Market Reports Houston

Real Estate Market Overview 2004 Houston Houston is Texas' largest city and the fourth largest city in the United States. Houston was the fastest growing city in the United States in the 20th century, according to American City Business Journals. More than four million people live in the metropolitan area. While still a major refinery center, Houston has managed to diversify its business base so the local economy does not follow the drastic rise and fall of oil prices. The Port of Houston, one of the largest in the world, is the second busiest port in the United States in terms of annual tonnage. Houston is also the site of the battle of San Jacinto, a battle that won Texas independence from Mexico. Quick Facts Land Area 5,920.11 square miles Population Density (2000) 705.7 people per square mile Counties Chambers, Fort Bend, Harris, Liberty, Montgomery, Waller Area Cities and Towns Baytown, Bellaire, Conroe, Deer Park, Galena Park, Houston, Humble, Katy, La Porte, Missouri City, Pasadena, Richmond, Rosenberg, Stafford, Sugar Land, West University Place Real Estate Center Market Overview 2004 Houston, Texas Table of Contents Demographics ..............................................................................................3 Education .....................................................................................................7 Employment .................................................................................................8 Economy ....................................................................................................13 Infrastructure ..............................................................................................14 Public Facilities ..........................................................................................15 Multifamily ..................................................................................................21 Housing ......................................................................................................28 Retail ..........................................................................................................32 Hotel...........................................................................................................40 Office..........................................................................................................41 Industrial ....................................................................................................49 -2- Real Estate Center Market Overview 2004 Houston, Texas Houston Market Overview 2004 Demographics Houston PMSA Population Percent Year Population Change 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 3,321,911 3,443,141 3,538,446 3,614,201 3,685,175 3,752,649 3,832,082 3,916,777 4,014,641 4,113,233 4,177,646 4,305,711 4,420,081 2.2 3.6 2.8 2.1 2 1.8 2.1 2.2 2.5 2.5 1.6 3.1 2.7 Source: U.S. Census Bureau County Population Growth County Chambers Fort Bend Harris Liberty Montgomery Waller 1990 Population 2002 Population 20,088 225,421 2,818,101 52,726 182,201 23,374 27,244 399,537 3,557,055 73,739 328,499 34,057 Growth 1990 - 2002 (percent) 35.6 77.2 26.2 39.9 80.3 45.7 Source: U.S. Census Bureau -3- Real Estate Center Market Overview 2004 Houston, Texas Area Cities With 10,000 or More Residents City Houston Pasadena Baytown Sugar Land Missouri City Conroe La Porte Deer Park Rosenberg South Houston Stafford Bellaire Humble West University Place Katy Richmond Galena Park Jacinto City 2000 Population 1,953,631 141,674 66,430 63,328 52,913 36,811 31,880 28,520 24,043 15,833 15,681 15,642 14,579 14,211 11,775 11,081 10,592 10,302 Source: U.S. Census Bureau Growth 1990-2000 (percent) 15.1 18.7 3.4 43.1 45.9 27 14.3 3.4 16.1 10.2 94.1 13.7 19.6 10 48 9.4 5.5 5.5 -4- Real Estate Center Market Overview 2004 Houston, Texas Texas Metropolitan Area Population Change, 1990 - 2002 Metropolitan Area McAllen-Edinburg-Mission Austin-San Marcos Laredo Dallas Brownsville-Harlingen-San Benito Brazoria County Houston Fort Worth-Arlington Texas Bryan-College Station San Antonio Killeen-Temple Galveston-Texas City Tyler Sherman-Denison Amarillo El Paso Waco Victoria Lubbock Longview-Marshall Corpus Christi Texarkana Wichita Falls Odessa-Midland Beaumont-Port Arthur Abilene San Angelo 1990 2002 Percent Population Population Change 383,545 846,227 133,239 2,676,248 260,120 191,707 3,321,911 1,361,034 16,986,335 121,862 1,324,749 255,299 217,396 151,309 95,019 187,514 591,610 189,123 74,361 222,636 193,801 349,894 120,132 130,351 225,545 361,218 119,655 98,458 Source: U.S. Census Bureau 614,474 1,349,291 207,611 3,743,254 353,561 257,256 4,420,081 1,802,465 21,779,893 156,099 1,660,205 319,163 261,219 181,437 113,860 222,915 697,562 217,713 84,932 247,574 212,288 382,188 131,027 138,960 239,981 382,242 125,647 103,018 60.2 59.4 55.8 39.9 35.9 34.2 33.1 32.4 28.2 28.1 25.3 25.0 20.2 19.9 19.8 18.9 17.9 15.1 14.2 11.2 9.5 9.2 9.1 6.6 6.4 5.8 5.0 4.6 Houston PMSA Projected Population Texas State Data Center Texas Water Year (Scenario 0.5) Development Board 2005 2010 2015 2020 4,552,054 4,935,298 5,336,859 5,760,656 4,910,029 5,932,219 Sources: Texas State Data Center and Texas Water Development Board -5- Real Estate Center Market Overview 2004 Houston, Texas Household Composition Houston PMSA Texas Average household size (2000) Population younger than 18 (2000, in percent) Population 65 and older (2000, in percent) Source: U.S. Census Bureau 2.82 29.2 7.4 2.74 28.2 9.9 Distribution by Race and Hispanic or Latino Origin (in percent) Houston PMSA 1990 White Black Asian American Indian Other Two or more races* Hispanic (of any race) 65.6 18.3 3.7 0.3 10.9 20.8 2000 58.7 18.5 5.1 0.4 14.2 3.0 32.9 Texas 1990 2000 60.8 11.7 0.3 1.8 0.1 25.3 71.0 11.5 2.7 0.6 11.7 2.5 32.0 * For the 2000 Census, the Census Bureau changed the "race" options, allowing people to report their race as "other" or as two or more races. Source: U.S. Census Bureau Projected Population Growth, 2000-2020 (in percent) Source: Texas State Data Center (Scenario 0.5) -6- Real Estate Center Market Overview 2004 Houston, Texas Houston Market Overview 2004 Education Educational Level, Persons Age 25 and Older 2000 (in percent) Level of Education High school graduate Some college, no degree Associate's degree Bachelor's degree Graduate or professional degree Fort Bend Harris Montgomery Texas County County County 23.0 21.3 6.4 26.3 10.2 22.5 21.3 5.0 17.4 8.9 26.8 24.8 4.9 20.7 8.7 26.3 21.7 5.2 16.1 7.4 Source: U.S. Census Bureau, 2000 Census Educational Level, Persons Age 25 and Older 2000 (in percent) Level of Education Completed High School Bachelor's Degree or More Source: U.S. Census Bureau Houston PMSA Texas 78.7 26.0 79.2 23.9 Local College and University Enrollment School Alvin Community College Kingwood College Lee College Montgomery College North Harris College Prairie View A&M University Rice University Texas Southern University U.T. Health Science Center at Houston University of Houston 4,229 8,115 Spring 2002 Fall 2002 4,161 5,970 6,329 6,258 9,972 7,255 4,602 9,739 3,335 6,978 4,486 Spring 2003 4,300 7,194 6000 Fall 2003 3,925 6,259 6,377 6,900 10,698 7,808 4,770 9,432 10,888 3,417 - 34,443 30,116 35,066 Sources: Educational institutions and Texas Higher Education Coordinating Board -7- Real Estate Center Market Overview 2004 Houston, Texas Houston Market Overview 2004 Employment Top Ten Employers Employer Houston Independent School District City of Houston Administaff Continental Airlines Memorial Hermann Healthcare System Harris County M.D. Anderson Cancer Center Halliburton Kroger ARAMARK Corporation Sector Education Employees 31,914 Government 23,000 (est.) Professional employer services Airline Health care Government 18,211 16,000 15,000 14,832 Health care 13,350 (est.) Oil and gas Grocery Food, facility and support services 13,000 12,000 10,000 Source: Houston Business Journal Apr-2003 and individual employers Jan-2004 Top Ten Private Employers Employer Administaff Continental Airlines Memorial Hermann Healthcare System M.D. Anderson Cancer Center Halliburton Kroger ARAMARK Corporation Reliant Energy HCA HP Sector Professional employer services Airline Health care Employees 18,211 16,000 15,000 Health care 13,350 (est.) Oil and Gas Grocery Food, facility and support services Energy services Health care Electronics 13,000 12,000 10,000 9,500 9,000 9,000 Source: Houston Business Journal Apr-2003 and individual employers Jan-2004 -8- Real Estate Center Market Overview 2004 Houston, Texas Employment Growth by Industry - 2003 Houston MSA Employment growth (percent) Unemployment rate (percent) New jobs Employment growth by sector (percent) Manufacturing Construction Natural Resources and Mining Trade, Transportation and Utilities Information Financial Activities Professional and Business Services Educational and Health Services Leisure and Hospitality Government Total Nonfarm -5.2 -3.3 3.3 -2.8 -5.6 0.8 -2.7 2.8 2.4 3 -0.8 -5.0 -3.0 0.6 -1.8 -5.8 0.9 -1.1 3.3 1.2 1.3 -0.5 -0.8 6.9 Texas -0.5 6.8 -16200 -49,800 Source: Texas Workforce Commission and U.S. Bureau of Labor Statistics -9- Real Estate Center Market Overview 2004 Houston, Texas Texas Metropolitan Area Employment Change, 1990 - 2003 Metropolitan Area Austin-San Marcos Laredo McAllen-Edinburg-Mission Brownsville-Harlingen-San Benito Bryan-College Station San Antonio Killeen-Temple Tyler Dallas Texas Fort Worth-Arlington Houston Victoria Amarillo El Paso Lubbock Waco Longview-Marshall Odessa-Midland Corpus Christi San Angelo Brazoria County Abilene Sherman-Denison Wichita Falls Galveston-Texas City Texarkana Beaumont-Port Arthur 1990 2003 Percent Employment Employment Change 454,618 48,766 128,560 90,866 58,292 587,550 87,724 70,970 1,467,668 8,071,312 721,875 1,720,152 34,648 92,967 229,358 107,823 86,347 86,048 104,401 150,142 43,587 93,552 52,389 43,804 56,897 105,423 51,575 157,435 746,750 77,065 197,870 131,457 82,368 796,235 117,801 93,561 1,916,607 10,284,203 915,919 2,180,719 43,652 113,051 274,926 128,854 102,310 100,952 120,374 172,705 49,798 105,320 58,513 48,866 62,812 114,327 55,658 167,915 64.3 58.0 53.9 44.7 41.3 35.5 34.3 31.8 30.6 27.4 26.9 26.8 26.0 21.6 19.9 19.5 18.5 17.3 15.3 15.0 14.2 12.6 11.7 11.6 10.4 8.4 7.9 6.7 Source: U.S. Bureau of Labor Statistics and The Real Estate Center - 10 - Real Estate Center Market Overview 2004 Houston, Texas Houston MSA Employment Percent Year Employment Change 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 1,720,152 1,748,519 1,763,867 1,787,299 1,837,749 1,879,482 1,899,779 1,946,050 2,035,246 2,052,980 2,087,395 2,132,341 2,411,572 2,180,719 1.6 0.9 1.3 2.8 2.3 1.1 2.4 4.6 0.9 1.7 2.2 0.6 1.7 Source: U.S. Bureau of Labor Statistics Annual Percent Change in Houston MSA Employment Source: U.S. Bureau of Labor Statistics - 11 - Real Estate Center Market Overview 2004 Houston, Texas Houston MSA Unemployment Rate (in percent) Source: U.S. Bureau of Labor Statistics - 12 - Real Estate Center Market Overview 2004 Houston, Texas Houston Market Overview 2004 Economy Houston MSA Gross Retail Sales Year Total Sales Sales per Capita $9,024 8,711 8,859 9,196 9,978 10,520 11,445 13,546 13,546 13,138 13,456 13,325 13,309 1990 $30,160,024,567 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 29,880,910,025 31,142,151,442 32,923,951,144 36,334,785,208 38,910,856,792 43,115,416,829 52,042,620,313 53,192,085,084 52,697,029,471 56,213,365,234 57,374,111,397 58,828,462,146 State Average 2002: $12,143 Source: Texas Comptroller's Office - 13 - Real Estate Center Market Overview 2004 Houston, Texas Houston Market Overview 2004 Infrastructure Houston Airline Boardings Airport Ellington Field (EFD) Enplaned (domestic) Deplaned (domestic) Total (domestic) Houston Hobby (HOU) Enplaned (domestic) Deplaned (domestic) Total (domestic) 4,377,233 4,373,113 8,750,346 4,422,032 4,442,889 8,864,921 4,552,487 4,553,027 9,105,514 4,318,209 4,318,941 8,637,150 4,019,340 4,016,387 8,035,727 3,901,871 3,901,459 7,803,330 53,446 49,104 102,550 49,776 47,167 96,943 39,809 34,071 73,880 32,064 28,191 60,255 40,471 35,564 76,035 42,114 38,192 80,306 1998 1999 2000 2001 2002 2003 George Bush Intercontinental (IAH) Enplaned (int'l & domestic) 15,498,429 16,464,987 17,521,731 17,437,784 16,897,821 17,003,336 Deplaned (int'l & domestic) 15,519,375 16,586,261 17,729,641 17,365,796 17,007,026 17,148,006 Total (int'l & domestic) 31,017,804 33,051,248 35,251,372 34,803,580 33,904,847 34,151,342 Source: Houston Airport System Houston Air Cargo (in millions of pounds) Airport Ellington Field (EFD) William P. Hobby (HOU) 2000 2001 2002 2003 12.6 130.0 117.2 115.3 13.9 11.8 11.8 George Bush Intercontinental (IAH) 604.3 571.9 604.3 727.8 Source: Houston Airport System Port Statistics Port of Houston Activity Total calls 1999 2000 2001 2002 2003 6,516 6,801 6,613 6,414 6,301 - Total short tons (in millions) 169.1 191.4 185.1 177.6 Source: Port of Houston Authority - 14 - Real Estate Center Market Overview 2004 Houston, Texas Houston Market Overview 2004 Public Facilities Baytown City Public Facilities Building Permits Baytown City Building Permit Office - 15 - Real Estate Center Market Overview 2004 Houston, Texas La Porte City Public Facilities Building Permits La Porte City Building Permit Office - 16 - Real Estate Center Market Overview 2004 Houston, Texas Missouri City City Public Facilities Building Permits Missouri City City Building Permit Office - 17 - Real Estate Center Market Overview 2004 Houston, Texas Pasadena City Public Facilities Building Permits Pasadena City Building Permit Office - 18 - Real Estate Center Market Overview 2004 Houston, Texas Rosenberg City Public Facilities Building Permits Rosenberg City Building Permit Office - 19 - Real Estate Center Market Overview 2004 Houston, Texas Sugar Land City Public Facilities Building Permits Sugar Land City Building Permit Office - 20 - Real Estate Center Market Overview 2004 Houston, Texas Houston Market Overview 2004 Multifamily Houston Apartment Statistics 2003 Houston Average rent per square foot Average rent for units built since 2000 Average occupancy (percent) Average occupancy for units built since 2000 (percent) Source: Apartment MarketData Research Texas Metro Average $0.79 $0.91 92.1 90.8 $0.78 $0.91 91.9 91.7 Houston MSA Multifamily Building Permits (5+ Family Bldg. Permits in units) Source: U.S. Bureau of Labor Statistics Houston Apartment Market Absorption (Year-End) Source: O’Connor & Associates - 21 - Real Estate Center Market Overview 2004 Houston, Texas Houston Apartment Market Occupancy Rate, in Percent (Quarterly) Source: O’Connor & Associates Houston Apartment Market Rental Rate, Per Square Foot (Quarterly) Source: O’Connor & Associates - 22 - Real Estate Center Market Overview 2004 Houston, Texas Baytown City Multifamily Building Permits Baytown City Building Permit Office - 23 - Real Estate Center Market Overview 2004 Houston, Texas Missouri City City Multifamily Building Permits Missouri City City Building Permit Office - 24 - Real Estate Center Market Overview 2004 Houston, Texas Pasadena City Multifamily Building Permits Pasadena City Building Permit Office - 25 - Real Estate Center Market Overview 2004 Houston, Texas Rosenberg City Multifamily Building Permits Rosenberg City Building Permit Office - 26 - Real Estate Center Market Overview 2004 Houston, Texas Sugar Land City Multifamily Building Permits Sugar Land City Building Permit Office - 27 - Real Estate Center Market Overview 2004 Houston, Texas Houston Market Overview 2004 Housing Housing Affordability - Fourth Quarter 2003 Percent of Households THAI for That Can Afford First-time Median-priced Home THAI* Homebuyers Fort Bend Houston Montgomery County Texas Metros U.S. Total 65 55 64 54 55 1.28 1.05 1.28 1.06 1.06 0.94 0.95 1.05 0.92 0.77 * The THAI is the ratio of median household income to the income required to buy the median priced home using currently available mortgage financing. Standard financing is a 30-year loan covering 80 percent of the cost of the home. A THAI of 1.00 indicates that the median household income is just enough to qualify for a loan sufficient to purchase the median-priced home. Source: Real Estate Center at Texas A&M University - 28 - Real Estate Center Market Overview 2004 Houston, Texas Price Distribution of MLS Homes Sold, Houston Area, 2003 (in percent) Price Range $29,999 or less 30,000 - 39,999 40,000 - 49,999 50,000 - 59,999 60,000 - 69,999 70,000 - 79,999 80,000 - 89,999 90,000 - 99,999 100,000 - 119,999 120,000 - 139,999 140,000 - 159,999 160,000 - 179,999 180,000 - 199,999 200,000 - 249,999 250,000 - 299,999 300,000 - 399,999 400,000 - 499,999 500,000 and more Houston 1.6 1.5 1.6 2.2 3.0 4.3 6.6 7.8 13.1 12.5 9.9 7.3 5.1 8.1 5.5 4.9 2.0 3.0 Fort Bend Montgomery County County 0.3 0.3 0.4 0.5 1.0 2.1 4.5 5.9 11.9 13.1 13.6 10.6 7.2 11.4 7.1 6.3 2.0 1.8 1.5 2.6 2.7 2.4 2.4 3.3 4.2 5.3 11.6 12.3 10.2 7.5 5.8 9.1 6.7 6.7 2.9 2.7 Source: Real Estate Center at Texas A&M University Property Tax Rates, 2003 Tax Rate per $100 Valuation $0.66 1.58 0.08133 0.04174 0.02 0.19 0.38803 $2.96 Taxing Entity City of Houston Houston ISD Community College Flood Control District Port of Houston Hospital District Harris County Total Source: Harris County Appraisal District - 29 - Real Estate Center Market Overview 2004 Houston, Texas Houston MSA Single-family Building Permits (in units) Source: U.S. Census Bureau Average Sales Price of Single-family Home, Houston Area Source: Real Estate Center at Texas A&M University - 30 - Real Estate Center Market Overview 2004 Houston, Texas Single-Family Home Sales Volume, Houston Area (in units) Source: Real Estate Center at Texas A&M University - 31 - Real Estate Center Market Overview 2004 Houston, Texas Houston Market Overview 2004 Retail Houston Retail Market Absorption (Year-End) Source: O’Connor & Associates - 32 - Real Estate Center Market Overview 2004 Houston, Texas Houston Retail Market Occupancy Rate, in Percent (Quarterly) Source: O’Connor & Associates Houston Retail Market Rental Rate, Per Square Foot (Quarterly) Source: O’Connor & Associates - 33 - Real Estate Center Market Overview 2004 Houston, Texas Baytown City Retail Building Permits Baytown City Building Permit Office - 34 - Real Estate Center Market Overview 2004 Houston, Texas La Porte City Retail Building Permits La Porte City Building Permit Office - 35 - Real Estate Center Market Overview 2004 Houston, Texas Missouri City City Retail Building Permits Missouri City City Building Permit Office - 36 - Real Estate Center Market Overview 2004 Houston, Texas Pasadena City Retail Building Permits Pasadena City Building Permit Office - 37 - Real Estate Center Market Overview 2004 Houston, Texas Rosenberg City Retail Building Permits Rosenberg City Building Permit Office - 38 - Real Estate Center Market Overview 2004 Houston, Texas Sugar Land City Retail Building Permits Sugar Land City Building Permit Office - 39 - Real Estate Center Market Overview 2004 Houston, Texas Houston Market Overview 2004 Hotel Hotel* Occupancy and Rental Rates Houston PMSA 2000 Rooms (000) Average daily rental rate Occupancy rate (percent) 2001 Rooms (000) Average daily rental rate Occupancy rate (percent) 2002 Rooms (000) Average daily rental rate Occupancy rate (percent) 2003 Rooms (000) Average daily rental rate Occupancy rate (percent) 57.6 320.8 55.7 314.3 54.2 307.1 52.4 296.8 Texas $71.62 $71.56 62.8 59.3 $71.94 $70.27 65.2 57.3 $72.03 $70.11 60.2 55.4 $69.88 $68.78 57.1 54.3 Source: PKF ConsultingSource: Office of the Governor Economic Development and Tourism and Source Strategies, Inc. of San Antonio *Only properties exceeding $16,600 in the current quarter are included; those units below $16,600 only result in 1.5% of the total state revenues, and have been excluded from this database. - 40 - Real Estate Center Market Overview 2004 Houston, Texas Houston Market Overview 2004 Office Houston Office Market Office Vacancy Rate, Year-End 2003 Source: CoStar Group Houston Office Market Net Absorption, Year-End 2003 Source: Delta Associates - 41 - Real Estate Center Market Overview 2004 Houston, Texas Houston Office Market Under Construction, SF, Year-End 2003 Source: Delta Associates Houston Office Market, Year-End 2003 Source: Delta Associates - 42 - Real Estate Center Market Overview 2004 Houston, Texas Rent Rate Analysis of Class A & B Office Buildings, Houston Area Source: Delta Associates Baytown City Office Building Permits Baytown City Building Permit Office - 43 - Real Estate Center Market Overview 2004 Houston, Texas La Porte City Office Building Permits La Porte City Building Permit Office - 44 - Real Estate Center Market Overview 2004 Houston, Texas Missouri City City Office Building Permits Missouri City City Building Permit Office - 45 - Real Estate Center Market Overview 2004 Houston, Texas Pasadena City Office Building Permits Pasadena City Building Permit Office - 46 - Real Estate Center Market Overview 2004 Houston, Texas Rosenberg City Office Building Permits Rosenberg City Building Permit Office - 47 - Real Estate Center Market Overview 2004 Houston, Texas Sugar Land City Office Building Permits Sugar Land City Building Permit Office - 48 - Real Estate Center Market Overview 2004 Houston, Texas Houston Market Overview 2004 Industrial Houston Industrial Market Year-End 2003 Source: Delta Associates Houston Industrial Market Net Absorption SF, Year-End 2003 Source: CB Richard Ellis - 49 - Real Estate Center Market Overview 2004 Houston, Texas Baytown City Industrial Building Permits Baytown City Building Permit Office - 50 - Real Estate Center Market Overview 2004 Houston, Texas Sugar Land City Industrial Building Permits Sugar Land City Building Permit Office - 51 - Real Estate Center Market Overview 2004 Houston, Texas This annual report is created free of charge by the Real Estate Center at Texas A&M University. We strive to provide the most accurate, up-to-date, and insightful data to paint a detailed picture of Texas’ Metropolitan Statistical Area’s. The Center also provides numerous publications, resources, and data on building permits, employment, population, and home sales at http://recenter.tamu.edu. Report compiled by: Administrative Coordinator Edith Craig Research Analysts Isilay Civan Blake Lacy Real Estate Center, 2115 TAMU, College Station, TX 77843-2115 Phone: 979.845.2031 | Fax: 979.845.0460 - 52 -