisted of 108,311,334 square feet in 371 projects. There were 2,051 Class-B buildings totaling 110,908,984 square feet, and the Class-C sector consisted of 40,764,297 square feet in 2,429 buildings. Within the Office market there were 412 owner-occupied build-ings accounting for 23,022,879 square feet of office space.

Sales ActivityTallying office building sales of 15,000 square feet or larger,

Houston office sales figures rose during the fourth quarter 2009 in terms of dollar volume compared to the third quarter of 2009.

In the fourth quarter, six office transactions closed with a total volume of $229,950,000. The six buildings totaled 1,356,416 square feet and the average price per square foot equated to $169.53 per square foot. That compares to six trans-actions totaling $71,333,815 in the third quarter 2009. The total square footage in the third quarter was 837,982 square feet for an average price per square foot of $85.13.

Total office building sales activity in 2009 was down com-pared to 2008. In the twelve months of 2009, the market saw

21 office sales transactions with a total volume of $351,533,815. The price per square foot averaged $114.55. In the same twelve months of 2008, the market posted 47 transactions with a total volume of $1,271,010,999. The price per square foot averaged $175.27.

Cap rates have been higher in 2009, averaging 9.71% com-pared to the same period in 2008 when they averaged 7.38%.

One of the largest transactions that has occurred within the last four quarters in the Houston market is the sale of Anadarko Tower in The Woodlands. This 807,586-square-foot office build-ing sold for $166,000,000, or $205.55 per square foot. The prop-erty sold on 12/28/2009.

Reports compiled by: Alfredo Negron CoStar Research Manager; and Meghan Drennan, CoStar Research Associate.





0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

19991q

19993q

20001q

20003q

20011q

20013q

20021q

20023q

20031q

20033q

20041q

20043q

20051q

20053q

20061q

20063q

20071q

20073q

20081q

20083q

20091q

20093q

20101q

Vac

ancy

Rat

e

A B C Total Market

(0.03)

1.14

(0.60)

0.07

(0.05)

0.07

0.57

1.18

1.89

2.36

1.19

2.41

0.61

0.14

(1.0)

(0.5)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF


0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Vac

ancy

Rat

e







CoStar Markets & Submarkets

In analyzing metropolitan areas in the U.S., CoStar has developed geographic designations to help group properties together, called Regions, Markets and Submarkets. Regions are the equivalent of metropolitan areas, or areas containing a large population nucleus, that together with adjacent communities have a high degree of economic and social integration. Regions are then divided into Markets, which are core areas within a metropolitan area that are known to be competitive with each other in terms of attracting and keeping tenants. Markets are then further subdivided into smaller units called Submarkets, which serve to delineate a core group of buildings that are competitive with each other and constitute a generally accepted competitive set, or peer group.

MARKETS

Markets Submarkets

Austin County Austin County

Bellaire Bellaire

Downtown CBD* Midtown

E Fort Bend Co/Sugar Land E Fort Bend Co/Sugar Land

FM 1960 FM 1960/Champions FM 1960/Hwy 249 FM 1960/I-45 North

Greenway Plaza Greenway Plaza

Gulf Freeway/Pasadena Gulf Freeway/Pasadena

I-10 East I-10 East

Katy Freeway Katy Freeway East Katy Freeway West

Kingwood/Humble Kingwood/Humble

NASA/Clear Lake NASA/Clear Lake

North Belt Greenspoint/IAH Greenspoint/N Belt West

Northeast Near Northeast Near

Northwest North Loop West Northwest Far Northwest Near

Richmond/Fountainview Richmond/Fountainview

San Felipe/Voss San Felipe/Voss

San Jacinto County San Jacinto County

South South

South Hwy 35 South Hwy 35

South Main/Medical Center South Main/Medical Center

Southwest Southwest Beltway 8 Southwest/Hillcroft

West Loop Galleria/Uptown Post Oak Park Riverway

Westchase Westchase

Woodlands Woodlands

* Submarkets comprising the CBD. For statistics reference the CBD vs Suburban Figures at a Glance Page.






Total Employment by Industry Total Employment GrowthPercent of Total Employment by Industry Total Number of Jobs Added Per Year

Source: Department of Labor, Bureau of Labor Statistics Source: Department of Labor, Bureau of Labor Statistics

Office* Employment Growth Office* Employment GrowthCumulative Growth in Office* Jobs Over the Past 5 Years Number of Office* Jobs Added Per Year

MarketEmployment

GrowthInventory Growth Difference

Atlanta -8.90% 6.90% -15.80%

Boston -3.40% 2.70% -6.10%

Chicago -10.20% 4.40% -14.60%

Dallas/Ft Worth 1.70% 7.70% -6.00%

Denver -3.30% 5.30% -8.60%

Los Angeles -10.50% 3.00% -13.50%

New York City -3.20% 1.80% -5.00%

Seattle/Puget Sound -2.30% 8.40% -10.70%

Tampa/St Petersburg -11.00% 8.20% -19.20%

Washington -1.70% 9.40% -11.10%

Houston -0.40% 8.20% -8.60%

Source: Department of Labor, Bureau of Labor Statistics

Historical Unemployment Rates

Source: Department of Labor, Bureau of Labor Statistics.

Source: Department of Labor, Bureau of Labor Statistics. * Office employment is defined as jobs in the Information,

Financial Activities, and Professional & Business Services industries

-5.0%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Perc

ent

Gro

wth

Houston U.S. Average

12%

9%

4%

15%

3%

14%

9%

21%

1%

5%

7% Natural Resources &MiningConstruction

Manufacturing

Trade, Transportation &UtilitiesInformation

Financial Activities

Professional & BusinessServicesEducation & HealthServicesLeisure & Hospitality

Other Services

Government

-8.0%

-7.0%

-6.0%

-5.0%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Perc

ent

Gro

wth


0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

19991q

19993q

20001q

20003q

20011q

20013q

20021q

20023q

20031q

20033q

20041q

20043q

20051q

20053q

20061q

20063q

20071q

20073q

20081q

20083q

20091q

20093q

Perc

ent

Unem

plo

yment


EMPLOYMENT AND TENANT






EMPLOYMENT AND TENANT

Tenant by Size Range Tenants by Lease ExpirationBased on Total Number of Tenants Based on Total Square Footage of Tenants

Source: CoStar Tenant® Source: CoStar Tenant®

Tenants by Industry SF Per Employee by IndustryBased on Total Square Footage of Tenants Based on All Tenants

Source: CoStar Tenant® Source: CoStar Tenant®

46.2%

20.4%

14.3%

11.5%

3.6%

1.4%

2.5%

0% 10% 20% 30% 40% 50%

Up to 2,499 SF

2,500-4,999 SF

5,000-9,999 SF

10,000-24,999 SF

25,000-49,999 SF

50,000-74,999 SF

75,000 SF & Up

Percentage of Tenants

13.1%

11.6%

11.9%

12.4%

10.3%

3.7%

0% 2% 4% 6% 8% 10% 12% 14%

2011

2012

2013

2014

2015

2016


19.9%

15.7%

9.0%

8.8%

8.6%

8.4%

7.9%

7.4%

6.6%

2.2%

2.2%

1.9%

1.5%

0% 5% 10% 15% 20% 25%

Agri/Mining/Util

Finance/Ins/RE

Retailers/Wholes

Business-Service

Manufacturing

Law Firms

Services

Engineers/Archit

Medical

Government

Transportation

Communications

Accountants


425.8

363.1

341.9

334.6

307.5

287.8

263.0

254.1

252.9

251.9

243.4

239.5

176.3

0 50 100 150 200 250 300 350 400 450

Law Firms

Retailers/Wholes

Agri/Mining/Util

Services

Transportation

Finance/Ins/RE

Engineers/Archit

Communications

Business-Service

Government

Accountants

Manufacturing

Medical

SF Per Employee






Construction Highlights in Select CoStar MarketsColor Coded by Under Construction Square Footage as a Percentage of Existing Inventory

INVENTORY & DEVELOPMENT

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Historical Deliveries 1982 - 2010

Source: CoStar Property® * Future deliveries based on current under construction buildings.

Construction Activity Markets Ranked by Under Construction Square Footage

# Bldgs Preleased SF Preleased % All Existing U/C

Downtown 2 951,735 52.4% 106,374 908,618

E Fort Bend Co/Sugar Land 3 14,009 7.8% 31,126 59,490

Woodlands 2 0 0.0% 32,948 69,500

Gulf Freeway/Pasadena 1 11,422 46.0% 17,503 24,831

FM 1960 1 23,000 100.0% 27,883 23,000

NASA/Clear Lake 1 0 0.0% 31,890 12,000

San Jacinto County 0 0 0.0% 2,882 0

Austin County 0 0 0.0% 4,629 0

Bellaire 0 0 0.0% 74,533 0

Greenway Plaza 0 0 0.0% 57,167 0

All Other 0 0 0.0% 60,414 0

Totals 10 1,000,166 45.6% 53,594 219,454


Recent Deliveries Future Deliveries Leased & Un-Leased SF in Deliveries Since 2006 Preleased & Un-Leased SF in Properties Scheduled to Deliver

Source: CoStar Property® Source: CoStar Property®

0

1,817,237

2,194,537

178,469

139,000

24,831

23,000

12,000

0

0

0

0

Market

Under Construction Inventory Average Bldg Size

Total RBA

23.224.7

13.9

5.63.9

0.9 1.0 1.4 1.70.6

2.0 1.4 1.1 0.6 0.3 0.6

2.8

5.05.8

2.5

4.73.6

1.62.6 3.1

4.0

6.0 6.6

1.1

0.0

5.0

10.0

15.0

20.0

25.0

30.0

1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Millio

ns

of

SF

Deliveries Average Delivered SF

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2006 2007 2008 2009 2010

Millio

ns

of

SF

Leased Un-Leased

0

200

400

600

800

1,000

1,200

1,400

2010 2q 2010 3q 2010 4q 2011 1q

T

Thousa

nds

of

SF

Preleased Un-Leased







Historical Construction Starts & DeliveriesSquare Footage Per Quarter Starting and Completing Construction


Recent Deliveries by Project Size Breakdown of Year-to-Date Development Based on RBA of Project

Building Size # Bldgs RBA SF Leased % Leased Avg Rate Single-Tenant Multi-Tenant

< 50,000 SF 8 137,742 79,933 58.0% $27.06 0 137,742

50,000 SF - 99,999 SF 0 0 0 0.0% $0.00 0 0

100,000 SF - 249,999 SF 0 0 0 0.0% $0.00 0 0

250,000 SF - 499,999 SF 0 0 0 0.0% $0.00 0 0

>= 500,000 SF 0 0 0 0.0% $0.00 0 0


Recent Development by Tenancy Existing Inventory ComparisonBased on RBA Developed for Single & Multi Tenant Use Based on Total RBA

2010 Deliveries


Currently Under Construction By Class By Space Type

2.08 2.032.11

1.13

2.16

1.76

1.47

0.27 0.34

0.11 0.10 0.15 0.09

1.42

0.71

0.95 0.90

1.67

1.25 1.18

1.89

2.36

1.19

2.41

0.61

0.14

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

of

SF

Construction Starts Deliveries

62%

38%

Multi Single

0%

100%

Multi Single

16%

42%42%

Class A Class B Class C

17%

83%

Multi Single







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Class A Market Statistics First Quarter 2010

YTD Net YTD Under Quoted

Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates

Austin County 0 0 0 0 0.0% 0 0 0 $0.00 Bellaire 11 1,489,020 122,971 143,090 9.6% (5,342) 0 0 $25.28 Downtown 35 31,187,481 2,281,418 2,819,672 9.0% (179,913) 0 1,817,237 $34.80 E Fort Bend Co/Sugar Land 24 3,970,336 838,494 844,274 21.3% 16,087 26,594 152,619 $29.07 FM 1960 23 4,115,397 2,019,248 2,054,177 49.9% 20,863 0 0 $26.33 Greenway Plaza 17 6,276,698 929,121 1,075,095 17.1% (7,682) 0 0 $27.56 Gulf Freeway/Pasadena 2 140,362 60,829 60,829 43.3% 0 0 0 $26.63 I-10 East 0 0 0 0 0.0% 0 0 0 $0.00 Katy Freeway 77 15,790,797 2,741,229 2,824,705 17.9% 140,036 0 0 $27.63 Kingwood/Humble 2 134,000 25,904 25,904 19.3% 0 0 0 $27.50 NASA/Clear Lake 11 1,118,136 63,717 72,869 6.5% 3,329 0 0 $22.97 North Belt 23 5,262,378 351,074 421,294 8.0% 14,627 0 0 $20.51 Northeast Near 0 0 0 0 0.0% 0 0 0 $0.00 Northwest 26 4,235,170 1,357,879 1,359,283 32.1% 67,051 0 0 $25.29 Richmond/Fountainview 0 0 0 0 0.0% 0 0 0 $0.00 San Felipe/Voss 3 1,741,228 234,410 274,914 15.8% (25,825) 0 0 $28.77 San Jacinto County 0 0 0 0 0.0% 0 0 0 $0.00 South 4 214,369 118,469 118,469 55.3% 5,500 0 0 $26.47 South Hwy 35 0 0 0 0 0.0% 0 0 0 $0.00 South Main/Medical Center 14 3,443,233 373,641 373,641 10.9% (22,613) 0 0 $30.70 Southwest 6 1,069,654 255,763 276,482 25.8% (10,768) 0 0 $17.90 West Loop 46 16,735,383 1,508,113 1,715,384 10.3% 99,340 0 0 $29.48 Westchase 27 7,813,357 1,514,487 1,647,597 21.1% 14,114 0 0 $28.76 Woodlands 20 3,574,335 557,926 599,726 16.8% 60,684 30,000 75,000 $29.99

Totals 371 108,311,334 15,354,693 16,707,405 15.4% 189,488 56,594 2,044,856 $29.19


Class B Market Statistics First Quarter 2010



Austin County 3 16,460 0 0 0.0% 0 0 0 $0.00 Bellaire 21 2,576,154 62,047 62,047 2.4% 16,216 0 0 $17.05 Downtown 134 17,504,430 2,291,751 2,415,166 13.8% (64,536) 0 0 $24.18 E Fort Bend Co/Sugar Land 181 3,897,666 449,646 452,023 11.6% 104,364 48,509 25,850 $21.42 FM 1960 275 8,048,645 2,093,910 2,151,354 26.7% 6,446 6,210 23,000 $16.66 Greenway Plaza 45 4,262,587 278,350 279,660 6.6% (3,551) 0 0 $20.56 Gulf Freeway/Pasadena 126 3,220,858 410,083 428,167 13.3% 63,262 0 24,831 $20.21 I-10 East 29 875,970 125,631 134,891 15.4% 15,294 0 0 $15.12 Katy Freeway 191 11,514,148 1,066,397 1,149,288 10.0% 222,139 3,500 0 $18.79 Kingwood/Humble 57 1,651,450 177,397 184,207 11.2% 16,056 22,929 0 $20.06 NASA/Clear Lake 126 5,120,393 461,536 476,820 9.3% 33,153 0 12,000 $21.04 North Belt 71 6,443,062 1,222,895 1,376,630 21.4% (97,421) 0 0 $15.77 Northeast Near 25 673,123 99,023 99,023 14.7% 14,819 0 0 $16.73 Northwest 151 9,271,259 1,598,713 1,632,521 17.6% (34,451) 0 0 $15.19 Richmond/Fountainview 18 792,393 77,045 77,045 9.7% 4,844 0 0 $13.88 San Felipe/Voss 37 3,577,313 310,553 339,007 9.5% 3,000 0 0 $19.60 San Jacinto County 1 2,882 0 0 0.0% 0 0 0 $0.00 South 46 975,387 150,733 167,388 17.2% (2,484) 0 0 $22.31 South Hwy 35 16 202,389 4,925 4,925 2.4% 500 0 0 $15.91 South Main/Medical Center 54 3,876,432 333,538 338,338 8.7% (72,285) 0 0 $21.13 Southwest 118 8,345,569 1,557,146 1,756,100 21.0% 9,945 0 0 $15.65 West Loop 62 5,827,830 1,206,761 1,242,827 21.3% 62,454 0 0 $21.62 Westchase 62 6,618,313 788,438 895,657 13.5% (66,709) 0 0 $19.49 Woodlands 202 5,614,271 497,825 593,204 10.6% 21,397 0 64,000 $20.89

Totals 2,051 110,908,984 15,264,343 16,256,288 14.7% 252,452 81,148 149,681 $18.90


Existing Inventory Vacancy


FIGURES AT A GLANCE






Class C Market Statistics First Quarter 2010



Austin County 5 20,575 0 0 0.0% 0 0 0 $0.00 Bellaire 35 928,528 132,883 144,537 15.6% (15,420) 0 0 $16.87 Downtown 349 6,409,591 1,592,052 1,592,052 24.8% 10,364 0 0 $17.05 E Fort Bend Co/Sugar Land 80 1,002,918 64,325 64,325 6.4% 284 0 0 $22.70 FM 1960 236 2,725,309 321,629 324,092 11.9% 9,992 0 0 $15.90 Greenway Plaza 158 2,037,377 279,595 279,595 13.7% 8,642 0 0 $17.77 Gulf Freeway/Pasadena 222 2,764,688 265,220 268,810 9.7% 4,932 0 0 $14.50 I-10 East 56 484,916 27,165 27,165 5.6% (1,500) 0 0 $10.91 Katy Freeway 166 3,478,450 282,258 293,684 8.4% (1,621) 0 0 $14.70 Kingwood/Humble 63 644,358 28,284 28,284 4.4% (1,826) 0 0 $15.83 NASA/Clear Lake 127 2,180,477 205,321 218,368 10.0% (19,417) 0 0 $16.86 North Belt 62 1,964,030 245,915 249,977 12.7% (2,468) 0 0 $13.32 Northeast Near 75 762,800 27,004 27,004 3.5% 16,942 0 0 $14.52 Northwest 210 2,949,756 107,754 107,754 3.7% 71,450 0 0 $12.93 Richmond/Fountainview 69 1,365,352 137,908 137,908 10.1% 14,026 0 0 $15.14 San Felipe/Voss 11 234,509 23,501 23,501 10.0% (1,601) 0 0 $15.34 San Jacinto County 0 0 0 0 0.0% 0 0 0 $0.00 South 70 621,632 82,800 82,800 13.3% (5,050) 0 0 $14.56 South Hwy 35 23 132,726 4,176 4,176 3.1% 500 0 0 $0.00 South Main/Medical Center 130 3,338,736 176,333 176,333 5.3% 30,381 0 0 $19.33 Southwest 149 4,051,049 367,596 367,596 9.1% (2,837) 0 0 $12.37 West Loop 21 755,047 11,631 11,631 1.5% 11,763 0 0 $0.00 Westchase 30 1,083,769 65,902 65,902 6.1% 2,576 0 0 $15.25 Woodlands 82 827,704 52,697 52,697 6.4% (2,293) 0 0 $18.39

Totals 2,429 40,764,297 4,501,949 4,548,191 11.2% 127,819 0 0 $15.64


Total Office Market Statistics First Quarter 2010



Austin County 8 37,035 0 0 0.0% 0 0 0 $0.00 Bellaire 67 4,993,702 317,901 349,674 7.0% (4,546) 0 0 $21.77 Downtown 518 55,101,502 6,165,221 6,826,890 12.4% (234,085) 0 1,817,237 $29.36 E Fort Bend Co/Sugar Land 285 8,870,920 1,352,465 1,360,622 15.3% 120,735 75,103 178,469 $26.77 FM 1960 534 14,889,351 4,434,787 4,529,623 30.4% 37,301 6,210 23,000 $19.19 Greenway Plaza 220 12,576,662 1,487,066 1,634,350 13.0% (2,591) 0 0 $24.65 Gulf Freeway/Pasadena 350 6,125,908 736,132 757,806 12.4% 68,194 0 24,831 $18.61 I-10 East 85 1,360,886 152,796 162,056 11.9% 13,794 0 0 $14.43 Katy Freeway 434 30,783,395 4,089,884 4,267,677 13.9% 360,554 3,500 0 $23.35 Kingwood/Humble 122 2,429,808 231,585 238,395 9.8% 14,230 22,929 0 $20.33 NASA/Clear Lake 264 8,419,006 730,574 768,057 9.1% 17,065 0 12,000 $20.53 North Belt 156 13,669,470 1,819,884 2,047,901 15.0% (85,262) 0 0 $16.54 Northeast Near 100 1,435,923 126,027 126,027 8.8% 31,761 0 0 $15.84 Northwest 387 16,456,185 3,064,346 3,099,558 18.8% 104,050 0 0 $19.42 Richmond/Fountainview 87 2,157,745 214,953 214,953 10.0% 18,870 0 0 $14.52 San Felipe/Voss 51 5,553,050 568,464 637,422 11.5% (24,426) 0 0 $22.60 San Jacinto County 1 2,882 0 0 0.0% 0 0 0 $0.00 South 120 1,811,388 352,002 368,657 20.4% (2,034) 0 0 $21.63 South Hwy 35 39 335,115 9,101 9,101 2.7% 1,000 0 0 $15.91 South Main/Medical Center 198 10,658,401 883,512 888,312 8.3% (64,517) 0 0 $23.83 Southwest 273 13,466,272 2,180,505 2,400,178 17.8% (3,660) 0 0 $15.27 West Loop 129 23,318,260 2,726,505 2,969,842 12.7% 173,557 0 0 $26.56 Westchase 119 15,515,439 2,368,827 2,609,156 16.8% (50,019) 0 0 $24.86 Woodlands 304 10,016,310 1,108,448 1,245,627 12.4% 79,788 30,000 139,000 $25.16

Totals 4,851 259,984,615 35,120,985 37,511,884 14.4% 569,759 137,742 2,194,537 $23.12




FIGURES AT A GLANCE






FIGURES AT A GLANCE

Class A Submarket Statistics First Quarter 2010



Austin County 0 0 0 0 0.0% 0 0 0 $0.00

Bellaire 11 1,489,020 122,971 143,090 9.6% (5,342) 0 0 $25.28

CBD 30 29,277,242 2,040,855 2,458,232 8.4% (200,377) 0 1,817,237 $35.56

E Fort Bend Co/Sugar Land 24 3,970,336 838,494 844,274 21.3% 16,087 26,594 152,619 $29.07

FM 1960/Champions 1 150,000 0 0 0.0% 0 0 0 $0.00

FM 1960/Hwy 249 19 3,569,632 1,958,250 1,980,554 55.5% 26,357 0 0 $26.82

FM 1960/I-45 North 3 395,765 60,998 73,623 18.6% (5,494) 0 0 $20.30

Galleria/Uptown 29 12,198,640 1,213,474 1,334,312 10.9% 48,446 0 0 $29.96

Greenspoint/IAH 5 744,018 135,701 135,701 18.2% 9,307 0 0 $21.17

Greenspoint/N Belt West 18 4,518,360 215,373 285,593 6.3% 5,320 0 0 $20.27

Greenway Plaza 17 6,276,698 929,121 1,075,095 17.1% (7,682) 0 0 $27.56

Gulf Freeway/Pasadena 2 140,362 60,829 60,829 43.3% 0 0 0 $26.63

I-10 East 0 0 0 0 0.0% 0 0 0 $0.00

Katy Freeway East 16 3,647,930 612,668 619,718 17.0% 76,909 0 0 $30.67

Katy Freeway West 61 12,142,867 2,128,561 2,204,987 18.2% 63,127 0 0 $26.57

Kingwood/Humble 2 134,000 25,904 25,904 19.3% 0 0 0 $27.50

Midtown 5 1,910,239 240,563 361,440 18.9% 20,464 0 0 $27.37

NASA/Clear Lake 11 1,118,136 63,717 72,869 6.5% 3,329 0 0 $22.97

North Loop West 5 1,054,673 271,524 272,928 25.9% 40,479 0 0 $24.17

Northeast Near 0 0 0 0 0.0% 0 0 0 $0.00

Northwest Far 20 2,943,113 1,086,355 1,086,355 36.9% 26,572 0 0 $25.56

Northwest Near 1 237,384 0 0 0.0% 0 0 0 $0.00

Post Oak Park 9 2,498,115 132,738 190,400 7.6% (20,963) 0 0 $28.91

Richmond/Fountainview 0 0 0 0 0.0% 0 0 0 $0.00

Riverway 8 2,038,628 161,901 190,672 9.4% 71,857 0 0 $27.11

San Felipe/Voss 3 1,741,228 234,410 274,914 15.8% (25,825) 0 0 $28.77

San Jacinto County 0 0 0 0 0.0% 0 0 0 $0.00

South 4 214,369 118,469 118,469 55.3% 5,500 0 0 $26.47

South Hwy 35 0 0 0 0 0.0% 0 0 0 $0.00

South Main/Medical Center 14 3,443,233 373,641 373,641 10.9% (22,613) 0 0 $30.70

Southwest Beltway 8 3 573,152 160,028 180,747 31.5% (10,768) 0 0 $19.80

Southwest/Hillcroft 3 496,502 95,735 95,735 19.3% 0 0 0 $16.23

Westchase 27 7,813,357 1,514,487 1,647,597 21.1% 14,114 0 0 $28.76

Woodlands 20 3,574,335 557,926 599,726 16.8% 60,684 30,000 75,000 $29.99

Totals 371 108,311,334 15,354,693 16,707,405 15.4% 189,488 56,594 2,044,856 $29.19








FIGURES AT A GLANCE

Class B Submarket Statistics First Quarter 2010



Austin County 3 16,460 0 0 0.0% 0 0 0 $0.00

Bellaire 21 2,576,154 62,047 62,047 2.4% 16,216 0 0 $17.05

CBD 47 13,789,736 1,928,847 2,019,123 14.6% (12,422) 0 0 $24.66

E Fort Bend Co/Sugar Land 181 3,897,666 449,646 452,023 11.6% 104,364 48,509 25,850 $21.42

FM 1960/Champions 78 2,636,252 611,816 615,702 23.4% 6,280 0 0 $14.26

FM 1960/Hwy 249 138 3,803,286 1,235,655 1,263,590 33.2% 9,209 6,210 0 $18.35

FM 1960/I-45 North 59 1,609,107 246,439 272,062 16.9% (9,043) 0 23,000 $15.47

Galleria/Uptown 27 2,879,845 692,226 703,611 24.4% 49,910 0 0 $23.16

Greenspoint/IAH 25 1,832,849 94,509 94,509 5.2% (7,783) 0 0 $16.41

Greenspoint/N Belt West 46 4,610,213 1,128,386 1,282,121 27.8% (89,638) 0 0 $15.65

Greenway Plaza 45 4,262,587 278,350 279,660 6.6% (3,551) 0 0 $20.56

Gulf Freeway/Pasadena 126 3,220,858 410,083 428,167 13.3% 63,262 0 24,831 $20.21

I-10 East 29 875,970 125,631 134,891 15.4% 15,294 0 0 $15.12


Katy Freeway West 128 7,881,162 799,081 872,918 11.1% 197,031 3,500 0 $18.54

Kingwood/Humble 57 1,651,450 177,397 184,207 11.2% 16,056 22,929 0 $20.06

Midtown 87 3,714,694 362,904 396,043 10.7% (52,114) 0 0 $21.33

NASA/Clear Lake 126 5,120,393 461,536 476,820 9.3% 33,153 0 12,000 $21.04

North Loop West 61 3,663,403 911,476 934,412 25.5% (52,714) 0 0 $15.50

Northeast Near 25 673,123 99,023 99,023 14.7% 14,819 0 0 $16.73

Northwest Far 71 4,698,934 542,412 553,284 11.8% 16,076 0 0 $14.75

Northwest Near 19 908,922 144,825 144,825 15.9% 2,187 0 0 $15.09

Post Oak Park 24 2,057,754 428,500 444,516 21.6% 1,686 0 0 $19.52

Richmond/Fountainview 18 792,393 77,045 77,045 9.7% 4,844 0 0 $13.88

Riverway 11 890,231 86,035 94,700 10.6% 10,858 0 0 $21.44

San Felipe/Voss 37 3,577,313 310,553 339,007 9.5% 3,000 0 0 $19.60

San Jacinto County 1 2,882 0 0 0.0% 0 0 0 $0.00

South 46 975,387 150,733 167,388 17.2% (2,484) 0 0 $22.31

South Hwy 35 16 202,389 4,925 4,925 2.4% 500 0 0 $15.91


Southwest Beltway 8 90 5,787,899 898,204 1,065,821 18.4% 7,838 0 0 $15.91

Southwest/Hillcroft 28 2,557,670 658,942 690,279 27.0% 2,107 0 0 $15.17

Westchase 62 6,618,313 788,438 895,657 13.5% (66,709) 0 0 $19.49

Woodlands 202 5,614,271 497,825 593,204 10.6% 21,397 0 64,000 $20.89

Totals 2,051 110,908,984 15,264,343 16,256,288 14.7% 252,452 81,148 149,681 $18.90








FIGURES AT A GLANCE

Class C Submarket Statistics First Quarter 2010



Austin County 5 20,575 0 0 0.0% 0 0 0 $0.00

Bellaire 35 928,528 132,883 144,537 15.6% (15,420) 0 0 $16.87

CBD 67 3,254,884 898,685 898,685 27.6% 7,819 0 0 $16.31

E Fort Bend Co/Sugar Land 80 1,002,918 64,325 64,325 6.4% 284 0 0 $22.70

FM 1960/Champions 92 1,016,707 108,525 108,525 10.7% 4,043 0 0 $14.04

FM 1960/Hwy 249 107 1,071,705 93,015 95,478 8.9% (1,116) 0 0 $15.42

FM 1960/I-45 North 37 636,897 120,089 120,089 18.9% 7,065 0 0 $18.90

Galleria/Uptown 6 311,749 0 0 0.0% 0 0 0 $0.00

Greenspoint/IAH 18 295,979 54,243 54,243 18.3% 0 0 0 $14.17

Greenspoint/N Belt West 44 1,668,051 191,672 195,734 11.7% (2,468) 0 0 $13.13

Greenway Plaza 158 2,037,377 279,595 279,595 13.7% 8,642 0 0 $17.77

Gulf Freeway/Pasadena 222 2,764,688 265,220 268,810 9.7% 4,932 0 0 $14.50

I-10 East 56 484,916 27,165 27,165 5.6% (1,500) 0 0 $10.91


Katy Freeway West 51 818,881 80,437 89,263 10.9% (10,019) 0 0 $15.28

Kingwood/Humble 63 644,358 28,284 28,284 4.4% (1,826) 0 0 $15.83

Midtown 282 3,154,707 693,367 693,367 22.0% 2,545 0 0 $18.43

NASA/Clear Lake 127 2,180,477 205,321 218,368 10.0% (19,417) 0 0 $16.86

North Loop West 110 1,290,268 29,930 29,930 2.3% 4,456 0 0 $13.59

Northeast Near 75 762,800 27,004 27,004 3.5% 16,942 0 0 $14.52

Northwest Far 74 1,084,616 51,989 51,989 4.8% 48,518 0 0 $13.71

Northwest Near 26 574,872 25,835 25,835 4.5% 18,476 0 0 $11.46

Post Oak Park 11 283,933 0 0 0.0% 0 0 0 $0.00

Richmond/Fountainview 69 1,365,352 137,908 137,908 10.1% 14,026 0 0 $15.14

Riverway 4 159,365 11,631 11,631 7.3% 11,763 0 0 $0.00

San Felipe/Voss 11 234,509 23,501 23,501 10.0% (1,601) 0 0 $15.34

San Jacinto County 0 0 0 0 0.0% 0 0 0 $0.00

South 70 621,632 82,800 82,800 13.3% (5,050) 0 0 $14.56

South Hwy 35 23 132,726 4,176 4,176 3.1% 500 0 0 $0.00

South Main/Medical Center 130 3,338,736 176,333 176,333 5.3% 30,381 0 0 $19.33

Southwest Beltway 8 79 1,822,674 125,925 125,925 6.9% (27,466) 0 0 $12.77

Southwest/Hillcroft 70 2,228,375 241,671 241,671 10.8% 24,629 0 0 $12.15

Westchase 30 1,083,769 65,902 65,902 6.1% 2,576 0 0 $15.25

Woodlands 82 827,704 52,697 52,697 6.4% (2,293) 0 0 $18.39

Totals 2,429 40,764,297 4,501,949 4,548,191 11.2% 127,819 0 0 $15.64








FIGURES AT A GLANCE

Total Office Submarket Statistics First Quarter 2010



Austin County 8 37,035 0 0 0.0% 0 0 0 $0.00

Bellaire 67 4,993,702 317,901 349,674 7.0% (4,546) 0 0 $21.77

CBD 144 46,321,862 4,868,387 5,376,040 11.6% (204,980) 0 1,817,237 $30.38

E Fort Bend Co/Sugar Land 285 8,870,920 1,352,465 1,360,622 15.3% 120,735 75,103 178,469 $26.77

FM 1960/Champions 171 3,802,959 720,341 724,227 19.0% 10,323 0 0 $14.22

FM 1960/Hwy 249 264 8,444,623 3,286,920 3,339,622 39.5% 34,450 6,210 0 $21.54

FM 1960/I-45 North 99 2,641,769 427,526 465,774 17.6% (7,472) 0 23,000 $16.90

Galleria/Uptown 62 15,390,234 1,905,700 2,037,923 13.2% 98,356 0 0 $28.03

Greenspoint/IAH 48 2,872,846 284,453 284,453 9.9% 1,524 0 0 $17.70

Greenspoint/N Belt West 108 10,796,624 1,535,431 1,763,448 16.3% (86,786) 0 0 $16.28

Greenway Plaza 220 12,576,662 1,487,066 1,634,350 13.0% (2,591) 0 0 $24.65

Gulf Freeway/Pasadena 350 6,125,908 736,132 757,806 12.4% 68,194 0 24,831 $18.61

I-10 East 85 1,360,886 152,796 162,056 11.9% 13,794 0 0 $14.43

Katy Freeway East 194 9,940,485 1,081,805 1,100,509 11.1% 110,415 0 0 $24.54

Katy Freeway West 240 20,842,910 3,008,079 3,167,168 15.2% 250,139 3,500 0 $22.91

Kingwood/Humble 122 2,429,808 231,585 238,395 9.8% 14,230 22,929 0 $20.33

Midtown 374 8,779,640 1,296,834 1,450,850 16.5% (29,105) 0 0 $22.90

NASA/Clear Lake 264 8,419,006 730,574 768,057 9.1% 17,065 0 12,000 $20.53

North Loop West 176 6,008,344 1,212,930 1,237,270 20.6% (7,779) 0 0 $17.38

Northeast Near 100 1,435,923 126,027 126,027 8.8% 31,761 0 0 $15.84

Northwest Far 165 8,726,663 1,680,756 1,691,628 19.4% 91,166 0 0 $21.39

Northwest Near 46 1,721,178 170,660 170,660 9.9% 20,663 0 0 $14.01

Post Oak Park 44 4,839,802 561,238 634,916 13.1% (19,277) 0 0 $22.50

Richmond/Fountainview 87 2,157,745 214,953 214,953 10.0% 18,870 0 0 $14.52

Riverway 23 3,088,224 259,567 297,003 9.6% 94,478 0 0 $25.17

San Felipe/Voss 51 5,553,050 568,464 637,422 11.5% (24,426) 0 0 $22.60

San Jacinto County 1 2,882 0 0 0.0% 0 0 0 $0.00

South 120 1,811,388 352,002 368,657 20.4% (2,034) 0 0 $21.63

South Hwy 35 39 335,115 9,101 9,101 2.7% 1,000 0 0 $15.91


Southwest Beltway 8 172 8,183,725 1,184,157 1,372,493 16.8% (30,396) 0 0 $15.83

Southwest/Hillcroft 101 5,282,547 996,348 1,027,685 19.5% 26,736 0 0 $14.48

Westchase 119 15,515,439 2,368,827 2,609,156 16.8% (50,019) 0 0 $24.86

Woodlands 304 10,016,310 1,108,448 1,245,627 12.4% 79,788 30,000 139,000 $25.16

Totals 4,851 259,984,615 35,120,985 37,511,884 14.4% 569,759 137,742 2,194,537 $23.12








FIGURES AT A GLANCE




CBD 30 29,277,242 2,040,855 2,458,232 8.4% (200,377) 0 1,817,237 $35.56

Suburban 341 79,034,092 13,313,838 14,249,173 18.0% 389,865 56,594 227,619 $27.58

Totals 371 108,311,334 15,354,693 16,707,405 15.4% 189,488 56,594 2,044,856 $29.19





CBD 47 13,789,736 1,928,847 2,019,123 14.6% (12,422) 0 0 $24.66

Suburban 2,004 97,119,248 13,335,496 14,237,165 14.7% 264,874 81,148 149,681 $18.14

Totals 2,051 110,908,984 15,264,343 16,256,288 14.7% 252,452 81,148 149,681 $18.90


Class C Market Statistics First Quarter 2010



CBD 67 3,254,884 898,685 898,685 27.6% 7,819 0 0 $16.31

Suburban 2,362 37,509,413 3,603,264 3,649,506 9.7% 120,000 0 0 $15.56

Totals 2,429 40,764,297 4,501,949 4,548,191 11.2% 127,819 0 0 $15.64


Class A & B Market Statistics First Quarter 2010



CBD 77 43,066,978 3,969,702 4,477,355 10.4% (212,799) 0 1,817,237 $31.48

Suburban 2,345 176,153,340 26,649,334 28,486,338 16.2% 654,739 137,742 377,300 $22.53

Totals 2,422 219,220,318 30,619,036 32,963,693 15.0% 441,940 137,742 2,194,537 $23.95





CBD 144 46,321,862 4,868,387 5,376,040 11.6% (204,980) 0 1,817,237 $30.38

Suburban 4,707 213,662,753 30,252,598 32,135,844 15.0% 774,739 137,742 377,300 $21.81

Totals 4,851 259,984,615 35,120,985 37,511,884 14.4% 569,759 137,742 2,194,537 $23.12












FIGURES AT A GLANCE


Net Quoted

Period # Blds Total RBA Direct SF Total SF Vac % Absorption # Blds Total RBA # Blds Total RBA Rates

2010 1q 371 108,311,334 15,354,693 16,707,405 15.4% 189,488 2 56,594 4 2,044,856 $29.19 2009 4q 369 108,254,740 15,463,609 16,840,299 15.6% (112,969) 4 577,346 5 2,026,450 $29.03 2009 3q 365 107,677,394 14,679,176 16,149,984 15.0% (184,374) 11 2,178,135 8 2,451,177 $28.31 2009 2q 354 105,499,259 12,446,045 13,787,475 13.1% 75,632 6 829,402 19 4,629,312 $28.68 2009 1q 348 104,669,857 11,736,014 13,033,705 12.5% 372,783 8 2,070,963 23 5,409,784 $29.00 2008 4q 340 102,598,894 10,335,516 11,335,525 11.0% 825,656 9 1,372,507 29 7,235,128 $29.17 2008 3q 331 101,226,387 9,838,348 10,788,674 10.7% 580,822 6 846,439 36 8,501,041 $28.99 2008 2q 325 100,379,948 9,590,178 10,523,057 10.5% 561,219 7 1,098,135 39 8,147,006 $29.30 2008 1q 318 99,281,813 9,217,853 9,986,141 10.1% 283,791 6 1,259,171 40 7,627,518 $28.41

2007 312 98,022,642 8,123,316 9,010,761 9.2% 4,242,940 14 2,099,719 37 7,123,544 $27.21 2006 298 95,922,923 9,959,821 11,153,982 11.6% 5,178,463 10 1,630,664 19 3,420,366 $23.73 2005 288 94,292,259 13,133,326 14,701,781 15.6% 2,156,922 9 1,062,873 10 2,018,558 $20.64 2004 279 93,229,386 14,017,091 15,795,830 16.9% 60,185 4 511,000 11 1,854,882 $20.86 2003 275 92,718,386 13,179,574 15,345,015 16.6% 168,193 8 2,167,642 5 807,000 $20.61 2002 267 90,550,744 10,628,333 13,345,566 14.7% (551,901) 5 2,789,351 8 2,167,642 $21.13 2001 262 87,761,393 7,687,152 10,004,314 11.4% 255,331 5 1,057,886 9 4,591,532 $22.47



Net Quoted


2010 1q 2,051 110,908,984 15,264,343 16,256,288 14.7% 252,452 6 81,148 6 149,681 $18.90 2009 4q 2,045 110,827,836 15,428,763 16,427,592 14.8% 107,360 4 30,532 11 218,829 $18.74 2009 3q 2,041 110,797,304 15,613,709 16,504,420 14.9% 8,727 12 230,958 15 249,361 $18.99 2009 2q 2,029 110,566,346 15,427,970 16,282,189 14.7% 109,295 18 359,274 23 378,988 $19.05 2009 1q 2,011 110,207,072 15,207,325 16,032,210 14.5% (925,697) 17 286,912 37 681,552 $19.13 2008 4q 1,995 110,043,160 14,095,689 14,942,601 13.6% 424,074 18 518,339 44 873,827 $19.30 2008 3q 1,977 109,524,821 14,219,651 14,848,336 13.6% (268,262) 22 329,421 47 1,230,315 $19.41 2008 2q 1,955 109,195,400 13,719,547 14,250,653 13.1% 380,391 13 149,693 58 1,286,790 $19.34 2008 1q 1,942 109,045,707 13,920,131 14,481,351 13.3% (80,436) 18 407,398 62 1,298,223 $19.14

2007 1,924 108,638,309 13,484,117 13,993,517 12.9% 2,784,774 84 1,887,230 64 1,303,917 $18.70 2006 1,843 106,977,583 13,892,484 15,117,565 14.1% 2,222,449 60 1,489,272 77 1,647,124 $17.12 2005 1,785 105,554,986 14,349,708 15,917,417 15.1% 2,198,427 61 1,489,352 57 1,618,524 $16.18 2004 1,724 104,065,634 14,688,774 16,626,492 16.0% 1,575,721 43 983,402 55 1,524,447 $15.85 2003 1,682 103,178,948 15,002,348 17,315,527 16.8% (37,130) 45 1,323,416 34 1,066,354 $15.69 2002 1,637 101,855,532 13,776,670 15,954,981 15.7% 174,170 48 1,820,708 32 980,114 $16.48 2001 1,589 100,034,824 12,396,101 14,308,443 14.3% (672,161) 37 1,318,842 43 1,768,888 $17.10



Net Quoted


2010 1q 4,851 259,984,615 35,120,985 37,511,884 14.4% 569,759 8 137,742 10 2,194,537 $23.12 2009 4q 4,843 259,846,873 35,541,004 37,943,901 14.6% 66,865 8 607,878 16 2,245,279 $23.16 2009 3q 4,835 259,238,995 34,986,338 37,402,888 14.4% (52,577) 23 2,409,093 23 2,700,538 $22.98 2009 2q 4,812 256,829,902 32,695,966 34,941,218 13.6% 73,242 24 1,188,676 42 5,008,300 $23.22 2009 1q 4,788 255,641,226 31,668,426 33,825,784 13.2% (598,409) 25 2,357,875 60 6,091,336 $23.35 2008 4q 4,764 253,406,351 29,111,813 30,992,500 12.2% 1,141,106 27 1,890,846 73 8,108,955 $23.37 2008 3q 4,737 251,515,505 28,631,416 30,242,760 12.0% (26,482) 28 1,175,860 83 9,731,356 $23.40 2008 2q 4,709 250,339,645 27,547,243 29,040,418 11.6% 895,321 20 1,247,828 97 9,433,796 $23.51 2008 1q 4,690 249,171,317 27,379,561 28,767,411 11.5% 172,413 24 1,666,569 102 8,925,741 $22.81

2007 4,666 247,504,748 25,823,223 27,273,255 11.0% 7,402,551 99 3,992,649 101 8,427,461 $22.01 2006 4,571 243,765,945 28,488,580 30,937,003 12.7% 7,035,172 74 3,132,850 97 5,073,190 $19.66 2005 4,502 240,893,820 31,936,253 35,100,050 14.6% 4,610,998 77 2,604,280 71 3,649,996 $18.00 2004 4,428 238,422,176 33,482,971 37,239,404 15.6% 2,076,682 57 1,611,313 72 3,422,784 $17.84 2003 4,375 236,972,909 33,331,663 37,866,819 16.0% (772,180) 59 3,556,783 47 1,984,279 $17.63 2002 4,320 233,668,603 28,849,511 33,790,333 14.5% (236,022) 60 4,724,623 46 3,213,481 $18.12 2001 4,262 229,003,795 24,627,214 28,889,503 12.6% (569,080) 50 2,495,112 57 6,470,690 $18.62


UC Inventory

Existing Inventory Vacancy Deliveries UC Inventory

Existing Inventory Vacancy Deliveries UC Inventory

Existing Inventory Vacancy Deliveries






LEASING ACTIVITY

Leasing Highlights in Select CoStar MarketsColor Coded by Vacancy Rate

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Historical Rental RatesBased on Full-Service Equivalent Rental Rates


Vacancy by Available Space Type Vacancy by ClassPercent of All Vacant Space in Direct vs. Sublet Percent of All Vacant Space by Class


U.S. Rental Rate Comparison Future Space AvailableBased on Full-Service Equivalent Rental Rates Space Scheduled to be Available for Occupancy*

Source: CoStar Property® * Includes Under Construction Spaces Source: CoStar Property®

Houston United States Houston United States

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

1999

1q

1999

3q

2000

1q

2000

3q

2001

1q

2001

3q

2002

1q

2002

3q

2003

1q

2003

3q

2004

1q

2004

3q

2005

1q

2005

3q

2006

1q

2006

3q

2007

1q

2007

3q

2008

1q

2008

3q

2009

1q

2009

3q

2010

1q

Dollar

s/SF/Y

ear

A B C Total Market

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Dollar

s/SF/Y

ear


94%

6%

Direct Sublet

6%

94%

Direct Sublet

45%

43%

12%


1.76

0.61

2.62

0.37

0.04 0.000.0

0.5

1.0

1.5

2.0

2.5

3.0

2010 2q 2010 3q 2010 4q 2011 1q 2011 2q 2011 3q

Mill

ions

15%

47%38%


LEASING ACTIVITY






LEASING ACTIVITY


* Renewal

Building Submarket SF Qtr Tenant Name Tenant Rep Company Landlord Rep Company

1 KBR Tower* CBD 695,800 1st Kellogg Brown & Root Jones Lang LaSalle Americas, Inc. Brookfield Properties Management, L

2 500 Jefferson Bldg* CBD 291,536 1st Kellogg Brown & Root Jones Lang LaSalle Americas, Inc. Brookfield Properties Management, L

3 KBR Tower CBD 187,687 1st Kellogg Brown & Root N/A Brookfield Properties Management, L

4 5150 Westway Park Blvd Northwest Far 92,420 1st CyrusOne Direct Deal Stan Johnson Company

5 Aerotech Business Center* NASA/Clear Lake 51,803 1st Wyle Laboratories Studley N/A

6 Bank of America Center CBD 30,188 1st N/A N/A PM Realty Group

7 Enclave Parkway Katy Freeway West 29,976 1st N/A N/A CB Richard Ellis

8 Marathon Oil Tower* Galleria/Uptown 26,407 1st WEUS Holdings CB Richard Ellis CB Richard Ellis

9 Energy Tower I Katy Freeway West 23,608 1st N/A N/A Mac Haik Management LLC

10 San Felipe Plaza San Felipe/Voss 21,495 1st N/A N/A Cushman & Wakefield, Inc.

11 Brookhollow Central II* North Loop West 21,263 1st Lorance & Thompson, P.C. NAI Houston Colvill Office Properties

12 6575 West Loop S* Bellaire 21,000 1st Bridgeway Software, Inc. N/A N/A

13 363 North Belt Greenspoint/N Belt West 20,345 1st Newfield N/A N/A

14 Younan Place Westchase 19,257 1st N/A N/A PM Realty Group

15 Galleria Plaza I Galleria/Uptown 19,204 1st N/A N/A Transwestern Commercial Services

16 3100 Main St Midtown 18,000 1st City of Houston N/A Yancey-Hausman, Inc.

17 10940 W Sam Houston Pky N Northwest Far 16,782 1st N/A N/A Betz Commercial Brokerage Inc

18 Cypress Court* FM 1960/I-45 North 15,809 1st South Bay Energy South Bay Energy BGK Texas Property Management, LLC

19 Two Riverway Riverway 15,671 1st IBM Corporation N/A Stream Realty Partners, L.P.

20 7850 N Sam Houston Pky W FM 1960/Hwy 249 14,718 1st N/A N/A Caldwell Companies

21 Timberway One Katy Freeway West 14,009 1st N/A N/A Jones Lang LaSalle Americas, Inc.

22 3700 Buffalo Speedway Greenway Plaza 13,579 1st Hale-Mills Construction, LTD N/A Moody National Realty Company

23 1 Houston Center CBD 13,439 1st N/A N/A CB Richard Ellis

24 Bank of America Center CBD 13,169 1st N/A N/A Jones Lang LaSalle Americas, Inc.

25 Granite Towers Phase I E Fort Bend Co/Sugar Land 12,857 1st N/A N/A Granite Properties

26 14511 Old Katy Rd Katy Freeway West 12,600 1st N/A Direct Deal NAI Houston

27 301 Commerce Green Blvd* E Fort Bend Co/Sugar Land 12,485 1st Weichert Relocation Resources Inc. Direct Deal Mac Haik Development Corporation

28 Beltway Lakes Phase I Northwest Far 12,077 1st N/A N/A Colliers International

29 1455 W Loop Fwy S Post Oak Park 11,566 1st N/A N/A Moody Rambin Interests

30 Ashford Crossing II Katy Freeway West 11,479 1st N/A N/A CB Richard Ellis

31 1 Houston Center CBD 10,862 1st N/A CB Richard Ellis Crescent Real Estate Equities Ltd.

32 Sandtrap V FM 1960/Hwy 249 10,621 1st N/A N/A Caldwell Companies

33 Bank of America Center CBD 10,185 1st N/A N/A PM Realty Group

34 Millennium Tower Westchase 10,175 1st Berkley Oil & Gas Specialty Services, LLC CresaPartners CB Richard Ellis

35 4110 Bellaire Blvd Bellaire 9,993 1st Texas Children Pediatric Associates Jones Lang LaSalle Pipeline Realty Company

36 NewQuest Properties FM 1960/Hwy 249 9,963 1st N/A N/A Transwestern Commercial Services

37 Granite Towers Phase I E Fort Bend Co/Sugar Land 8,971 1st N/A N/A Granite Properties

38 Atrium @ Nassau Bay Bldg NASA/Clear Lake 8,813 1st Futron JacksonCooksey PM Realty Group

39 Heritage Plaza CBD 8,737 1st N/A CBRE Lincoln Property Company

40 10940 W Sam Houston Pky N Northwest Far 8,600 1st N/A N/A Betz Commercial Brokerage Inc

Select Top Office Leases Based on Leased Square Footage For Deals Signed in 2010






SALES ACTIVITY

The Optimist Sales Index Average of Two Highest Price/SF's and Two Lowest Cap Rates Per Quarter

Source: CoStar COMPS®

Sales Volume & Price Sales Analysis by Building SizeBased on Office Building Sales of 15,000 SF and Larger Based on Office Building Sales From Jan. 2009 - Dec. 2009

Bldg Size # RBA $ Volume Price/SF Cap Rate

< 50,000 SF 25 272,489 26,664,014$ 97.85$ 7.82%

50K-249K SF 13 1,660,815 122,400,000$ 73.70$ 10.70%

250K-499K SF 1 449,909 52,873,000$ 117.52$ -

>500K SF 1 807,586 166,000,000$ 205.55$ -

Source: CoStar COMPS® Source: CoStar COMPS®

U.S. Price/SF Comparison U.S. Cap Rate ComparisonBased on Office Building Sales of 15,000 SF and Larger Based on Office Building Sales of 15,000 SF and Larger

Source: CoStar COMPS® Source: CoStar COMPS®

$20

$70

$120

$170

$220

$270

$320

20051q

20053q

20061q

20063q

20071q

20073q

20081q

20083q

20091q

20093q

Dollar

s per

SF

Houston US

$0

$200

$400

$600

$800

$1,000

$1,200

20051q

20053q

20061q

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20093q

Millio

ns

of

Sal

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$0

$50

$100

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$250

Price

/SF

Sales Volume Price/SF

0.0%

2.0%

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6.0%

8.0%

10.0%

12.0%

2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q

Cap

Rat

e P

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$0

$50

$100

$150

$200

$250

$300

Dollars/S

F

Cap Rate Price/SF

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

11.0%

20051q

20053q

20061q

20063q

20071q

20073q

20081q

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SALES ACTIVITY

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Select Land Sales Based on Commercially Zoned Land Sales Occurring From Jan. 2009 - March 2010

5940 Clay Rd, Katy Martindale Rd, Houston 11019 Shadow Creek Pky, Pearland

Sale Price: $2,590,500 Sale Price: $2,580,000 Sale Price: $2,300,000Acres: 157.00 Acres: 164.00 Acres: 1.71Price/SF: $0.38 Price/SF: $0.36 Price/SF: $30.86Closing Date: 03/16/2009 Closing Date: 02/03/2010 Closing Date: 06/18/2009Zoning: Unrestricted Zoning: None Zoning: PUDIntended Use: Hold for Development Intended Use: Hold for Development Intended Use: RestaurantBuyer: Clay & Co. Buyer: ElTesoro DelBajio LLC Buyer: CB PTX, LLCSeller: Clay Katy Hockley Ltd Seller: WL Woodland Lakes LLC Seller: Gulf Coast Commercial Group

E Sam Houston Pky, Pasadena Aldine Westfield, Houston 13826 Furman Rd, Houston

Sale Price: $2,200,000 Sale Price: $2,060,933 Sale Price: $1,266,055Acres: 2.78 Acres: 37.85 Acres: 25.00Price/SF: $18.18 Price/SF: $1.25 Price/SF: $1.16Closing Date: 12/23/2009 Closing Date: 02/01/2009 Closing Date: 10/15/2009Zoning: None Zoning: None Zoning: NoneIntended Use: Commercial Intended Use: Office Intended Use: CommercialBuyer: H & D Equities, Inc. Buyer: The National Realty Group, Inc. Buyer: OCB Properties, LtdSeller: Joseph Langteau Seller: Morris Kagan & Israel Rudy Seller: McDonald Robert L





Houston Office MarketMARKET HIGHLIGHTS – CLASS “A, B & C”




A U S T I N C O U N T Y M A R K E T

Deliveries, Absorption & Vacancy Historical Analysis, All Classes


Vacant Space Quoted Rental RatesHistorical Analysis, All Classes Historical Analysis, All Classes


Net QuotedPeriod # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates2010 1q 8 37,035 0 0.0% 0 0 0 0 0 $0.00

2009 4q 8 37,035 0 0.0% 0 0 0 0 0 $0.00

2009 3q 8 37,035 0 0.0% 0 0 0 0 0 $0.00

2009 2q 8 37,035 0 0.0% 0 0 0 0 0 $0.00

2009 1q 8 37,035 0 0.0% 0 0 0 0 0 $0.00

2008 4q 8 37,035 0 0.0% 0 0 0 0 0 $0.00

2008 3q 8 37,035 0 0.0% 0 0 0 0 0 $0.00

2008 2q 8 37,035 0 0.0% 0 0 0 0 0 $0.00

2008 1q 8 37,035 0 0.0% 0 0 0 0 0 $0.00

2007 4q 8 37,035 0 0.0% 0 0 0 0 0 $0.00

2007 3q 8 37,035 0 0.0% 0 0 0 0 0 $0.00

2007 2q 8 37,035 0 0.0% 0 0 0 0 0 $0.00

2007 1q 8 37,035 0 0.0% 0 0 0 0 0 $0.00

2006 4q 8 37,035 0 0.0% 0 0 0 0 0 $0.00

2006 3q 8 37,035 0 0.0% 0 0 0 0 0 $0.00

2006 2q 8 37,035 0 0.0% 0 0 0 0 0 $0.00


UC InventoryDelivered InventoryExisting Inventory Vacancy

0.000

0.000

0.000

0.000

0.000

0.000

0.000

0.000

0.000

0.000

0.000

2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Perce

nt V

acant

Delivered SF Absorption SF Vacancy

$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.70

$0.80

$0.90

$1.00

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Dollar

s/SF/Y

ear

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

Direct SF Sublet SF







B E L L A I R E M A R K E T





Net QuotedPeriod # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates2010 1q 67 4,993,702 349,674 7.0% (4,546) 0 0 0 0 $21.77

2009 4q 67 4,993,702 345,128 6.9% 33,546 0 0 0 0 $22.02

2009 3q 67 4,993,702 378,674 7.6% 31,564 0 0 0 0 $21.02

2009 2q 67 4,993,702 410,238 8.2% (9,996) 0 0 0 0 $21.02

2009 1q 67 4,993,702 400,242 8.0% (61,898) 0 0 0 0 $21.86

2008 4q 67 4,993,702 338,344 6.8% 176,064 0 0 0 0 $23.24

2008 3q 67 4,993,702 514,408 10.3% 88,720 0 0 0 0 $22.99

2008 2q 67 4,993,702 603,128 12.1% 23,960 0 0 0 0 $22.89

2008 1q 67 4,993,702 627,088 12.6% (153,825) 1 27,716 0 0 $21.85

2007 4q 66 4,965,986 445,547 9.0% (56,664) 0 0 1 27,716 $21.32

2007 3q 66 4,965,986 388,883 7.8% 82,743 0 0 1 27,716 $20.82

2007 2q 66 4,965,986 471,626 9.5% 77,887 0 0 1 27,716 $18.54

2007 1q 66 4,965,986 549,513 11.1% 61,319 0 0 0 0 $18.26

2006 4q 66 4,965,986 610,832 12.3% 22,315 0 0 0 0 $17.72

2006 3q 66 4,965,986 633,147 12.7% (81,160) 0 0 0 0 $17.16

2006 2q 66 4,965,986 551,987 11.1% 40,813 0 0 0 0 $16.30



(0.200)

(0.150)

(0.100)

(0.050)

0.000

0.050

0.100

0.150

0.200

2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

Perce

nt V

acant


$20.40

$20.60

$20.80

$21.00

$21.20

$21.40

$21.60

$21.80

$22.00

$22.20

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Dollar

s/SF/Y

ear

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

0.45

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

Direct SF Sublet SF







D O W N T O W N M A R K E T





Net QuotedPeriod # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates2010 1q 518 55,101,502 6,826,890 12.4% (234,085) 0 0 2 1,817,237 $29.36

2009 4q 518 55,101,502 6,592,805 12.0% 109,494 1 18,930 2 1,817,237 $29.78

2009 3q 517 55,082,572 6,683,369 12.1% (188,739) 0 0 3 1,836,167 $28.20

2009 2q 517 55,082,572 6,494,630 11.8% (202,092) 0 0 3 1,836,167 $29.03

2009 1q 517 55,082,572 6,292,538 11.4% (243,762) 2 59,462 2 1,817,237 $29.51

2008 4q 515 55,023,110 5,989,314 10.9% 345,561 1 560,000 4 1,876,699 $30.63

2008 3q 514 54,463,110 5,774,875 10.6% (226,526) 0 0 4 2,424,699 $30.58

2008 2q 514 54,463,110 5,548,349 10.2% 50,073 0 0 3 1,452,225 $30.72

2008 1q 514 54,463,110 5,598,422 10.3% 92,604 0 0 2 607,462 $28.32

2007 4q 514 54,463,110 5,691,026 10.4% 119,492 0 0 1 560,000 $27.69

2007 3q 514 54,463,110 5,810,518 10.7% 537,721 1 55,000 1 560,000 $25.05

2007 2q 513 54,408,110 6,293,239 11.6% 1,323,065 0 0 2 615,000 $25.74

2007 1q 513 54,408,110 7,616,304 14.0% (62,600) 1 7,374 2 615,000 $24.25

2006 4q 512 54,400,736 7,546,330 13.9% 480,458 0 0 2 62,374 $23.07

2006 3q 512 54,400,736 8,026,788 14.8% 542,828 0 0 2 62,374 $21.63

2006 2q 513 54,463,786 8,632,666 15.9% 549,748 0 0 2 62,374 $21.06



(0.400)

(0.200)

0.000

0.200

0.400

0.600

0.800

1.000

1.200

1.400

1.600

2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

Perce

nt V

acant


$27.00

$27.50

$28.00

$28.50

$29.00

$29.50

$30.00

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Dollar

s/SF/Y

ear

5.00

5.20

5.40

5.60

5.80

6.00

6.20

6.40

6.60

6.80

7.00

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

Direct SF Sublet SF







E F O R T B E N D C O / S U G A R L A N D M A R K E TMARKET HIGHLIGHTS – CLASS “A, B & C”





Net QuotedPeriod # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates2010 1q 285 8,870,920 1,360,622 15.3% 120,735 4 75,103 3 178,469 $26.77

2009 4q 281 8,795,817 1,406,254 16.0% (3,981) 2 166,619 7 253,572 $26.54

2009 3q 279 8,629,198 1,235,654 14.3% 67,648 7 97,868 8 267,572 $26.21

2009 2q 272 8,531,330 1,205,434 14.1% 123,376 0 0 14 357,940 $26.40

2009 1q 272 8,531,330 1,328,810 15.6% 66,926 1 6,000 13 333,940 $26.51

2008 4q 271 8,525,330 1,389,736 16.3% 213,149 2 215,780 12 173,321 $24.88

2008 3q 269 8,309,550 1,387,105 16.7% (43,855) 5 376,887 7 301,619 $24.46

2008 2q 264 7,932,663 966,363 12.2% (72,371) 0 0 12 678,506 $24.82

2008 1q 264 7,932,663 893,992 11.3% 5,199 2 24,340 11 672,506 $23.85

2007 4q 262 7,908,323 874,851 11.1% 146,144 3 30,346 12 690,687 $24.00

2007 3q 259 7,877,977 990,649 12.6% 70,508 0 0 12 638,542 $23.48

2007 2q 259 7,877,977 1,061,157 13.5% 299,960 2 159,645 10 248,752 $22.22

2007 1q 257 7,718,332 1,201,472 15.6% (123,433) 2 196,452 9 385,317 $21.92

2006 4q 255 7,521,880 881,587 11.7% 97,344 0 0 8 441,927 $20.17

2006 3q 255 7,521,880 978,931 13.0% 279,841 4 68,560 7 411,147 $19.77

2006 2q 251 7,453,320 1,190,212 16.0% 123,094 1 3,818 10 473,407 $18.92



(0.200)

(0.100)

0.000

0.100

0.200

0.300

0.400

0.500

2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

Perce

nt V

acant


$25.90

$26.00

$26.10

$26.20

$26.30

$26.40

$26.50

$26.60

$26.70

$26.80

$26.90

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Dollar

s/SF/Y

ear

1.05

1.10

1.15

1.20

1.25

1.30

1.35

1.40

1.45

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

Direct SF Sublet SF







F M 1 9 6 0 M A R K E TMARKET HIGHLIGHTS – CLASS “A, B & C”






2009 4q 533 14,883,141 4,560,714 30.6% 138,720 1 7,532 2 29,210 $20.75

2009 3q 532 14,875,609 4,691,902 31.5% 119,924 1 55,468 3 36,742 $21.06

2009 2q 531 14,820,141 4,756,358 32.1% 2,173 2 14,725 4 92,210 $21.31

2009 1q 529 14,805,416 4,743,806 32.0% (4,267) 5 82,705 4 77,725 $21.27

2008 4q 524 14,722,711 4,656,834 31.6% 103,781 8 208,799 8 152,898 $21.63

2008 3q 516 14,513,912 4,551,816 31.4% (599,283) 7 161,312 15 351,697 $21.70

2008 2q 509 14,352,600 3,791,221 26.4% (14,247) 3 212,624 20 452,816 $22.10

2008 1q 506 14,139,976 3,564,350 25.2% (309,812) 4 55,008 20 648,484 $22.05

2007 4q 502 14,084,968 3,199,530 22.7% (363,761) 3 79,400 16 576,503 $19.73

2007 3q 499 14,005,568 2,756,369 19.7% (60,265) 14 62,404 14 623,964 $20.17

2007 2q 485 13,943,164 2,633,700 18.9% (3,852) 7 97,938 27 645,443 $18.81

2007 1q 478 13,845,226 2,531,910 18.3% 227,646 11 214,073 26 332,150 $17.96

2006 4q 467 13,631,153 2,545,483 18.7% (85,756) 3 117,632 35 469,223 $18.02

2006 3q 464 13,513,521 2,342,095 17.3% 201,004 6 216,622 31 529,961 $17.67

2006 2q 458 13,296,899 2,326,477 17.5% (26,083) 1 33,358 22 638,615 $17.66



(0.700)

(0.600)

(0.500)

(0.400)

(0.300)

(0.200)

(0.100)

0.000

0.100

0.200

0.300

2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

Perce

nt V

acant


$18.00

$18.50

$19.00

$19.50

$20.00

$20.50

$21.00

$21.50

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Dollar

s/SF/Y

ear

4.20

4.30

4.40

4.50

4.60

4.70

4.80

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

Direct SF Sublet SF







G R E E N W A Y P L A Z A M A R K E T





Net QuotedPeriod # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates2010 1q 220 12,576,662 1,634,350 13.0% (2,591) 0 0 0 0 $24.65

2009 4q 220 12,576,662 1,631,759 13.0% 50,423 0 0 0 0 $25.56

2009 3q 220 12,576,662 1,682,182 13.4% (56,109) 0 0 0 0 $25.71

2009 2q 220 12,576,662 1,626,073 12.9% 9,955 0 0 0 0 $26.20

2009 1q 220 12,576,662 1,636,028 13.0% (115,069) 0 0 0 0 $26.32

2008 4q 220 12,576,662 1,520,959 12.1% (101,738) 0 0 0 0 $26.59

2008 3q 220 12,576,662 1,419,221 11.3% (63,074) 0 0 0 0 $26.47

2008 2q 220 12,576,662 1,356,147 10.8% 28,385 1 20,000 0 0 $26.68

2008 1q 219 12,556,662 1,364,532 10.9% (212,439) 1 104,671 1 20,000 $25.59

2007 4q 218 12,451,991 1,047,422 8.4% 295,508 0 0 2 124,671 $24.31

2007 3q 218 12,451,991 1,342,930 10.8% 119,920 0 0 2 124,671 $22.58

2007 2q 218 12,451,991 1,462,850 11.7% 56,277 0 0 2 124,671 $21.01

2007 1q 218 12,451,991 1,519,127 12.2% (40,380) 0 0 2 124,671 $20.60

2006 4q 218 12,451,991 1,478,747 11.9% (31,577) 0 0 0 0 $21.02

2006 3q 218 12,451,991 1,447,170 11.6% 255,099 0 0 0 0 $19.17

2006 2q 218 12,451,991 1,702,269 13.7% 15,945 1 4,500 0 0 $19.22



(0.300)

(0.200)

(0.100)

0.000

0.100

0.200

0.300

0.400

2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

Perce

nt V

acant


$23.50

$24.00

$24.50

$25.00

$25.50

$26.00

$26.50

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Dollar

s/SF/Y

ear

1.25

1.30

1.35

1.40

1.45

1.50

1.55

1.60

1.65

1.70

1.75

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

Direct SF Sublet SF







G U L F F R E E W A Y / P A S A D E N A M A R K E T





Net QuotedPeriod # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates2010 1q 350 6,125,908 757,806 12.4% 68,194 0 0 1 24,831 $18.61

2009 4q 350 6,125,908 826,000 13.5% 58,392 0 0 1 24,831 $16.99

2009 3q 350 6,125,908 884,392 14.4% 43,859 1 88,000 1 24,831 $16.98

2009 2q 349 6,037,908 840,251 13.9% 48,920 0 0 1 88,000 $17.21

2009 1q 349 6,037,908 889,171 14.7% (3,286) 0 0 1 88,000 $17.75

2008 4q 349 6,037,908 885,885 14.7% (49,941) 1 28,800 0 0 $18.21

2008 3q 348 6,009,108 807,144 13.4% 12,592 0 0 1 28,800 $18.70

2008 2q 348 6,009,108 819,736 13.6% (53,052) 0 0 1 28,800 $18.91

2008 1q 348 6,009,108 766,684 12.8% 45,487 1 52,362 1 28,800 $18.06

2007 4q 347 5,956,746 759,809 12.8% 82,971 0 0 2 81,162 $17.09

2007 3q 347 5,956,746 842,780 14.1% 17,412 1 11,280 2 81,162 $17.18

2007 2q 346 5,945,466 848,912 14.3% 41,990 1 60,000 3 92,442 $17.44

2007 1q 345 5,885,466 830,902 14.1% 179,004 3 87,162 2 71,280 $16.95

2006 4q 342 5,798,304 922,744 15.9% (71,663) 0 0 5 158,442 $16.42

2006 3q 342 5,798,304 851,081 14.7% 21,116 0 0 3 87,162 $15.24

2006 2q 342 5,798,304 872,197 15.0% 2,738 1 504 3 87,162 $15.76



(0.100)

(0.050)

0.000

0.050

0.100

0.150

0.200

2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

11.0%

11.5%

12.0%

12.5%

13.0%

13.5%

14.0%

14.5%

15.0%

Perce

nt V

acant


$16.00

$16.50

$17.00

$17.50

$18.00

$18.50

$19.00

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Dollar

s/SF/Y

ear

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

Direct SF Sublet SF







I - 1 0 E A S T M A R K E T





Net QuotedPeriod # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates2010 1q 85 1,360,886 162,056 11.9% 13,794 0 0 0 0 $14.43

2009 4q 85 1,360,886 175,850 12.9% (10,404) 0 0 0 0 $14.55

2009 3q 85 1,360,886 165,446 12.2% (13,580) 0 0 0 0 $14.85

2009 2q 85 1,360,886 151,866 11.2% 19,392 0 0 0 0 $14.22

2009 1q 85 1,360,886 171,258 12.6% (9,983) 0 0 0 0 $14.45

2008 4q 85 1,360,886 161,275 11.9% 45,204 0 0 0 0 $15.00

2008 3q 85 1,360,886 206,479 15.2% (1,266) 0 0 0 0 $15.00

2008 2q 85 1,360,886 205,213 15.1% (16,428) 0 0 0 0 $14.89

2008 1q 85 1,360,886 188,785 13.9% 796 0 0 0 0 $15.35

2007 4q 85 1,360,886 189,581 13.9% 68,761 0 0 0 0 $14.68

2007 3q 86 1,421,666 319,122 22.4% (40,667) 0 0 0 0 $14.49

2007 2q 86 1,421,666 278,455 19.6% (22,715) 1 25,000 0 0 $13.73

2007 1q 85 1,396,666 230,740 16.5% (71,826) 2 12,873 1 25,000 $13.77

2006 4q 83 1,383,793 146,041 10.6% 3,383 0 0 3 37,873 $13.69

2006 3q 83 1,383,793 149,424 10.8% 41,908 0 0 3 37,873 $13.81

2006 2q 83 1,383,793 191,332 13.8% 5,653 0 0 2 12,873 $12.95



(0.080)

(0.060)

(0.040)

(0.020)

0.000

0.020

0.040

0.060

0.080

2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Perce

nt V

acant


$13.90

$14.00

$14.10

$14.20

$14.30

$14.40

$14.50

$14.60

$14.70

$14.80

$14.90

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Dollar

s/SF/Y

ear

0.14

0.14

0.15

0.15

0.16

0.16

0.17

0.17

0.18

0.18

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

Direct SF Sublet SF







K A T Y F R E E W A Y M A R K E T





Net QuotedPeriod # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates2010 1q 434 30,783,395 4,267,677 13.9% 360,554 1 3,500 0 0 $23.35

2009 4q 433 30,779,895 4,624,731 15.0% (27,120) 2 310,528 1 3,500 $23.41

2009 3q 431 30,469,367 4,287,083 14.1% 29,876 4 1,240,430 3 314,028 $23.28

2009 2q 427 29,228,937 3,076,529 10.5% 230,883 5 351,718 6 1,549,458 $23.03

2009 1q 422 28,877,219 2,955,694 10.2% 550,546 6 1,535,805 10 1,897,676 $23.18

2008 4q 416 27,341,414 1,970,435 7.2% 96,482 1 101,300 15 3,418,157 $23.37

2008 3q 415 27,240,114 1,965,617 7.2% 635,640 1 343,541 14 3,469,385 $23.60

2008 2q 414 26,896,573 2,257,716 8.4% 217,366 8 118,126 14 3,793,532 $23.21

2008 1q 406 26,778,447 2,356,956 8.8% 321,648 4 665,900 20 3,535,658 $23.76

2007 4q 402 26,112,547 2,012,704 7.7% 447,026 2 370,000 19 3,178,099 $22.94

2007 3q 400 25,742,547 2,089,730 8.1% 94,955 1 174,521 19 3,179,785 $21.20

2007 2q 399 25,568,026 2,010,164 7.9% 226,241 4 79,944 16 2,361,180 $19.78

2007 1q 395 25,488,082 2,156,461 8.5% (80,076) 2 13,711 11 1,448,380 $19.45

2006 4q 395 25,628,983 2,217,286 8.7% 646,910 3 557,183 10 1,100,176 $20.09

2006 3q 392 25,071,800 2,307,013 9.2% 127,394 3 169,400 11 1,150,838 $18.30

2006 2q 389 24,902,400 2,265,007 9.1% 201,830 6 126,423 10 792,097 $17.75



(0.200)

0.000

0.200

0.400

0.600

0.800

1.000

1.200

1.400

1.600

1.800

2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

Perce

nt V

acant


$22.80

$22.90

$23.00

$23.10

$23.20

$23.30

$23.40

$23.50

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Dollar

s/SF/Y

ear

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

Direct SF Sublet SF







K I N G W O O D / H U M B L E M A R K E T





Net QuotedPeriod # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates2010 1q 122 2,429,808 238,395 9.8% 14,230 1 22,929 0 0 $20.33

2009 4q 121 2,406,879 229,696 9.5% (7,314) 0 0 1 22,929 $20.32

2009 3q 121 2,406,879 222,382 9.2% 11,556 0 0 1 22,929 $20.33

2009 2q 121 2,406,879 233,938 9.7% 6,307 6 26,400 1 22,929 $21.01

2009 1q 115 2,380,479 213,845 9.0% (12,428) 0 0 7 49,329 $21.50

2008 4q 115 2,380,479 201,417 8.5% 989 0 0 2 26,529 $21.76

2008 3q 115 2,380,479 202,406 8.5% (11,257) 0 0 1 22,929 $20.89

2008 2q 115 2,380,479 191,149 8.0% 14,764 0 0 0 0 $21.58

2008 1q 115 2,380,479 205,913 8.7% 29,269 1 16,100 0 0 $21.92

2007 4q 114 2,364,379 219,082 9.3% (12,151) 1 2,620 1 16,100 $21.95

2007 3q 113 2,361,759 204,311 8.7% 46,886 2 67,688 2 18,720 $21.69

2007 2q 111 2,294,071 183,509 8.0% 13,384 0 0 4 86,408 $21.97

2007 1q 111 2,294,071 196,893 8.6% (10,361) 1 44,000 2 67,688 $21.81

2006 4q 110 2,250,071 142,532 6.3% (842) 0 0 3 111,688 $22.02

2006 3q 110 2,250,071 141,690 6.3% (3,733) 1 27,518 3 111,688 $21.75

2006 2q 109 2,222,553 110,439 5.0% 758 0 0 2 71,518 $22.10



(0.020)

(0.010)

0.000

0.010

0.020

0.030

0.040

0.050

0.060

0.070

0.080

2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Perce

nt V

acant


$19.60

$19.80

$20.00

$20.20

$20.40

$20.60

$20.80

$21.00

$21.20

$21.40

$21.60

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Dollar

s/SF/Y

ear

0.20

0.21

0.21

0.22

0.22

0.23

0.23

0.24

0.24

0.25

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

Direct SF Sublet SF







N A S A / C L E A R L A K E M A R K E T





Net QuotedPeriod # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates2010 1q 264 8,419,006 768,057 9.1% 17,065 0 0 1 12,000 $20.53

2009 4q 264 8,419,006 785,122 9.3% 44,741 1 9,000 0 0 $20.73

2009 3q 263 8,410,006 820,863 9.8% 66,191 2 51,240 1 9,000 $20.35

2009 2q 261 8,358,766 835,814 10.0% 34,432 1 11,250 3 60,240 $20.72

2009 1q 260 8,347,516 858,996 10.3% (53,173) 1 10,000 4 71,490 $20.24

2008 4q 259 8,337,516 795,823 9.5% 84,712 2 138,407 5 81,490 $20.19

2008 3q 257 8,199,109 742,128 9.1% 93,297 1 1,800 6 216,657 $19.90

2008 2q 256 8,197,309 833,625 10.2% 7,558 1 4,800 5 159,207 $19.60

2008 1q 255 8,192,509 836,383 10.2% (36,819) 2 17,820 5 154,007 $19.09

2007 4q 253 8,174,689 781,744 9.6% 7,681 4 46,118 5 134,420 $18.06

2007 3q 250 8,167,025 781,761 9.6% (4,298) 3 65,600 8 178,738 $17.10

2007 2q 247 8,101,425 711,863 8.8% 184,842 3 96,084 9 129,538 $16.65

2007 1q 244 8,005,341 800,621 10.0% 77,638 1 5,005 11 220,822 $15.74

2006 4q 243 8,000,336 873,254 10.9% 152,525 2 122,537 7 129,609 $14.93

2006 3q 241 7,877,799 903,242 11.5% 96,763 1 8,000 7 236,646 $15.41

2006 2q 240 7,869,799 992,005 12.6% 58,478 0 0 5 148,562 $15.24



(0.100)

(0.050)

0.000

0.050

0.100

0.150

0.200

2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

8.0%

8.5%

9.0%

9.5%

10.0%

10.5%

Perce

nt V

acant


$19.90

$20.00

$20.10

$20.20

$20.30

$20.40

$20.50

$20.60

$20.70

$20.80

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Dollar

s/SF/Y

ear

0.65

0.70

0.75

0.80

0.85

0.90

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

Direct SF Sublet SF







N O R T H B E L T M A R K E T






2009 4q 156 13,669,470 1,962,639 14.4% 76,650 0 0 0 0 $16.73

2009 3q 156 13,669,470 2,039,289 14.9% (387,332) 0 0 0 0 $17.30

2009 2q 156 13,669,470 1,651,957 12.1% (44,800) 1 63,621 0 0 $17.28

2009 1q 155 13,605,849 1,543,536 11.3% 6,259 0 0 1 63,621 $17.09

2008 4q 155 13,605,849 1,549,795 11.4% 41,649 1 84,125 1 63,621 $16.66

2008 3q 154 13,521,724 1,507,319 11.1% 89,398 0 0 2 147,746 $16.31

2008 2q 154 13,521,724 1,596,717 11.8% (76,307) 0 0 2 147,746 $16.97

2008 1q 154 13,521,724 1,520,410 11.2% 35,382 0 0 1 84,125 $16.99

2007 4q 154 13,521,724 1,555,792 11.5% 108,615 0 0 1 84,125 $16.84

2007 3q 154 13,521,724 1,664,407 12.3% 61,272 1 135,030 1 84,125 $16.65

2007 2q 153 13,386,694 1,590,649 11.9% 10,330 0 0 2 219,155 $16.09

2007 1q 153 13,386,694 1,600,979 12.0% 132,837 1 15,900 1 135,030 $15.67

2006 4q 152 13,370,794 1,717,916 12.8% 86,791 0 0 2 150,930 $15.91

2006 3q 152 13,370,794 1,804,707 13.5% 90,360 0 0 1 15,900 $15.46

2006 2q 152 13,370,794 1,895,067 14.2% 105,793 0 0 1 15,900 $15.36



(0.500)

(0.400)

(0.300)

(0.200)

(0.100)

0.000

0.100

0.200

2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

Perce

nt V

acant


$16.00

$16.20

$16.40

$16.60

$16.80

$17.00

$17.20

$17.40

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Dollar

s/SF/Y

ear

0.00

0.50

1.00

1.50

2.00

2.50

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

Direct SF Sublet SF







N O R T H E A S T N E A R M A R K E T






2009 4q 100 1,435,923 157,788 11.0% 1,896 0 0 0 0 $15.95

2009 3q 100 1,435,923 159,684 11.1% 39,967 0 0 0 0 $16.00

2009 2q 100 1,435,923 199,651 13.9% 29,877 1 8,000 0 0 $16.02

2009 1q 99 1,427,923 221,528 15.5% (8,320) 0 0 1 8,000 $17.32

2008 4q 99 1,427,923 213,208 14.9% 22,041 0 0 1 8,000 $17.37

2008 3q 99 1,427,923 235,249 16.5% 21,663 0 0 1 8,000 $16.93

2008 2q 99 1,427,923 256,912 18.0% 35,264 0 0 0 0 $15.72

2008 1q 99 1,427,923 292,176 20.5% (19,479) 1 9,682 0 0 $15.02

2007 4q 98 1,418,241 263,015 18.5% (5,032) 0 0 1 9,682 $16.02

2007 3q 98 1,418,241 257,983 18.2% 13,954 0 0 1 9,682 $15.82

2007 2q 98 1,418,241 271,937 19.2% (13,292) 0 0 1 9,682 $15.76

2007 1q 98 1,418,241 258,645 18.2% (18,142) 0 0 0 0 $17.24

2006 4q 98 1,418,241 240,503 17.0% 9,869 0 0 0 0 $15.97

2006 3q 98 1,418,241 250,372 17.7% (27,642) 0 0 0 0 $15.56

2006 2q 98 1,418,241 222,730 15.7% (14,170) 0 0 0 0 $16.29



(0.030)

(0.020)

(0.010)

0.000

0.010

0.020

0.030

0.040

0.050

2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Perce

nt V

acant


$15.00

$15.50

$16.00

$16.50

$17.00

$17.50

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Dollar

s/SF/Y

ear

0.00

0.05

0.10

0.15

0.20

0.25

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

Direct SF Sublet SF







N O R T H W E S T M A R K E T





Net QuotedPeriod # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates2010 1q 387 16,456,185 3,099,558 18.8% 104,050 0 0 0 0 $19.42

2009 4q 387 16,456,185 3,203,608 19.5% (108,264) 1 95,269 0 0 $19.00

2009 3q 386 16,360,916 3,000,075 18.3% 114,258 1 92,420 1 95,269 $19.26

2009 2q 385 16,268,496 3,021,913 18.6% 223,955 3 405,639 2 187,689 $19.24

2009 1q 382 15,862,857 2,840,229 17.9% (21,117) 1 250,000 5 593,328 $19.21

2008 4q 381 15,612,857 2,569,112 16.5% 140,494 3 373,629 6 843,328 $18.93

2008 3q 378 15,239,228 2,335,977 15.3% 162,770 1 48,139 9 1,216,957 $19.04

2008 2q 377 15,191,089 2,450,608 16.1% 55,158 1 163,436 9 1,172,676 $19.83

2008 1q 376 15,027,653 2,342,330 15.6% 127,558 0 0 8 1,002,873 $20.10

2007 4q 376 15,027,653 2,469,888 16.4% 138,194 3 308,857 6 835,204 $19.25

2007 3q 373 14,718,796 2,299,225 15.6% 229,713 1 158,518 7 712,247 $18.58

2007 2q 372 14,560,278 2,370,420 16.3% 261,764 1 130,000 5 515,514 $17.43

2007 1q 371 14,430,278 2,502,184 17.3% 5,141 1 63,546 5 597,375 $17.04

2006 4q 370 14,366,732 2,443,779 17.0% 61,032 2 103,373 5 655,200 $16.58

2006 3q 368 14,263,359 2,401,438 16.8% (2,230) 1 36,183 4 325,437 $16.56

2006 2q 367 14,227,176 2,363,025 16.6% (121,608) 0 0 5 361,620 $15.82



(0.200)

(0.100)

0.000

0.100

0.200

0.300

0.400

0.500

2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Perce

nt V

acant


$18.70

$18.80

$18.90

$19.00

$19.10

$19.20

$19.30

$19.40

$19.50

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Dollar

s/SF/Y

ear

2.50

2.60

2.70

2.80

2.90

3.00

3.10

3.20

3.30

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

Direct SF Sublet SF







R I C H M O N D / F O U N T A I N V I E W M A R K E T






2009 4q 87 2,157,745 233,823 10.8% 10,673 0 0 0 0 $14.43

2009 3q 87 2,157,745 244,496 11.3% 16,002 0 0 0 0 $14.61

2009 2q 87 2,157,745 260,498 12.1% 13,142 0 0 0 0 $14.73

2009 1q 87 2,157,745 273,640 12.7% 1,707 0 0 0 0 $14.33

2008 4q 87 2,157,745 275,347 12.8% 36,675 0 0 0 0 $14.41

2008 3q 87 2,157,745 312,022 14.5% 45,588 0 0 0 0 $13.65

2008 2q 87 2,157,745 357,610 16.6% 14,458 0 0 0 0 $13.98

2008 1q 87 2,157,745 372,068 17.2% 6,454 0 0 0 0 $13.64

2007 4q 87 2,157,745 378,522 17.5% 33,024 0 0 0 0 $13.48

2007 3q 87 2,157,745 411,546 19.1% (30,473) 0 0 0 0 $13.31

2007 2q 87 2,157,745 381,073 17.7% (31,787) 0 0 0 0 $14.59

2007 1q 87 2,157,745 349,286 16.2% (94,785) 0 0 0 0 $14.23

2006 4q 87 2,157,745 254,501 11.8% (33) 0 0 0 0 $13.85

2006 3q 87 2,157,745 254,468 11.8% (57,546) 0 0 0 0 $13.59

2006 2q 88 2,163,745 202,922 9.4% (4,131) 0 0 0 0 $13.97



(0.120)

(0.100)

(0.080)

(0.060)

(0.040)

(0.020)

0.000

0.020

0.040

0.060

2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Perce

nt V

acant


$14.10

$14.20

$14.30

$14.40

$14.50

$14.60

$14.70

$14.80

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Dollar

s/SF/Y

ear

0.00

0.05

0.10

0.15

0.20

0.25

0.30

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

Direct SF Sublet SF







S A N F E L I P E / V O S S M A R K E T






2009 4q 51 5,553,050 612,996 11.0% 10,540 0 0 0 0 $22.63

2009 3q 51 5,553,050 623,536 11.2% (80,075) 0 0 0 0 $23.12

2009 2q 51 5,553,050 543,461 9.8% 12,606 0 0 0 0 $23.51

2009 1q 51 5,553,050 556,067 10.0% (74,449) 0 0 0 0 $24.47

2008 4q 51 5,553,050 481,618 8.7% (48,159) 0 0 0 0 $23.61

2008 3q 51 5,553,050 433,459 7.8% 4,412 0 0 0 0 $24.41

2008 2q 51 5,553,050 437,871 7.9% (34,535) 0 0 0 0 $23.94

2008 1q 52 5,632,550 482,836 8.6% 63,122 0 0 0 0 $21.94

2007 4q 52 5,632,550 545,958 9.7% 101,798 0 0 0 0 $20.30

2007 3q 52 5,632,550 647,756 11.5% 100,761 0 0 0 0 $19.83

2007 2q 52 5,632,550 748,517 13.3% 131,539 0 0 0 0 $19.78

2007 1q 52 5,632,550 880,056 15.6% 74,244 1 8,333 0 0 $19.55

2006 4q 51 5,624,217 945,967 16.8% 13,674 0 0 1 8,333 $19.09

2006 3q 51 5,624,217 959,641 17.1% 26,874 0 0 1 8,333 $18.66

2006 2q 51 5,624,217 986,515 17.5% 64,261 0 0 1 8,333 $18.02



(0.100)

(0.050)

0.000

0.050

0.100

0.150

2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

Perce

nt V

acant


$21.50

$22.00

$22.50

$23.00

$23.50

$24.00

$24.50

$25.00

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Dollar

s/SF/Y

ear

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

Direct SF Sublet SF







S A N J A C I N T O C O U N T Y M A R K E T





Net QuotedPeriod # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates2010 1q 1 2,882 0 0.0% 0 0 0 0 0 $0.00

2009 4q 1 2,882 0 0.0% 0 0 0 0 0 $0.00

2009 3q 1 2,882 0 0.0% 0 0 0 0 0 $0.00

2009 2q 1 2,882 0 0.0% 0 0 0 0 0 $0.00

2009 1q 1 2,882 0 0.0% 0 0 0 0 0 $0.00

2008 4q 1 2,882 0 0.0% 0 0 0 0 0 $0.00

2008 3q 1 2,882 0 0.0% 0 0 0 0 0 $0.00

2008 2q 1 2,882 0 0.0% 0 0 0 0 0 $0.00

2008 1q 1 2,882 0 0.0% 0 0 0 0 0 $0.00

2007 4q 1 2,882 0 0.0% 0 0 0 0 0 $0.00

2007 3q 1 2,882 0 0.0% 0 0 0 0 0 $0.00

2007 2q 1 2,882 0 0.0% 0 0 0 0 0 $0.00

2007 1q 1 2,882 0 0.0% 0 0 0 0 0 $0.00

2006 4q 1 2,882 0 0.0% 0 0 0 0 0 $0.00

2006 3q 1 2,882 0 0.0% 0 0 0 0 0 $0.00

2006 2q 1 2,882 0 0.0% 0 0 0 0 0 $0.00



0.000

0.000

0.000

0.000

0.000

0.000

0.000

0.000

0.000

0.000

0.000

2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Perce

nt V

acant


$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.70

$0.80

$0.90

$1.00

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Dollar

s/SF/Y

ear

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

Direct SF Sublet SF






Houston Office MarketMARKET HIGHLIGHTS – CLASS “A, B & C”S O U T H M A R K E T






2009 4q 120 1,811,388 366,623 20.2% 40,475 0 0 0 0 $22.11

2009 3q 120 1,811,388 407,098 22.5% 52,132 1 80,000 0 0 $23.33

2009 2q 119 1,731,388 379,230 21.9% (60,733) 0 0 1 80,000 $23.19

2009 1q 119 1,731,388 318,497 18.4% 12,280 1 20,000 1 80,000 $22.93

2008 4q 118 1,711,388 310,777 18.2% 37,681 2 50,869 2 100,000 $22.59

2008 3q 116 1,660,519 297,589 17.9% 13,417 1 72,000 3 70,869 $21.33

2008 2q 115 1,588,519 239,006 15.0% (11,884) 0 0 4 142,869 $19.41

2008 1q 115 1,588,519 227,122 14.3% (36,077) 1 30,000 4 142,869 $21.31

2007 4q 114 1,558,519 161,045 10.3% 3,826 0 0 3 80,869 $20.95

2007 3q 114 1,558,519 164,871 10.6% 29,916 0 0 3 80,869 $19.35

2007 2q 114 1,558,519 194,787 12.5% 3,934 0 0 3 80,869 $19.26

2007 1q 114 1,558,519 198,721 12.8% (30,151) 1 37,714 3 80,869 $18.16

2006 4q 113 1,520,805 130,856 8.6% 34,160 3 64,738 1 37,714 $13.05

2006 3q 110 1,456,067 100,278 6.9% 25,652 1 10,500 4 102,452 $12.53

2006 2q 109 1,445,567 115,430 8.0% 98,820 1 81,500 5 112,952 $12.30



(0.080)

(0.060)

(0.040)

(0.020)

0.000

0.020

0.040

0.060

0.080

0.100

2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Perce

nt V

acant


$20.50

$21.00

$21.50

$22.00

$22.50

$23.00

$23.50

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Dollar

s/SF/Y

ear

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

0.45

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

Direct SF Sublet SF







S O U T H H W Y 3 5 M A R K E T





Net QuotedPeriod # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates2010 1q 39 335,115 9,101 2.7% 1,000 0 0 0 0 $15.91

2009 4q 39 335,115 10,101 3.0% (725) 0 0 0 0 $17.05

2009 3q 39 335,115 9,376 2.8% (2,851) 0 0 0 0 $11.50

2009 2q 39 335,115 6,525 1.9% (400) 0 0 0 0 $10.25

2009 1q 39 335,115 6,125 1.8% 4,900 0 0 0 0 $10.25

2008 4q 39 335,115 11,025 3.3% 7,080 0 0 0 0 $10.25

2008 3q 39 335,115 18,105 5.4% 8,575 0 0 0 0 $11.97

2008 2q 39 335,115 26,680 8.0% (22,780) 0 0 0 0 $13.28

2008 1q 39 335,115 3,900 1.2% 0 0 0 0 0 $10.02

2007 4q 39 335,115 3,900 1.2% 3,800 0 0 0 0 $10.02

2007 3q 39 335,115 7,700 2.3% 5,800 0 0 0 0 $19.75

2007 2q 39 335,115 13,500 4.0% 22,254 0 0 0 0 $19.75

2007 1q 39 335,115 35,754 10.7% (27,854) 0 0 0 0 $19.75

2006 4q 39 335,115 7,900 2.4% (500) 0 0 0 0 $23.76

2006 3q 39 335,115 7,400 2.2% 0 0 0 0 0 $23.76

2006 2q 39 335,115 7,400 2.2% 0 0 0 0 0 $23.76



(0.040)

(0.030)

(0.020)

(0.010)

0.000

0.010

0.020

0.030

2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Perce

nt V

acant


$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

$16.00

$18.00

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Dollar

s/SF/Y

ear

0.00

0.00

0.00

0.01

0.01

0.01

0.01

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

Direct SF Sublet SF







S O U T H M A I N / M E D I C A L C E N T E R M A R K E T






2009 4q 198 10,658,401 823,795 7.7% 67,847 0 0 0 0 $23.99

2009 3q 198 10,658,401 891,642 8.4% 45,024 0 0 0 0 $24.09

2009 2q 198 10,658,401 936,666 8.8% 32,402 0 0 0 0 $23.78

2009 1q 198 10,658,401 969,068 9.1% 37,014 1 4,760 0 0 $23.79

2008 4q 197 10,653,641 1,001,322 9.4% 235,666 0 0 1 4,760 $25.65

2008 3q 197 10,653,641 1,236,988 11.6% (188,789) 1 23,000 1 4,760 $25.24

2008 2q 196 10,630,641 1,025,199 9.6% 137,064 1 300,000 1 23,000 $25.17

2008 1q 195 10,330,641 862,263 8.3% (7,472) 0 0 2 323,000 $24.35

2007 4q 195 10,330,641 854,791 8.3% (9,821) 0 0 2 323,000 $24.19

2007 3q 195 10,330,641 844,970 8.2% 88,616 1 12,000 1 300,000 $24.02

2007 2q 194 10,318,641 921,586 8.9% (50,362) 0 0 2 312,000 $22.73

2007 1q 194 10,318,641 871,224 8.4% 174,960 2 514,022 2 312,000 $21.17

2006 4q 192 9,804,619 532,162 5.4% 213,590 0 0 4 826,022 $21.31

2006 3q 192 9,804,619 745,752 7.6% (40,087) 0 0 3 814,022 $21.03

2006 2q 192 9,804,619 705,665 7.2% (8,825) 0 0 2 514,022 $21.24



(0.300)

(0.200)

(0.100)

0.000

0.100

0.200

0.300

0.400

0.500

0.600

2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

Perce

nt V

acant


$23.60

$23.65

$23.70

$23.75

$23.80

$23.85

$23.90

$23.95

$24.00

$24.05

$24.10

$24.15

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Dollar

s/SF/Y

ear

0.70

0.75

0.80

0.85

0.90

0.95

1.00

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

Direct SF Sublet SF







S O U T H W E S T M A R K E T






2009 4q 273 13,466,272 2,396,518 17.8% (57,597) 0 0 0 0 $15.45

2009 3q 273 13,466,272 2,338,921 17.4% (60,878) 0 0 0 0 $15.36

2009 2q 273 13,466,272 2,278,043 16.9% 75,426 0 0 0 0 $15.38

2009 1q 273 13,466,272 2,353,469 17.5% (129,818) 0 0 0 0 $15.21

2008 4q 273 13,466,272 2,223,651 16.5% 35,376 0 0 0 0 $15.41

2008 3q 273 13,466,272 2,259,027 16.8% (167,929) 0 0 0 0 $15.61

2008 2q 273 13,466,272 2,091,098 15.5% (43,947) 1 37,884 0 0 $15.55

2008 1q 272 13,428,388 2,009,267 15.0% 19,916 0 0 1 37,884 $15.35

2007 4q 272 13,428,388 2,029,183 15.1% 110,888 1 4,750 1 37,884 $15.12

2007 3q 271 13,423,638 2,135,321 15.9% 451,279 1 211,587 2 42,634 $14.97

2007 2q 270 13,212,051 2,375,013 18.0% 245,392 1 39,996 2 216,337 $14.93

2007 1q 269 13,172,055 2,580,409 19.6% (85,481) 3 174,958 3 256,333 $14.84

2006 4q 266 12,997,097 2,319,970 17.8% 345,362 0 0 5 426,541 $14.82

2006 3q 266 12,997,097 2,665,332 20.5% (127,249) 0 0 3 194,954 $14.75

2006 2q 266 12,997,097 2,538,083 19.5% 14,882 2 58,350 2 154,958 $14.60



(0.200)

(0.100)

0.000

0.100

0.200

0.300

0.400

0.500

2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Perce

nt V

acant


$15.05

$15.10

$15.15

$15.20

$15.25

$15.30

$15.35

$15.40

$15.45

$15.50

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Dollar

s/SF/Y

ear

2.05

2.10

2.15

2.20

2.25

2.30

2.35

2.40

2.45

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

Direct SF Sublet SF







W E S T L O O P M A R K E T





Net QuotedPeriod # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates2010 1q 129 23,318,260 2,969,842 12.7% 173,557 0 0 0 0 $26.56

2009 4q 129 23,318,260 3,143,399 13.5% (95,263) 0 0 0 0 $25.55

2009 3q 129 23,318,260 3,048,136 13.1% (13,568) 0 0 0 0 $26.63

2009 2q 129 23,318,260 3,034,568 13.0% (383,125) 0 0 0 0 $27.34

2009 1q 129 23,318,260 2,651,443 11.4% (416,061) 1 66,408 0 0 $27.25

2008 4q 129 23,374,852 2,291,974 9.8% (71,780) 0 0 1 66,408 $27.14

2008 3q 129 23,374,852 2,220,194 9.5% (45,102) 0 0 1 66,408 $26.68

2008 2q 129 23,374,852 2,175,092 9.3% 73,706 0 0 1 66,408 $26.17

2008 1q 129 23,374,852 2,248,798 9.6% 36,905 0 0 1 66,408 $24.73

2007 4q 129 23,374,852 2,285,703 9.8% 114,628 0 0 1 66,408 $24.54

2007 3q 129 23,374,852 2,400,331 10.3% 360,195 0 0 0 0 $23.09

2007 2q 129 23,374,852 2,760,526 11.8% 9,464 0 0 0 0 $22.69

2007 1q 129 23,374,852 2,769,990 11.9% 201,037 0 0 0 0 $21.88

2006 4q 129 23,374,852 2,971,027 12.7% 411,481 0 0 0 0 $20.54

2006 3q 129 23,374,852 3,382,508 14.5% 167,959 0 0 0 0 $19.63

2006 2q 129 23,374,852 3,550,467 15.2% 238,558 0 0 0 0 $19.00



(0.500)

(0.400)

(0.300)

(0.200)

(0.100)

0.000

0.100

0.200

0.300

0.400

2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

Perce

nt V

acant


$24.50

$25.00

$25.50

$26.00

$26.50

$27.00

$27.50

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Dollar

s/SF/Y

ear

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

Direct SF Sublet SF







W E S T C H A S E M A R K E T






2009 4q 119 15,515,439 2,559,137 16.5% (301,694) 0 0 0 0 $23.68

2009 3q 119 15,515,439 2,257,443 14.5% 43,066 1 272,361 0 0 $23.95

2009 2q 118 15,243,078 2,028,148 13.3% (160,671) 2 222,342 1 272,361 $23.85

2009 1q 116 15,020,736 1,645,135 11.0% (262,069) 1 20,000 3 494,703 $24.08

2008 4q 115 15,000,736 1,363,066 9.1% (136,039) 1 24,000 4 514,703 $23.31

2008 3q 114 14,976,736 1,203,027 8.0% 122,988 0 0 5 538,703 $23.36

2008 2q 114 14,976,736 1,326,015 8.9% 482,049 2 371,458 5 538,703 $24.20

2008 1q 112 14,605,278 1,436,606 9.8% (57,184) 2 309,200 6 841,161 $24.14

2007 4q 110 14,296,078 1,070,222 7.5% 101,771 0 0 6 724,658 $22.71

2007 3q 110 14,296,078 1,171,993 8.2% 76,641 0 0 4 680,658 $22.82

2007 2q 110 14,296,078 1,248,634 8.7% 46,938 0 0 3 627,751 $22.10

2007 1q 110 14,296,078 1,295,572 9.1% 90,815 0 0 3 627,751 $21.32

2006 4q 110 14,296,078 1,386,387 9.7% 267,641 0 0 0 0 $20.39

2006 3q 110 14,296,078 1,654,028 11.6% (41,189) 1 206,362 0 0 $19.51

2006 2q 109 14,089,716 1,406,477 10.0% 176,607 0 0 1 206,362 $19.32



(0.400)

(0.300)

(0.200)

(0.100)

0.000

0.100

0.200

0.300

0.400

0.500

0.600

2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

Perce

nt V

acant


$23.00

$23.20

$23.40

$23.60

$23.80

$24.00

$24.20

$24.40

$24.60

$24.80

$25.00

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Dollar

s/SF/Y

ear

0.00

0.50

1.00

1.50

2.00

2.50

3.00

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

Direct SF Sublet SF







W O O D L A N D S M A R K E T






2009 4q 303 9,986,310 1,295,415 13.0% 35,830 0 0 2 94,000 $23.79

2009 3q 303 9,986,310 1,331,245 13.3% 69,488 5 431,306 2 94,000 $24.23

2009 2q 298 9,555,004 969,427 10.1% 72,213 3 84,981 6 461,306 $24.84

2009 1q 295 9,470,023 956,659 10.1% 137,659 5 302,735 8 516,287 $25.34

2008 4q 290 9,167,288 791,583 8.6% (73,841) 5 105,137 11 779,041 $25.26

2008 3q 285 9,062,151 612,605 6.8% 21,539 11 149,181 13 862,127 $25.62

2008 2q 274 8,912,970 484,963 5.4% 101,067 2 19,500 20 777,308 $25.46

2008 1q 272 8,893,470 566,530 6.4% 221,180 4 353,770 19 760,504 $27.00

2007 4q 268 8,539,700 433,940 5.1% 77,415 1 60,000 21 876,273 $25.04

2007 3q 267 8,479,700 451,355 5.3% 78,621 0 0 20 860,742 $24.92

2007 2q 267 8,479,700 529,976 6.2% 21,244 1 25,000 8 730,742 $24.60

2007 1q 266 8,454,700 526,220 6.2% 123,179 2 28,200 4 428,938 $23.50

2006 4q 264 8,426,500 621,199 7.4% 237,129 3 76,804 6 457,138 $23.36

2006 3q 261 8,349,696 781,524 9.4% (22,804) 1 20,444 9 533,942 $23.37

2006 2q 260 8,329,252 738,276 8.9% 148,931 1 5,000 7 195,644 $20.65



(0.100)

0.000

0.100

0.200

0.300

0.400

0.500

2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

Perce

nt V

acant


$23.00

$23.50

$24.00

$24.50

$25.00

$25.50

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Dollar

s/SF/Y

ear

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

2009 1q 2009 2q 2009 3q 2009 4q 2010 1q

Millio

ns

SF

Direct SF Sublet SF

houston office market -1q 2010

Real Estate

costar office reporta

costar office reportc

construction office

office loft

office medical

office condominium

office statistics

ratio of available space