Costar Advisory Report: Houston Office - 3Q 2010

Houston Office MarketT H I R D 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

THIRD 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 Transactions

Analysis of Individual CoStar Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25Select Same Building SalesSelect Land SalesAustin 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


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

HOUSTON – THIRD 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 71.7 billion square feet of coverage in 3 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.

1331 L ST NW • Washington, DC USA 20005 • (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 Stays at 14.2% Net Absorption Positive 210,600 SF in the Quarter

The Houston Office market ended the third quarter 2010 with a vacancy rate of 14.2%. The vacancy rate was unchanged over the previous quarter, with net absorption

totaling positive 210,600 square feet in the third quarter. Vacant sublease space decreased in the quarter, ending the quarter at 2,079,733 square feet. Rental rates ended the third quarter at $22.76, a decrease over the previous quarter. A total of four buildings delivered to the market in the quarter totaling 100,181 square feet, with 2,167,880 square feet still under construction at the end of the quarter.

AbsorptionNet absorption for the overall Houston office market was

positive 210,600 square feet in the third quarter 2010. That compares to negative (405,872) square feet in the second quarter 2010, positive 503,617 square feet in the first quarter 2010, and positive 48,573 square feet in the fourth 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 One; Reliant Energy, Inc. moving out of 407,104 square feet at RRI Energy Plaza; and Fluor Enterprises moving out of 187,908 square feet at The Lake Corporate Center.

Tenants moving into large blocks of space in 2010 include: Foster Wheeler USA Corporation moving into 358,138 square feet at Trammell Crow Energy Center Phase 1; Tax Masters, Inc. moving into 107,890 square feet at Dairy Ashford Plaza; and CyrusOne moving into 92,420 square feet at 5150 Westway Park Blvd.

The Class-A office market recorded net absorption of posi-tive 191,481 square feet in the third quarter 2010, compared to

negative (499,344) square feet in the second quarter 2010, posi-tive 101,407 in the first quarter 2010, and negative (116,932) in the fourth quarter 2009.

The Class-B office market recorded net absorption of posi-tive 12,443 square feet in the third quarter 2010, compared to positive 86,065 square feet in the second quarter 2010, positive 276,345 in the first quarter 2010, and positive 131,697 in the fourth quarter 2009.

The Class-C office market recorded net absorption of positive 6,676 square feet in the third quarter 2010 compared to positive 7,407 square feet in the second quarter 2010, posi-tive 125,865 in the first quarter 2010, and positive 33,808 in the fourth quarter 2009.

Net absorption for Houston’s central business district was negative (183,475) square feet in the third quarter 2010. That compares to negative (97,132) square feet in the second quarter 2010, negative (218,957) in the first quarter 2010, and positive 138,950 in the fourth quarter 2009.

Net absorption for the suburban markets was positive 394,075 square feet in the third quarter 2010. That compares to negative (308,740) square feet in second quarter 2010, positive 722,574 in the first quarter 2010, and negative (90,377) in the fourth quarter 2009.

VacancyThe office vacancy rate in the Houston market area changed

to 14.2% at the end of the third quarter 2010. The vacancy rate was 14.2% at the end of the second quarter 2010, 14.0% at the end of the first quarter 2010, and 14.2% at the end of the fourth quarter 2009.

Vacancy Rates by Class 1999-2010

Source: CoStar Property®

Absorption & Deliveries U.S. Vacancy ComparisonPast 9 Quarters Past 9 Quarters

Source: CoStar Property• Source: CoStar Property•

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Houston United States

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


Houston Office MarketTHIRD QUARTER 2010 – HOUSTON



OVERVIEW

Class-A projects reported a vacancy rate of 15.4% at the end of the third quarter 2010, 15.5% at the end of the second quarter 2010, 15.0% at the end of the first quarter 2010, and 15.1% at the end of the fourth quarter 2009.

Class-B projects reported a vacancy rate of 14.2% at the end of the third quarter 2010, 14.2% at the end of the second quarter 2010, 14.2% at the end of the first quarter 2010, and 14.3% at the end of the fourth quarter 2009.

Class-C projects reported a vacancy rate of 10.9% at the end of the third quarter 2010, 11.0% at the end of second quarter 2010, 11.0% at the end of the first quarter 2010, and 11.3% at the end of the fourth quarter 2009.

The overall vacancy rate in Houston’s central business dis-trict at the end of the third quarter 2010 increased to 12.0%. The vacancy rate was 11.7% at the end of the second quarter 2010, 11.4% at the end of the first quarter 2010, and 11.0% at the end of the fourth quarter 2009.

The vacancy rate in the suburban markets decreased to 14.6% in the third quarter 2010. The vacancy rate was 14.8% at the end of the second quarter 2010, 14.6% at the end of the first quarter 2010, and 14.9% at the end of the fourth 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 335,027-square-foot deal signed by Weatherford International at 2000 St James Pl in the West Loop market; and the 316,763-square-foot lease signed by Shell Trading at RRI Energy Plaza in the Downtown market.

Sublease VacancyThe amount of vacant sublease space in the Houston market

decreased to 2,079,733 square feet by the end of the third quarter 2010, from 2,228,545 square feet at the end of the second quarter

2010. There was 2,244,042 square feet vacant at the end of the first quarter 2010 and 2,272,040 square feet at the end of the fourth quarter 2009.

Houston’s Class-A projects reported vacant sublease space of 1,153,351 square feet at the end of third quarter 2010, down from the 1,281,104 square feet reported at the end of the second quarter 2010. There were 1,269,173 square feet of sublease space vacant at the end of the first quarter 2010, and 1,264,833 square feet at the end of the fourth quarter 2009.

Class-B projects reported vacant sublease space of 889,567 square feet at the end of the third quarter 2010, down from the 914,491 square feet reported at the end of the second quarter 2010. At the end of the first quarter 2010 there were 928,627 square feet, and at the end of the fourth quarter 2009 there were 979,829 square feet vacant.

Class-C projects reported increased vacant sublease space from the second quarter 2010 to the third quarter 2010. Sublease vacancy went from 32,950 square feet to 36,815 square feet dur-ing that time. There was 46,242 square feet at the end of the first quarter 2010, and 27,378 square feet at the end of the fourth quarter 2009.

Sublease vacancy in Houston’s central business district stood at 469,038 square feet at the end of the third quarter 2010. It was 493,501 square feet at the end of the second quarter 2010, 507,653 square feet at the end of the first quarter 2010, and 414,389 square feet at the end of the fourth quarter 2009.

Sublease vacancy in the suburban markets ended the third quarter 2010 at 1,610,695 square feet. At the end of the second quarter 2010 sublease vacancy was 1,735,044 square feet, was 1,736,389 square feet at the end of the first quarter 2010, and was 1,857,651 square feet at the end of the fourth quarter 2009.

Rental RatesThe average quoted asking rental rate for available office

space, all classes, was $22.76 per square foot per year at the end of the third quarter 2010 in the Houston market area. This rep-resented a 1.1% decrease in quoted rental rates from the end of the second quarter 2010, when rents were reported at $23.02 per square foot.

The average quoted rate within the Class-A sector was $28.84 at the end of the third quarter 2010, while Class-B rates stood at $18.78, and Class-C rates at $15.50. At the end of the second quarter 2010, Class-A rates were $29.02 per square foot, Class-B rates were $18.98, and Class-C rates were $15.43.

The average quoted asking rental rate in Houston’s CBD was $29.69 at the end of the third quarter 2010, and $21.53 in the suburban markets. In the second quarter 2010, quoted rates were $29.79 in the CBD and $21.72 in the suburbs.

Deliveries and ConstructionDuring the third quarter 2010, four buildings totaling

100,181 square feet were completed in the Houston market





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OVERVIEW

area. This compares to six buildings totaling 89,934 square feet that were completed in the second quarter 2010, eight buildings totaling 145,449 square feet completed in the first quarter 2010, and 629,672 square feet in 11 buildings completed in the fourth quarter 2009.

There were 2,167,880 square feet of office space under con-struction at the end of the third quarter 2010.

Some of the notable 2010 deliveries include: Westgreen Professional Building, an 80,977-square-foot facility that deliv-ered in third quarter 2010 and is now 37% occupied, and Pinemed Medical Office Building, a 30,000-square-foot building that delivered in first quarter 2010 and is now 85% occupied.

The largest projects underway at the end of third quarter 2010 were MainPlace, a 972,474-square-foot building with 10% 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 260,991,569 square feet in 5,017 buildings as of the end of the third quarter 2010. The Class-A office sector consisted of 108,840,005 square feet in 354 projects. There were 2,163 Class-B buildings totaling 111,600,603 square feet, and the Class-C sector consisted of 40,550,961 square feet in 2,500 buildings. Within the Office market there were 416 owner-occupied build-ings accounting for 25,076,947 square feet of office space.

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

Houston office sales figures rose during the second quarter 2010 in terms of dollar volume compared to the first quarter of 2010.

In the second quarter, 10 office transactions closed with a total volume of $208,546,373. The 10 buildings totaled 1,303,701 square feet and the average price per square foot equated to $159.96 per square foot. That compares to six trans-actions totaling $112,350,000 in the first quarter 2010. The total

square footage in the first quarter was 762,080 square feet for an average price per square foot of $147.43.

Total office building sales activity in 2010 was up compared to 2009. In the first six months of 2010, the market saw 16 office sales transactions with a total volume of $320,896,373. The price per square foot averaged $155.34. In the same first six months of 2009, the market posted 10 transactions with a total volume of $55,250,000. The price per square foot averaged $154.01.

Cap rates have been lower in 2010, averaging 9.36% com-pared to the same period in 2009 when they averaged 9.74%.

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 Senior Research Manager; and Liz Wilkinson, CoStar Research Associate.





0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

19991q

19993q

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ancy

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e

A B C Total Market

(0.06)

1.14

(0.54)

0.48

(0.01)

0.05

0.50

(0.41)

0.21

1.41

1.902.13

1.57

2.40

0.63

0.15 0.09 0.10

(1.0)

(0.5)

0.0

0.5

1.0

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3.0

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8.0%

10.0%

12.0%

14.0%

16.0%

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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 -9.70% 6.00% -15.70%

Boston -3.20% 2.60% -5.80%

Chicago -10.80% 3.40% -14.20%

Dallas/Ft Worth -0.90% 6.20% -7.10%

Denver -4.50% 4.60% -9.10%

Los Angeles -10.90% 2.70% -13.60%

New York City -3.90% 1.60% -5.50%

Seattle/Puget Sound -4.00% 8.60% -12.60%

Tampa/St Petersburg -12.80% 6.40% -19.20%

Washington -2.70% 7.40% -10.10%

Houston -2.70% 7.30% -10.00%

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

-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%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Perc

ent

Gro

wth

Houston U.S. Average

12%

10%

4%

15%

4%

14%

9%

19%

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%

7.0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Perc

ent

Gro

wth


0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

20001q

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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®

47.5%

20.2%

13.6%

11.3%

3.5%

1.3%

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

13.3%

11.9%

13.1%

11.6%

12.8%

4.2%

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

2011

2012

2013

2014

2015

2016


19.5%

16.1%

9.4%

8.7%

8.6%

8.2%

8.0%

7.1%

6.6%

2.2%

2.1%

1.9%

1.5%

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

Agri/Mining/Util

Finance/Ins/RE

Manufacturing

Retailers/Wholes

Business-Service

Services

Law Firms

Engineers/Archit

Medical

Government

Transportation

Communications

Accountants


422.1

366.4

328.5

324.4

299.6

292.3

263.8

253.0

251.4

250.2

245.1

244.0

175.1

0 50 100 150 200 250 300 350 400 450

Law Firms

Retailers/Wholes

Services

Agri/Mining/Util

Transportation

Finance/Ins/RE

Business-Service

Government

Communications

Accountants

Engineers/Archit

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 2 942,010 51.8% 107,148 908,618

FM 1960 1 0 0.0% 26,107 156,000

North Belt 1 100,000 100.0% 86,616 100,000

Woodlands 2 0 0.0% 31,898 37,505

NASA/Clear Lake 2 0 0.0% 29,274 9,816

San Jacinto County 0 0 0.0% 2,882 0

Bellaire 0 0 0.0% 73,365 0

Austin County 0 0 0.0% 4,343 0

E Fort Bend Co/Sugar Land 0 0 0.0% 29,724 0

Greenway Plaza 0 0 0.0% 56,171 0

All Other 0 0 0.0% 51,313 0

Totals 8 1,042,010 48.1% 52,021 270,985


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

2,167,880

156,000

100,000

75,011

19,632

0

0

0

0

0

Market

Under Construction Inventory Average Bldg Size

Total RBA

23.324.9

14.2

5.8

3.9

1.0 1.0 1.5 1.70.6

2.0 1.5 1.0 1.0 0.4 0.6

3.04.8

5.7

3.04.8

3.51.7

3.5 3.14.0

6.8 6.7

1.3

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

8.0

2006 2007 2008 2009 2010

Millio

ns

of

SF

Leased Un-Leased

0

200

400

600

800

1,000

1,200

2010 4q 2011 1q 2011 2q 2013 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 17 254,587 166,241 65.3% $26.08 0 254,587

50,000 SF - 99,999 SF 1 80,977 29,961 37.0% $25.13 0 80,977

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

2.092.22

2.11

1.50

2.09

1.75

1.49

0.260.35

0.13 0.180.01 0.05

0.26

0.00

1.63

0.69

0.95

0.70

2.35

1.17

1.41

1.90

2.13

1.57

2.40

0.63

0.15 0.09 0.10

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 2010 2q 2010 3q

Millio

ns

of

SF

Construction Starts Deliveries

56%44%

Multi Single

0%

100%

Multi Single

16%

42%42%

Class A Class B Class C

18%

82%

Multi Single







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Class A Market Statistics Third 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 1,489,020 126,410 154,698 10.4% (16,950) 0 0 $23.56 Downtown 35 31,110,187 2,463,181 2,991,386 9.6% (388,224) 0 1,817,237 $34.33 E Fort Bend Co/Sugar Land 22 3,917,805 1,189,008 1,204,077 30.7% (392,075) 0 0 $28.32 FM 1960 18 3,920,273 1,929,646 1,942,271 49.5% 45,238 0 156,000 $26.05 Greenway Plaza 17 6,267,603 975,672 1,111,923 17.7% (44,510) 0 0 $27.27 Gulf Freeway/Pasadena 2 75,066 23,414 29,687 39.5% 9,846 22,704 0 $28.03 I-10 East 0 0 0 0 0.0% 0 0 0 $0.00 Katy Freeway 75 16,144,167 2,609,085 2,636,153 16.3% 303,382 80,977 0 $27.53 Kingwood/Humble 3 158,640 25,904 25,904 16.3% 4,800 0 0 $29.50 NASA/Clear Lake 12 1,228,136 113,871 120,085 9.8% 16,113 0 0 $22.85 North Belt 21 5,074,057 239,116 301,348 5.9% 43,168 0 100,000 $19.38 Northeast Near 0 0 0 0 0.0% 0 0 0 $0.00 Northwest 25 4,184,931 1,322,400 1,323,804 31.6% 83,828 0 0 $25.33 Richmond/Fountainview 0 0 0 0 0.0% 0 0 0 $0.00 San Felipe/Voss 3 1,741,228 272,931 275,619 15.8% (26,530) 0 0 $29.48 San Jacinto County 0 0 0 0 0.0% 0 0 0 $0.00 South 3 188,500 98,100 98,100 52.0% 0 0 0 $26.63 South Hwy 35 0 0 0 0 0.0% 0 0 0 $0.00 South Main/Medical Center 14 3,916,577 363,337 363,337 9.3% (12,309) 0 0 $30.92 Southwest 8 1,849,149 460,502 501,988 27.1% 86 0 0 $15.13 West Loop 42 16,563,196 1,536,380 1,729,030 10.4% 45,726 0 0 $29.98 Westchase 26 7,636,999 1,328,853 1,377,220 18.0% 97,508 0 0 $30.03 Woodlands 17 3,374,471 483,323 527,854 15.6% 24,447 0 0 $28.58

Totals 354 108,840,005 15,561,133 16,714,484 15.4% (206,456) 103,681 2,073,237 $28.84


Class B Market Statistics Third Quarter 2010



Austin County 3 16,460 0 0 0.0% 0 0 0 $0.00 Bellaire 21 2,579,916 68,375 128,506 5.0% (50,243) 0 0 $18.17 Downtown 138 18,032,999 2,354,362 2,417,936 13.4% (113,591) 0 0 $23.69 E Fort Bend Co/Sugar Land 190 3,907,232 505,723 508,722 13.0% 96,958 101,954 0 $20.73 FM 1960 302 7,812,546 1,460,065 1,523,355 19.5% 114,763 38,854 0 $16.55 Greenway Plaza 44 3,952,200 273,558 275,017 7.0% 1,092 0 0 $21.26 Gulf Freeway/Pasadena 135 3,353,751 523,494 548,975 16.4% (17,163) 0 0 $19.81 I-10 East 27 846,288 107,609 116,869 13.8% 26,947 0 0 $14.14 Katy Freeway 197 11,258,823 1,023,273 1,101,573 9.8% 282,079 3,500 0 $18.67 Kingwood/Humble 58 1,795,933 184,857 188,598 10.5% 35,565 22,929 0 $20.45 NASA/Clear Lake 143 5,260,776 394,886 421,863 8.0% 39,310 25,000 19,632 $20.56 North Belt 75 6,646,685 1,336,137 1,488,850 22.4% (227,030) 0 0 $15.73 Northeast Near 24 667,123 88,369 88,369 13.2% 25,473 0 0 $18.16 Northwest 159 9,142,510 1,660,585 1,686,762 18.4% (45,457) 0 0 $15.02 Richmond/Fountainview 22 972,874 97,798 97,798 10.1% 7,964 0 0 $15.82 San Felipe/Voss 37 3,585,757 307,740 331,579 9.2% 10,428 0 0 $19.77 San Jacinto County 1 2,882 0 0 0.0% 0 0 0 $0.00 South 53 1,029,834 137,476 137,476 13.3% 41,628 0 0 $21.42 South Hwy 35 17 188,024 5,574 5,574 3.0% 351 0 0 $16.24 South Main/Medical Center 59 3,958,724 342,622 347,422 8.8% (91,072) 9,646 0 $21.48 Southwest 121 7,603,905 1,328,044 1,491,444 19.6% 73,090 0 0 $15.45 West Loop 64 5,950,779 1,228,833 1,243,653 20.9% 92,706 0 0 $19.90 Westchase 65 7,209,281 950,974 1,010,632 14.0% 2,808 0 0 $18.86 Woodlands 208 5,825,301 557,378 666,326 11.4% 68,247 30,000 75,011 $21.41

Totals 2,163 111,600,603 14,937,732 15,827,299 14.2% 374,853 231,883 94,643 $18.78


Existing Inventory Vacancy


FIGURES AT A GLANCE






Class C Market Statistics Third Quarter 2010



Austin County 6 22,630 0 0 0.0% 0 0 0 $0.00 Bellaire 36 919,870 142,068 142,068 15.4% (12,451) 0 0 $15.50 Downtown 345 6,359,352 1,536,087 1,536,087 24.2% 42,709 0 0 $16.78 E Fort Bend Co/Sugar Land 86 1,032,809 70,508 70,708 6.8% (3,255) 0 0 $20.13 FM 1960 232 2,678,270 250,276 252,739 9.4% 58,293 0 0 $15.38 Greenway Plaza 157 2,025,572 300,922 300,922 14.9% (11,685) 0 0 $17.75 Gulf Freeway/Pasadena 238 2,817,091 256,557 260,147 9.2% 19,246 0 0 $14.13 I-10 East 59 415,363 9,324 15,860 3.8% (7,183) 0 0 $14.24 Katy Freeway 175 3,456,161 290,675 292,197 8.5% (9,377) 0 0 $14.73 Kingwood/Humble 65 663,736 27,108 27,108 4.1% 650 0 0 $14.91 NASA/Clear Lake 144 2,263,946 226,533 239,580 10.6% (26,429) 0 0 $16.93 North Belt 62 1,964,522 266,920 276,377 14.1% (28,868) 0 0 $13.44 Northeast Near 77 781,657 52,088 52,088 6.7% (14,253) 0 0 $16.70 Northwest 214 2,904,032 140,901 140,901 4.9% 66,483 0 0 $13.78 Richmond/Fountainview 67 1,223,670 55,987 55,987 4.6% 22,192 0 0 $15.53 San Felipe/Voss 11 234,509 21,403 21,403 9.1% 497 0 0 $18.87 San Jacinto County 0 0 0 0 0.0% 0 0 0 $0.00 South 82 654,091 66,196 66,196 10.1% 11,854 0 0 $15.35 South Hwy 35 25 138,990 16,372 16,372 11.8% (10,196) 0 0 $20.76 South Main/Medical Center 130 3,339,842 165,550 165,550 5.0% 42,164 0 0 $18.33 Southwest 149 3,999,769 353,187 353,187 8.8% 10,724 0 0 $12.11 West Loop 21 755,047 2,444 2,444 0.3% 20,950 0 0 $16.50 Westchase 30 1,083,769 59,794 59,794 5.5% 3,799 0 0 $15.29 Woodlands 89 816,263 86,020 86,020 10.5% (35,916) 0 0 $18.80

Totals 2,500 40,550,961 4,396,920 4,433,735 10.9% 139,948 0 0 $15.50


Total Office Market Statistics Third Quarter 2010



Austin County 9 39,090 0 0 0.0% 0 0 0 $0.00 Bellaire 68 4,988,806 336,853 425,272 8.5% (79,644) 0 0 $20.64 Downtown 518 55,502,538 6,353,630 6,945,409 12.5% (459,106) 0 1,817,237 $28.73 E Fort Bend Co/Sugar Land 298 8,857,846 1,765,239 1,783,507 20.1% (298,372) 101,954 0 $24.30 FM 1960 552 14,411,089 3,639,987 3,718,365 25.8% 218,294 38,854 156,000 $19.19 Greenway Plaza 218 12,245,375 1,550,152 1,687,862 13.8% (55,103) 0 0 $25.02 Gulf Freeway/Pasadena 375 6,245,908 803,465 838,809 13.4% 11,929 22,704 0 $18.28 I-10 East 86 1,261,651 116,933 132,729 10.5% 19,764 0 0 $14.15 Katy Freeway 447 30,859,151 3,923,033 4,029,923 13.1% 576,084 84,477 0 $22.94 Kingwood/Humble 126 2,618,309 237,869 241,610 9.2% 41,015 22,929 0 $19.90 NASA/Clear Lake 299 8,752,858 735,290 781,528 8.9% 28,994 25,000 19,632 $20.22 North Belt 158 13,685,264 1,842,173 2,066,575 15.1% (212,730) 0 100,000 $16.01 Northeast Near 101 1,448,780 140,457 140,457 9.7% 11,220 0 0 $17.65 Northwest 398 16,231,473 3,123,886 3,151,467 19.4% 104,854 0 0 $19.28 Richmond/Fountainview 89 2,196,544 153,785 153,785 7.0% 30,156 0 0 $15.74 San Felipe/Voss 51 5,561,494 602,074 628,601 11.3% (15,605) 0 0 $23.07 San Jacinto County 1 2,882 0 0 0.0% 0 0 0 $0.00 South 138 1,872,425 301,772 301,772 16.1% 53,482 0 0 $21.82 South Hwy 35 42 327,014 21,946 21,946 6.7% (9,845) 0 0 $17.41 South Main/Medical Center 203 11,215,143 871,509 876,309 7.8% (61,217) 9,646 0 $24.42 Southwest 278 13,452,823 2,141,733 2,346,619 17.4% 83,900 0 0 $14.91 West Loop 127 23,269,022 2,767,657 2,975,127 12.8% 159,382 0 0 $26.43 Westchase 121 15,930,049 2,339,621 2,447,646 15.4% 104,115 0 0 $25.02 Woodlands 314 10,016,035 1,126,721 1,280,200 12.8% 56,778 30,000 75,011 $23.73

Totals 5,017 260,991,569 34,895,785 36,975,518 14.2% 308,345 335,564 2,167,880 $22.76




FIGURES AT A GLANCE






FIGURES AT A GLANCE

Class A Submarket Statistics Third Quarter 2010



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

Bellaire 11 1,489,020 126,410 154,698 10.4% (16,950) 0 0 $23.56

CBD 30 29,260,087 2,251,291 2,658,619 9.1% (405,048) 0 1,817,237 $35.18

E Fort Bend Co/Sugar Land 22 3,917,805 1,189,008 1,204,077 30.7% (392,075) 0 0 $28.32

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

FM 1960/Hwy 249 15 3,423,258 1,880,257 1,880,257 54.9% 49,384 0 156,000 $26.61

FM 1960/I-45 North 2 347,015 49,389 62,014 17.9% (4,146) 0 0 $19.25

Galleria/Uptown 28 12,182,222 1,264,536 1,395,075 11.5% (17,517) 0 0 $30.71

Greenspoint/IAH 4 680,397 72,850 72,850 10.7% 8,537 0 100,000 $21.44

Greenspoint/N Belt West 17 4,393,660 166,266 228,498 5.2% 34,631 0 0 $18.94

Greenway Plaza 17 6,267,603 975,672 1,111,923 17.7% (44,510) 0 0 $27.27

Gulf Freeway/Pasadena 2 75,066 23,414 29,687 39.5% 9,846 22,704 0 $28.03

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

Katy Freeway East 14 3,555,614 448,244 451,597 12.7% 194,647 0 0 $33.70

Katy Freeway West 61 12,588,553 2,160,841 2,184,556 17.4% 108,735 80,977 0 $26.36

Kingwood/Humble 3 158,640 25,904 25,904 16.3% 4,800 0 0 $29.50

Midtown 5 1,850,100 211,890 332,767 18.0% 16,824 0 0 $25.61

NASA/Clear Lake 12 1,228,136 113,871 120,085 9.8% 16,113 0 0 $22.85

North Loop West 5 1,054,498 298,486 299,890 28.4% 13,515 0 0 $24.42

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

Northwest Far 19 2,893,049 1,023,914 1,023,914 35.4% 70,313 0 0 $25.59

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

Post Oak Park 9 2,497,937 113,284 146,122 5.8% 19,625 0 0 $29.12

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

Riverway 5 1,883,037 158,560 187,833 10.0% 43,618 0 0 $25.16

San Felipe/Voss 3 1,741,228 272,931 275,619 15.8% (26,530) 0 0 $29.48

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

South 3 188,500 98,100 98,100 52.0% 0 0 0 $26.63

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

South Main/Medical Center 14 3,916,577 363,337 363,337 9.3% (12,309) 0 0 $30.92

Southwest Beltway 8 3 573,152 141,785 162,504 28.4% 7,475 0 0 $16.46

Southwest/Hillcroft 5 1,275,997 318,717 339,484 26.6% (7,389) 0 0 $14.61

Westchase 26 7,636,999 1,328,853 1,377,220 18.0% 97,508 0 0 $30.03

Woodlands 17 3,374,471 483,323 527,854 15.6% 24,447 0 0 $28.58

Totals 354 108,840,005 15,561,133 16,714,484 15.4% (206,456) 103,681 2,073,237 $28.84








FIGURES AT A GLANCE

Class B Submarket Statistics Third Quarter 2010



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

Bellaire 21 2,579,916 68,375 128,506 5.0% (50,243) 0 0 $18.17

CBD 48 13,873,111 2,017,290 2,079,000 15.0% (126,897) 0 0 $23.84

E Fort Bend Co/Sugar Land 190 3,907,232 505,723 508,722 13.0% 96,958 101,954 0 $20.73

FM 1960/Champions 82 2,657,655 639,633 646,690 24.3% 16,670 9,558 0 $13.40

FM 1960/Hwy 249 155 3,393,499 563,311 586,586 17.3% 64,355 6,296 0 $21.06

FM 1960/I-45 North 65 1,761,392 257,121 290,079 16.5% 33,738 23,000 0 $15.31

Galleria/Uptown 26 2,856,196 686,353 694,767 24.3% 58,754 0 0 $19.70

Greenspoint/IAH 25 1,880,570 264,508 264,508 14.1% (130,722) 0 0 $16.37

Greenspoint/N Belt West 50 4,766,115 1,071,629 1,224,342 25.7% (96,308) 0 0 $15.59

Greenway Plaza 44 3,952,200 273,558 275,017 7.0% 1,092 0 0 $21.26

Gulf Freeway/Pasadena 135 3,353,751 523,494 548,975 16.4% (17,163) 0 0 $19.81

I-10 East 27 846,288 107,609 116,869 13.8% 26,947 0 0 $14.14


Katy Freeway West 129 7,992,607 768,233 832,828 10.4% 244,693 3,500 0 $18.55

Kingwood/Humble 58 1,795,933 184,857 188,598 10.5% 35,565 22,929 0 $20.45

Midtown 90 4,159,888 337,072 338,936 8.1% 13,306 0 0 $22.91

NASA/Clear Lake 143 5,260,776 394,886 421,863 8.0% 39,310 25,000 19,632 $20.56

North Loop West 66 3,736,397 916,207 928,863 24.9% (29,830) 0 0 $15.15

Northeast Near 24 667,123 88,369 88,369 13.2% 25,473 0 0 $18.16

Northwest Far 72 4,483,053 603,434 616,955 13.8% (21,695) 0 0 $14.84

Northwest Near 21 923,060 140,944 140,944 15.3% 6,068 0 0 $15.11

Post Oak Park 24 2,055,286 424,565 430,221 20.9% 15,981 0 0 $20.01

Richmond/Fountainview 22 972,874 97,798 97,798 10.1% 7,964 0 0 $15.82

Riverway 14 1,039,297 117,915 118,665 11.4% 17,971 0 0 $20.30

San Felipe/Voss 37 3,585,757 307,740 331,579 9.2% 10,428 0 0 $19.77

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

South 53 1,029,834 137,476 137,476 13.3% 41,628 0 0 $21.42

South Hwy 35 17 188,024 5,574 5,574 3.0% 351 0 0 $16.24

South Main/Medical Center 59 3,958,724 342,622 347,422 8.8% (91,072) 9,646 0 $21.48

Southwest Beltway 8 95 5,826,164 906,823 1,070,223 18.4% 62,450 0 0 $15.42

Southwest/Hillcroft 26 1,777,741 421,221 421,221 23.7% 10,640 0 0 $15.58

Westchase 65 7,209,281 950,974 1,010,632 14.0% 2,808 0 0 $18.86

Woodlands 208 5,825,301 557,378 666,326 11.4% 68,247 30,000 75,011 $21.41

Totals 2,163 111,600,603 14,937,732 15,827,299 14.2% 374,853 231,883 94,643 $18.78








FIGURES AT A GLANCE

Class C Submarket Statistics Third Quarter 2010



Austin County 6 22,630 0 0 0.0% 0 0 0 $0.00

Bellaire 36 919,870 142,068 142,068 15.4% (12,451) 0 0 $15.50

CBD 66 3,246,109 849,923 849,923 26.2% 32,381 0 0 $16.27

E Fort Bend Co/Sugar Land 86 1,032,809 70,508 70,708 6.8% (3,255) 0 0 $20.13

FM 1960/Champions 90 1,003,147 73,091 73,091 7.3% 23,982 0 0 $13.62

FM 1960/Hwy 249 107 1,081,834 81,764 84,227 7.8% 10,835 0 0 $15.30

FM 1960/I-45 North 35 593,289 95,421 95,421 16.1% 23,476 0 0 $17.77

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

Greenspoint/IAH 18 296,939 53,927 53,927 18.2% 316 0 0 $14.33

Greenspoint/N Belt West 44 1,667,583 212,993 222,450 13.3% (29,184) 0 0 $13.28

Greenway Plaza 157 2,025,572 300,922 300,922 14.9% (11,685) 0 0 $17.75

Gulf Freeway/Pasadena 238 2,817,091 256,557 260,147 9.2% 19,246 0 0 $14.13

I-10 East 59 415,363 9,324 15,860 3.8% (7,183) 0 0 $14.24

Katy Freeway East 124 2,637,247 208,227 208,227 7.9% (4,651) 0 0 $14.60

Katy Freeway West 51 818,914 82,448 83,970 10.3% (4,726) 0 0 $15.06

Kingwood/Humble 65 663,736 27,108 27,108 4.1% 650 0 0 $14.91

Midtown 279 3,113,243 686,164 686,164 22.0% 10,328 0 0 $17.82

NASA/Clear Lake 144 2,263,946 226,533 239,580 10.6% (26,429) 0 0 $16.93

North Loop West 113 1,295,314 51,055 51,055 3.9% 18,227 0 0 $15.04

Northeast Near 77 781,657 52,088 52,088 6.7% (14,253) 0 0 $16.70

Northwest Far 75 1,039,937 49,857 49,857 4.8% 43,934 0 0 $14.03

Northwest Near 26 568,781 39,989 39,989 7.0% 4,322 0 0 $12.38

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

Richmond/Fountainview 67 1,223,670 55,987 55,987 4.6% 22,192 0 0 $15.53

Riverway 4 159,365 2,444 2,444 1.5% 20,950 0 0 $16.50

San Felipe/Voss 11 234,509 21,403 21,403 9.1% 497 0 0 $18.87

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

South 82 654,091 66,196 66,196 10.1% 11,854 0 0 $15.35

South Hwy 35 25 138,990 16,372 16,372 11.8% (10,196) 0 0 $20.76

South Main/Medical Center 130 3,339,842 165,550 165,550 5.0% 42,164 0 0 $18.33

Southwest Beltway 8 79 1,773,156 109,088 109,088 6.2% (11,477) 0 0 $12.50

Southwest/Hillcroft 70 2,226,613 244,099 244,099 11.0% 22,201 0 0 $11.93

Westchase 30 1,083,769 59,794 59,794 5.5% 3,799 0 0 $15.29

Woodlands 89 816,263 86,020 86,020 10.5% (35,916) 0 0 $18.80

Totals 2,500 40,550,961 4,396,920 4,433,735 10.9% 139,948 0 0 $15.50








FIGURES AT A GLANCE

Total Office Submarket Statistics Third Quarter 2010



Austin County 9 39,090 0 0 0.0% 0 0 0 $0.00

Bellaire 68 4,988,806 336,853 425,272 8.5% (79,644) 0 0 $20.64

CBD 144 46,379,307 5,118,504 5,587,542 12.0% (499,564) 0 1,817,237 $29.69

E Fort Bend Co/Sugar Land 298 8,857,846 1,765,239 1,783,507 20.1% (298,372) 101,954 0 $24.30

FM 1960/Champions 173 3,810,802 712,724 719,781 18.9% 40,652 9,558 0 $13.43

FM 1960/Hwy 249 277 7,898,591 2,525,332 2,551,070 32.3% 124,574 6,296 156,000 $23.47

FM 1960/I-45 North 102 2,701,696 401,931 447,514 16.6% 53,068 23,000 0 $16.09

Galleria/Uptown 60 15,350,167 1,950,889 2,089,842 13.6% 41,237 0 0 $27.91

Greenspoint/IAH 47 2,857,906 391,285 391,285 13.7% (121,869) 0 100,000 $16.97

Greenspoint/N Belt West 111 10,827,358 1,450,888 1,675,290 15.5% (90,861) 0 0 $15.80

Greenway Plaza 218 12,245,375 1,550,152 1,687,862 13.8% (55,103) 0 0 $25.02

Gulf Freeway/Pasadena 375 6,245,908 803,465 838,809 13.4% 11,929 22,704 0 $18.28

I-10 East 86 1,261,651 116,933 132,729 10.5% 19,764 0 0 $14.15


Katy Freeway West 241 21,400,074 3,011,522 3,101,354 14.5% 348,702 84,477 0 $22.87

Kingwood/Humble 126 2,618,309 237,869 241,610 9.2% 41,015 22,929 0 $19.90

Midtown 374 9,123,231 1,235,126 1,357,867 14.9% 40,458 0 0 $22.67

NASA/Clear Lake 299 8,752,858 735,290 781,528 8.9% 28,994 25,000 19,632 $20.22

North Loop West 184 6,086,209 1,265,748 1,279,808 21.0% 1,912 0 0 $17.41

Northeast Near 101 1,448,780 140,457 140,457 9.7% 11,220 0 0 $17.65

Northwest Far 166 8,416,039 1,677,205 1,690,726 20.1% 92,552 0 0 $21.10

Northwest Near 48 1,729,225 180,933 180,933 10.5% 10,390 0 0 $14.39

Post Oak Park 44 4,837,156 537,849 576,343 11.9% 35,606 0 0 $23.08

Richmond/Fountainview 89 2,196,544 153,785 153,785 7.0% 30,156 0 0 $15.74

Riverway 23 3,081,699 278,919 308,942 10.0% 82,539 0 0 $22.90

San Felipe/Voss 51 5,561,494 602,074 628,601 11.3% (15,605) 0 0 $23.07

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

South 138 1,872,425 301,772 301,772 16.1% 53,482 0 0 $21.82

South Hwy 35 42 327,014 21,946 21,946 6.7% (9,845) 0 0 $17.41

South Main/Medical Center 203 11,215,143 871,509 876,309 7.8% (61,217) 9,646 0 $24.42

Southwest Beltway 8 177 8,172,472 1,157,696 1,341,815 16.4% 58,448 0 0 $15.29

Southwest/Hillcroft 101 5,280,351 984,037 1,004,804 19.0% 25,452 0 0 $14.29

Westchase 121 15,930,049 2,339,621 2,447,646 15.4% 104,115 0 0 $25.02

Woodlands 314 10,016,035 1,126,721 1,280,200 12.8% 56,778 30,000 75,011 $23.73

Totals 5,017 260,991,569 34,895,785 36,975,518 14.2% 308,345 335,564 2,167,880 $22.76








FIGURES AT A GLANCE




CBD 30 29,260,087 2,251,291 2,658,619 9.1% (405,048) 0 1,817,237 $35.18

Suburban 324 79,579,918 13,309,842 14,055,865 17.7% 198,592 103,681 256,000 $27.26

Totals 354 108,840,005 15,561,133 16,714,484 15.4% (206,456) 103,681 2,073,237 $28.84





CBD 48 13,873,111 2,017,290 2,079,000 15.0% (126,897) 0 0 $23.84

Suburban 2,115 97,727,492 12,920,442 13,748,299 14.1% 501,750 231,883 94,643 $18.13

Totals 2,163 111,600,603 14,937,732 15,827,299 14.2% 374,853 231,883 94,643 $18.78


Class C Market Statistics Third Quarter 2010



CBD 66 3,246,109 849,923 849,923 26.2% 32,381 0 0 $16.27

Suburban 2,434 37,304,852 3,546,997 3,583,812 9.6% 107,567 0 0 $15.40

Totals 2,500 40,550,961 4,396,920 4,433,735 10.9% 139,948 0 0 $15.50


Class A & B Market Statistics Third Quarter 2010



CBD 78 43,133,198 4,268,581 4,737,619 11.0% (531,945) 0 1,817,237 $30.75

Suburban 2,439 177,307,410 26,230,284 27,804,164 15.7% 700,342 335,564 350,643 $22.20

Totals 2,517 220,440,608 30,498,865 32,541,783 14.8% 168,397 335,564 2,167,880 $23.52





CBD 144 46,379,307 5,118,504 5,587,542 12.0% (499,564) 0 1,817,237 $29.69

Suburban 4,873 214,612,262 29,777,281 31,387,976 14.6% 807,909 335,564 350,643 $21.53

Totals 5,017 260,991,569 34,895,785 36,975,518 14.2% 308,345 335,564 2,167,880 $22.76












FIGURES AT A GLANCE


Net Quoted

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

2010 3q 354 108,840,005 15,561,133 16,714,484 15.4% 191,481 1 80,977 4 2,073,237 $28.84 2010 2q 353 108,759,028 15,543,884 16,824,988 15.5% (499,344) 1 22,704 5 2,154,214 $29.02 2010 1q 352 108,736,324 15,033,767 16,302,940 15.0% 101,407 0 0 4 1,920,918 $29.00 2009 4q 352 108,736,324 15,139,514 16,404,347 15.1% (116,932) 4 578,791 4 1,920,918 $28.96 2009 3q 348 108,157,533 14,349,673 15,708,624 14.5% (198,667) 10 2,085,171 8 2,499,709 $28.26 2009 2q 338 106,072,362 12,195,213 13,424,786 12.7% 489,792 6 1,155,781 16 4,481,199 $28.64 2009 1q 332 104,916,581 11,572,963 12,758,797 12.2% 393,604 6 1,809,572 21 5,616,605 $29.04

2008 326 103,107,009 10,390,662 11,342,829 11.0% 2,690,411 25 5,026,224 26 7,268,558 $29.18 2007 301 98,080,785 8,151,516 9,007,016 9.2% 4,043,265 11 1,739,633 36 7,853,575 $27.04 2006 290 96,341,152 10,145,112 11,310,648 11.7% 4,943,507 9 1,329,761 17 3,526,598 $23.54 2005 281 95,011,391 13,389,391 14,924,394 15.7% 2,674,822 12 1,622,808 9 1,717,499 $20.53 2004 269 93,388,583 14,226,611 15,976,408 17.1% 28,733 4 511,000 13 2,164,661 $20.86 2003 265 92,877,583 13,344,989 15,494,141 16.7% 135,815 7 2,118,892 7 1,291,606 $20.61 2002 258 90,758,691 10,800,639 13,511,064 14.9% (621,625) 4 2,746,151 7 2,118,892 $21.05 2001 254 88,012,540 7,809,134 10,143,288 11.5% 738,855 6 1,555,853 8 4,548,332 $22.36 2000 248 86,456,687 7,886,752 9,326,290 10.8% 149,662 9 2,079,568 9 4,102,004 $21.69



Net Quoted


2010 3q 2,163 111,600,603 14,937,732 15,827,299 14.2% 12,443 3 19,204 4 94,643 $18.78 2010 2q 2,160 111,581,399 14,906,047 15,820,538 14.2% 86,065 5 67,230 7 113,847 $18.98 2010 1q 2,155 111,514,169 14,910,746 15,839,373 14.2% 276,345 8 145,449 12 181,077 $19.20 2009 4q 2,147 111,368,720 14,990,440 15,970,269 14.3% 131,697 7 50,881 14 274,325 $18.96 2009 3q 2,140 111,317,839 15,179,374 16,051,085 14.4% 120,380 13 312,134 20 315,560 $19.17 2009 2q 2,127 111,005,705 15,024,113 15,859,331 14.3% 75,108 19 412,660 30 551,194 $19.25 2009 1q 2,108 110,593,045 14,715,895 15,521,779 14.0% (888,922) 19 318,222 42 858,458 $19.42

2008 2,090 110,397,823 13,614,122 14,437,635 13.1% 584,241 94 1,791,342 49 985,809 $19.64 2007 1,997 108,670,754 12,753,462 13,294,807 12.2% 2,769,208 89 2,214,397 82 1,630,029 $19.21 2006 1,912 106,862,861 13,665,236 14,256,122 13.3% 2,545,775 64 1,802,401 82 1,975,909 $17.22 2005 1,850 105,127,135 14,134,111 15,066,171 14.3% 2,468,297 82 1,803,294 62 2,086,809 $16.21 2004 1,768 103,323,841 14,433,615 15,731,174 15.2% 1,657,061 55 1,093,729 77 2,131,255 $15.84 2003 1,714 102,326,828 14,730,955 16,391,222 16.0% 47,694 54 1,332,676 46 1,281,171 $15.70 2002 1,660 100,994,152 13,590,427 15,106,240 15.0% 951,207 55 1,946,729 43 1,105,094 $16.52 2001 1,605 99,047,423 12,203,233 14,110,718 14.2% (663,621) 38 1,329,133 50 1,882,030 $17.12 2000 1,567 97,718,290 10,646,952 12,117,964 12.4% 1,446,658 49 3,298,385 34 1,301,112 $16.37



Net Quoted


2010 3q 5,017 260,991,569 34,895,785 36,975,518 14.2% 210,600 4 100,181 8 2,167,880 $22.76 2010 2q 5,013 260,891,388 34,857,392 37,085,937 14.2% (405,872) 6 89,934 12 2,268,061 $23.02 2010 1q 5,007 260,801,454 34,346,089 36,590,131 14.0% 503,617 8 145,449 16 2,101,995 $23.18 2009 4q 4,999 260,656,005 34,676,259 36,948,299 14.2% 48,573 11 629,672 18 2,195,243 $23.24 2009 3q 4,988 260,026,333 34,081,507 36,367,200 14.0% (7,320) 23 2,397,305 28 2,815,269 $23.08 2009 2q 4,965 257,629,028 31,848,181 33,962,575 13.2% 476,457 25 1,568,441 46 5,032,393 $23.33 2009 1q 4,940 256,060,587 30,844,091 32,870,591 12.8% (538,046) 25 2,127,794 63 6,475,063 $23.53

2008 4,916 254,055,793 28,518,305 30,327,751 11.9% 2,795,382 119 6,817,566 75 8,254,367 $23.57 2007 4,799 247,382,000 24,999,308 26,449,340 10.7% 7,245,006 103 3,973,021 118 9,483,604 $22.19 2006 4,701 243,842,825 28,369,568 30,155,171 12.4% 7,194,845 77 3,145,076 102 5,521,498 $19.66 2005 4,629 240,958,474 31,970,969 34,465,665 14.3% 5,423,852 104 3,521,296 75 3,817,222 $18.00 2004 4,528 237,569,814 33,413,525 36,500,857 15.4% 2,142,916 71 1,721,573 99 4,382,510 $17.89 2003 4,461 236,010,287 33,218,291 37,084,246 15.7% (722,970) 68 3,531,194 63 2,683,635 $17.68 2002 4,397 232,731,570 28,811,043 33,082,559 14.2% 488,628 67 4,810,444 57 3,303,612 $18.13 2001 4,332 227,980,941 24,546,134 28,820,558 12.6% (75,756) 54 3,023,013 64 6,543,632 $18.62 2000 4,280 225,052,375 22,859,498 25,816,236 11.5% 1,932,192 80 5,746,347 53 5,541,143 $17.92


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

2010

3q

Dollar

s/SF/Y

ear

A B C Total Market

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

20083q

20084q

20091q

20092q

20093q

20094q

20101q

20102q

20103q

Dollar

s/SF/Y

ear


94%

6%

Direct Sublet

5%

95%

Direct Sublet

45%

43%

12%


2.36

0.27

0.630.55

2.15

0.000.0

0.5

1.0

1.5

2.0

2.5

2010 4q 2011 1q 2011 2q 2011 3q 2011 4q 2012 1q

Mill

ions

15%

48% 37%


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 Llc Jones Lang LaSalle Americas, Inc. Brookfield Properties Management, L

2 2000 St James Pl Galleria/Uptown 335,027 3rd Weatherford International CB Richard Ellis Core Real Estate, LLC

3 RRI Energy Plaza CBD 316,763 3rd Shell Trading Cushman & Wakefield, Inc. PM Realty Group

4 500 Jefferson Bldg* CBD 291,536 1st Kellogg Brown & Root Jones Lang LaSalle Americas, Inc. Brookfield Properties Management, L

5 Ten West Corporate Center II* Katy Freeway West 248,872 3rd Mustang Engineering CB Richard Ellis Despain, Joel

6 One Commerce Green Bldg* Greenspoint/N Belt West 213,645 3rd Nabors Industries Ltd. N/A N/A

7 Galleria Tower II* Galleria/Uptown 193,000 3rd Southern Union Co. Jones Lang LaSalle Americas, Inc. Colvil Office Properties

8 KBR Tower CBD 182,687 1st Kellogg Brown & Root Llc Jones Lang LaSalle Americas, Inc. Brookfield Properties Management, L

9 13401 North Freeway Office Bldg Greenspoint/N Belt West 143,500 1st Exon Mobil Corporation Transwestern N/A

10 Pinnacle Westchase Westchase 133,417 2nd Aker Solutions Studley Stream Realty Partners, L.P.

11 Post Oak Central Three* Galleria/Uptown 130,846 2nd SUEZ Energy Newmark Knight Frank CAPSTAR Commercial Real Estate Svcs

12 Wells Fargo Plaza CBD 122,896 1st U.S. General Services Administration Jones Lang LaSalle Americas, Inc. CB Richard Ellis

13 5150 Westway Park Blvd Northwest Far 92,420 1st CyrusOne Direct Deal Stan Johnson Company

14 2500 CityWest* Westchase 72,185 3rd TGS-Nopec Geophysical Company, L.P. NAI Houston N/A

15 The Lake Corporate Center E Fort Bend Co/Sugar Land 60,693 2nd Money Management International Jones Lang LaSalle Americas, Inc. Colvill Office Properties

16 Koch Bldg* Greenway Plaza 58,519 2nd Merrill Lynch Global Commodities N/A N/A

17 Thirty Forty Post Oak* Galleria/Uptown 57,549 2nd Bechtel CB Richard Ellis Palermo REI, LP

18 One Allen Center* CBD 56,186 3rd Macquarie Bank N/A CB Richard Ellis

19 Valmet Bldg* Northwest Far 52,432 1st Telvent N/A N/A

20 Marathon Oil Tower Galleria/Uptown 46,796 2nd Aon Corporation Jones Lang LaSalle Americas, Inc. CB Richard Ellis

21 Koch Bldg Greenway Plaza 45,565 2nd Merrill Lynch Global Commodities N/A Transwestern

22 First City Tower CBD 41,410 1st Sutherland Asbill & Brennan, LLP Cushman & Wakefield, Inc. Colvill Office Properties

23 One Riverway* Riverway 39,617 2nd Texas Capital Bank Texas Capital Bank N/A

24 FM 1960 MEDICAL CENTER - Building 1 FM 1960/I-45 North 38,513 2nd 1960 Family Practice N/A N/A

25 Bridgewood I* Greenspoint/N Belt West 33,759 1st ENGlobal Corporation Grubb & Ellis PM Realty Group

26 Bridgewood I* Greenspoint/N Belt West 33,759 1st ENGlobal Corporation Grubb & Ellis PM Realty Group

27 Willowchase Office Bldg FM 1960/Hwy 249 33,343 3rd N/A N/A Lincoln Property Company

28 The Reserve at Sierra Pines Woodlands 32,984 2nd Praxair N/A Stream Realty Partners, L.P.

29 Brooktree Bldg North Loop West 32,960 1st Houston Area Community Services, Inc. B.K. Witt & Associates Colliers International

30 North Belt Office Center II Greenspoint/N Belt West 31,301 3rd TGS-NOPEC N/A Studley

31 The Esperson Bldgs* CBD 30,387 3rd Martin, Disiere, Jefferson & Wisdom, L.L.P. N/A Transwestern

32 3800 Buffalo Speedway Greenway Plaza 30,360 2nd Fulcrum Cushman & Wakefield, Inc. Crescent Real Estate

33 Two Riverway Riverway 30,354 3rd N/A N/A Cushman & Wakefield, Inc.

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

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

36 The Reserve at Sierra Pines Woodlands 27,919 2nd Praxair N/A Stream Realty Partners, L.P.

37 Park Ten Plaza Katy Freeway West 27,306 1st Multiphase Solutions; Inc. N/A Transwestern

38 Bank of America Center* CBD 25,933 1st BMO Nesbitt Burns Transwestern N/A

39 3100 Weslayan* Greenway Plaza 25,529 3rd Berkeley Eye Center McAlpine Interests Hartman Management, LP

40 Wells Fargo Plaza CBD 24,727 1st Petrohawk Energy Corporation N/A CB Richard Ellis

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 July 2009 - June 2010

Bldg Size # RBA $ Volume Price/SF Cap Rate

< 50,000 SF 16 250,475 32,293,315$ 128.93$ 8.85%

50K-249K SF 17 2,299,926 264,750,000$ 115.11$ 9.76%

250K-499K SF 3 1,128,869 169,698,873$ 150.33$ 7.20%

>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

20053q

20061q

20063q

20071q

20073q

20081q

20083q

20091q

20093q

20101q

Dollar

s per

SF

Houston US

$0

$200

$400

$600

$800

$1,000

$1,200

20053q

20061q

20063q

20071q

20073q

20081q

20083q

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20101q

Millio

ns

of

Sal

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Do

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$0

$50

$100

$150

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$250

Price

/SF

Sales Volume Price/SF

0.0%

2.0%

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8.0%

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12.0%

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

Cap

Rat

e P

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ge

$0

$50

$100

$150

$200

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$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%

20053q

20061q

20063q

20071q

20073q

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20083q

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SALES ACTIVITY

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Select Land Sales Based on Commercially Zoned Land Sales Occurring From July 2009 - Sept. 2010

3009 Post Oak Blvd, Houston 14214 East Fwy, Houston 300 W 17th St, Houston

Sale Price: $13,024,440 Sale Price: $4,055,000 Sale Price: $2,600,000Acres: 2.30 Acres: 39.15 Acres: 2.76Price/SF: $130.00 Price/SF: $2.38 Price/SF: $21.63Closing Date: 09/20/2010 Closing Date: 04/08/2010 Closing Date: 08/10/2010Zoning: N/Ap Zoning: none Zoning: N/AIntended Use: Office Intended Use: Warehouse Intended Use: Hold for DevelopmentBuyer: Skanska USA Commercial Development In Buyer: N/A Buyer: Sullivan Interests, LPSeller: Hines Seller: Ritchie Bros Properties Seller: Houston Independent School District

Martindale Rd, Houston 800 W 34th St, Houston E Sam Houston Pky, Pasadena

Sale Price: $2,580,000 Sale Price: $2,442,180 Sale Price: $2,200,000Acres: 164.00 Acres: 5.75 Acres: 2.78Price/SF: $0.36 Price/SF: $9.75 Price/SF: $18.18Closing Date: 02/03/2010 Closing Date: 03/04/2010 Closing Date: 12/23/2009Zoning: None Zoning: None Zoning: NoneIntended Use: Office Intended Use: Retail Intended Use: RetailBuyer: ElTesoro DelBajio LLC Buyer: Covenant Community Capital Corporation Buyer: H & D Equities, Inc.Seller: WL Woodland Lakes Llc Seller: Label Products Houston, Inc. Seller: Joseph Langteau





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 3q 9 39,090 0 0.0% 0 0 0 0 0 $0.00

2010 2q 9 39,090 0 0.0% 0 0 0 0 0 $0.00

2010 1q 9 39,090 0 0.0% 0 0 0 0 0 $0.00

2009 4q 9 39,090 0 0.0% 0 0 0 0 0 $0.00

2009 3q 9 39,090 0 0.0% 0 0 0 0 0 $0.00

2009 2q 9 39,090 0 0.0% 0 0 0 0 0 $0.00

2009 1q 9 39,090 0 0.0% 0 0 0 0 0 $0.00

2008 4q 9 39,090 0 0.0% 0 0 0 0 0 $0.00

2008 3q 9 39,090 0 0.0% 0 0 0 0 0 $0.00

2008 2q 9 39,090 0 0.0% 0 0 0 0 0 $0.00

2008 1q 9 39,090 0 0.0% 0 0 0 0 0 $0.00

2007 4q 9 39,090 0 0.0% 0 0 0 0 0 $0.00

2007 3q 9 39,090 0 0.0% 0 0 0 0 0 $0.00

2007 2q 9 39,090 0 0.0% 0 0 0 0 0 $0.00

2007 1q 9 39,090 0 0.0% 0 0 0 0 0 $0.00

2006 4q 9 39,090 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


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 2010 2q 2010 3q

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 2010 2q 2010 3q

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 3q 68 4,988,806 425,272 8.5% (81,550) 0 0 0 0 $20.64

2010 2q 68 4,988,806 343,722 6.9% 6,452 0 0 0 0 $21.06

2010 1q 68 4,988,806 350,174 7.0% (4,546) 0 0 0 0 $21.77

2009 4q 68 4,988,806 345,628 6.9% 33,046 0 0 0 0 $22.02

2009 3q 68 4,988,806 378,674 7.6% 32,064 0 0 0 0 $21.02

2009 2q 68 4,988,806 410,738 8.2% (9,996) 0 0 0 0 $21.02

2009 1q 68 4,988,806 400,742 8.0% (61,898) 0 0 0 0 $21.86

2008 4q 68 4,988,806 338,844 6.8% 176,064 0 0 0 0 $23.24

2008 3q 68 4,988,806 514,908 10.3% 88,720 0 0 0 0 $22.99

2008 2q 68 4,988,806 603,628 12.1% 23,960 0 0 0 0 $22.89

2008 1q 68 4,988,806 627,588 12.6% (153,825) 1 27,716 0 0 $21.85

2007 4q 67 4,961,090 446,047 9.0% (56,664) 0 0 1 27,716 $21.32

2007 3q 67 4,961,090 389,383 7.8% 82,743 0 0 1 27,716 $20.82

2007 2q 67 4,961,090 472,126 9.5% 77,387 0 0 1 27,716 $18.54

2007 1q 67 4,961,090 549,513 11.1% 61,819 0 0 0 0 $18.26

2006 4q 67 4,961,090 611,332 12.3% 22,315 0 0 0 0 $17.72



(0.200)

(0.150)

(0.100)

(0.050)

0.000

0.050

0.100

0.150

0.200


Millio

ns

SF

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

Perce

nt V

acant


$19.50

$20.00

$20.50

$21.00

$21.50

$22.00

$22.50

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

Dollar

s/SF/Y

ear

0.00

0.05

0.10

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0.20

0.25

0.30

0.35

0.40

0.45

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

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 3q 518 55,502,538 6,945,409 12.5% (147,075) 0 0 2 1,817,237 $28.73

2010 2q 518 55,502,538 6,798,334 12.2% (72,628) 0 0 2 1,817,237 $28.97

2010 1q 518 55,502,538 6,725,706 12.1% (239,403) 0 0 2 1,817,237 $29.36

2009 4q 518 55,502,538 6,486,303 11.7% 126,143 1 20,375 2 1,817,237 $29.78

2009 3q 517 55,482,163 6,592,071 11.9% (199,639) 0 0 3 1,837,612 $28.20

2009 2q 517 55,482,163 6,392,432 11.5% (202,092) 0 0 3 1,837,612 $29.03

2009 1q 517 55,482,163 6,190,340 11.2% (243,735) 2 59,462 2 1,817,237 $29.84

2008 4q 515 55,422,701 5,887,143 10.6% 376,841 2 567,280 4 1,876,699 $30.94

2008 3q 513 54,855,421 5,696,704 10.4% (226,526) 0 0 5 2,431,979 $30.76

2008 2q 513 54,855,421 5,470,178 10.0% 50,073 0 0 4 1,459,505 $30.86

2008 1q 513 54,855,421 5,520,251 10.1% 92,604 0 0 3 614,742 $28.54

2007 4q 513 54,855,421 5,612,855 10.2% 151,297 0 0 1 560,000 $27.87

2007 3q 513 54,855,421 5,764,152 10.5% 561,921 1 55,000 1 560,000 $25.19

2007 2q 512 54,800,421 6,271,073 11.4% 1,323,065 0 0 2 615,000 $25.74

2007 1q 512 54,800,421 7,594,138 13.9% (62,600) 1 7,374 2 615,000 $24.25

2006 4q 511 54,793,047 7,524,164 13.7% 480,458 0 0 2 62,374 $23.08



(0.400)

(0.200)

0.000

0.200

0.400

0.600

0.800

1.000

1.200

1.400

1.600


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 2010 2q 2010 3q

Dollar

s/SF/Y

ear

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

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

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 3q 298 8,857,846 1,783,507 20.1% 86,801 0 0 0 0 $24.30

2010 2q 298 8,857,846 1,870,308 21.1% (497,201) 3 32,230 0 0 $24.18

2010 1q 295 8,825,616 1,340,877 15.2% 112,028 3 69,724 3 32,230 $26.22

2009 4q 292 8,755,892 1,383,181 15.8% 5,446 3 167,384 6 101,954 $25.96

2009 3q 289 8,588,508 1,221,243 14.2% 80,035 7 91,044 9 269,338 $26.22

2009 2q 282 8,497,464 1,210,234 14.2% 126,376 1 2,400 15 352,882 $26.40

2009 1q 281 8,495,064 1,334,210 15.7% 67,526 1 6,000 14 325,682 $26.51

2008 4q 280 8,489,064 1,395,736 16.4% 224,249 4 228,680 13 165,063 $24.88

2008 3q 277 8,324,657 1,455,578 17.5% (108,928) 5 376,887 10 313,085 $24.46

2008 2q 272 7,947,770 969,763 12.2% (72,571) 0 0 14 687,572 $24.82

2008 1q 272 7,947,770 897,192 11.3% 5,099 2 24,340 13 681,572 $23.85

2007 4q 270 7,923,430 877,951 11.1% 146,286 3 30,288 12 692,247 $24.00

2007 3q 267 7,893,142 993,949 12.6% 70,808 0 0 12 640,044 $23.48

2007 2q 267 7,893,142 1,064,757 13.5% 299,960 2 159,645 10 250,254 $22.22

2007 1q 265 7,733,497 1,205,072 15.6% (125,033) 2 196,452 9 386,819 $21.92

2006 4q 263 7,537,045 883,587 11.7% 98,744 0 0 8 443,487 $20.17



(0.600)

(0.500)

(0.400)

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0.000

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Millio

ns

SF

0.0%

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15.0%

20.0%

25.0%

Perce

nt V

acant


$23.00

$23.50

$24.00

$24.50

$25.00

$25.50

$26.00

$26.50

$27.00

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

Dollar

s/SF/Y

ear

0.00

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0.80

1.00

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

Millio

ns

SF

Direct SF Sublet SF







F M 1 9 6 0 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 3q 552 14,411,089 3,718,365 25.8% 4,469 2 9,558 1 156,000 $19.19

2010 2q 550 14,401,531 3,713,276 25.8% 160,215 1 23,000 3 165,558 $19.67

2010 1q 549 14,378,531 3,850,491 26.8% 53,610 1 6,296 3 32,558 $19.77

2009 4q 548 14,372,235 3,897,805 27.1% 129,096 1 3,766 2 29,296 $21.43

2009 3q 547 14,368,469 4,023,135 28.0% 112,415 1 55,468 3 33,062 $21.75

2009 2q 546 14,313,001 4,080,082 28.5% 8,682 2 13,540 4 88,530 $22.06

2009 1q 544 14,299,461 4,075,224 28.5% (8,048) 7 89,415 4 72,774 $22.01

2008 4q 537 14,210,046 3,977,761 28.0% 80,408 8 208,895 10 158,423 $22.50

2008 3q 529 14,001,151 3,849,274 27.5% (605,073) 6 153,312 17 357,318 $22.61

2008 2q 523 13,847,839 3,090,889 22.3% 11,348 3 212,624 21 451,622 $23.07

2008 1q 520 13,635,215 2,889,613 21.2% (252,580) 12 109,817 18 638,216 $23.03

2007 4q 508 13,525,398 2,527,216 18.7% (351,810) 3 79,400 23 623,312 $20.99

2007 3q 505 13,445,998 2,096,006 15.6% (84,119) 14 62,404 22 678,773 $20.21

2007 2q 491 13,383,594 1,949,483 14.6% (11,073) 6 62,101 35 700,252 $18.88

2007 1q 485 13,321,493 1,876,309 14.1% 291,744 13 272,381 25 296,313 $18.01

2006 4q 472 13,049,112 1,895,672 14.5% (64,397) 4 156,005 36 491,694 $18.04



(0.700)

(0.600)

(0.500)

(0.400)

(0.300)

(0.200)

(0.100)

0.000

0.100

0.200

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Millio

ns

SF

0.0%

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15.0%

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25.0%

30.0%

Perce

nt V

acant


$17.50

$18.00

$18.50

$19.00

$19.50

$20.00

$20.50

$21.00

$21.50

$22.00

$22.50

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

Dollar

s/SF/Y

ear

3.40

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3.80

3.90

4.00

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4.20

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

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






2010 2q 218 12,245,375 1,736,891 14.2% (95,355) 0 0 0 0 $25.10

2010 1q 218 12,245,375 1,641,536 13.4% (8,777) 0 0 0 0 $24.85

2009 4q 218 12,245,375 1,632,759 13.3% 50,323 0 0 0 0 $25.78

2009 3q 218 12,245,375 1,683,082 13.7% (86,994) 0 0 0 0 $25.92

2009 2q 218 12,245,375 1,596,088 13.0% 9,755 0 0 0 0 $26.44

2009 1q 218 12,245,375 1,605,843 13.1% (115,369) 0 0 0 0 $26.57

2008 4q 218 12,245,375 1,490,474 12.2% (101,738) 0 0 0 0 $26.86

2008 3q 218 12,245,375 1,388,736 11.3% (63,074) 0 0 0 0 $26.64

2008 2q 218 12,245,375 1,325,662 10.8% 22,431 1 20,000 0 0 $26.83

2008 1q 217 12,225,375 1,328,093 10.9% (196,107) 1 104,671 1 20,000 $25.72

2007 4q 216 12,120,704 1,027,315 8.5% 288,140 0 0 2 124,671 $24.43

2007 3q 216 12,120,704 1,315,455 10.9% 120,020 0 0 2 124,671 $22.62

2007 2q 216 12,120,704 1,435,475 11.8% 56,377 0 0 2 124,671 $21.04

2007 1q 217 12,300,704 1,671,852 13.6% (218,836) 0 0 2 124,671 $20.63

2006 4q 217 12,300,704 1,453,016 11.8% (32,177) 0 0 0 0 $21.04



(0.300)

(0.200)

(0.100)

0.000

0.100

0.200

0.300

0.400


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

$27.00

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

Dollar

s/SF/Y

ear

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2.00

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

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






2010 2q 375 6,245,908 797,886 12.8% (7,674) 1 22,704 0 0 $18.57

2010 1q 374 6,223,204 767,508 12.3% 60,526 0 0 1 22,704 $18.65

2009 4q 374 6,223,204 828,034 13.3% 60,292 0 0 1 22,704 $17.02

2009 3q 374 6,223,204 888,326 14.3% 43,559 1 88,000 1 22,704 $16.98

2009 2q 373 6,135,204 843,885 13.8% 48,020 0 0 1 88,000 $17.21

2009 1q 373 6,135,204 891,905 14.5% (3,086) 0 0 1 88,000 $17.76

2008 4q 373 6,135,204 888,819 14.5% (44,841) 1 28,800 0 0 $18.23

2008 3q 372 6,106,404 815,178 13.3% 11,792 0 0 1 28,800 $18.70

2008 2q 372 6,106,404 826,970 13.5% (48,842) 0 0 1 28,800 $18.91

2008 1q 372 6,106,404 778,128 12.7% 57,187 2 73,362 1 28,800 $18.06

2007 4q 370 6,033,042 761,953 12.6% 80,834 0 0 3 102,162 $17.09

2007 3q 370 6,033,042 842,787 14.0% 17,612 1 11,280 3 102,162 $17.18

2007 2q 369 6,021,762 849,119 14.1% 43,550 1 58,263 4 113,442 $17.44

2007 1q 368 5,963,499 834,406 14.0% 187,104 3 87,162 2 69,543 $16.96

2006 4q 365 5,876,337 934,348 15.9% (90,263) 0 0 5 156,705 $16.42



(0.100)

(0.050)

0.000

0.050

0.100

0.150

0.200


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 2010 2q 2010 3q

Dollar

s/SF/Y

ear

0.65

0.70

0.75

0.80

0.85

0.90

0.95

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

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 3q 86 1,261,651 132,729 10.5% 7,265 0 0 0 0 $14.15

2010 2q 86 1,261,651 139,994 11.1% (1,695) 0 0 0 0 $14.27

2010 1q 86 1,261,651 138,299 11.0% 14,194 0 0 0 0 $14.91

2009 4q 86 1,261,651 152,493 12.1% (6,076) 0 0 0 0 $15.16

2009 3q 86 1,261,651 146,417 11.6% (11,080) 0 0 0 0 $15.59

2009 2q 86 1,261,651 135,337 10.7% 19,392 0 0 0 0 $14.83

2009 1q 86 1,261,651 154,729 12.3% (9,983) 0 0 0 0 $15.06

2008 4q 86 1,261,651 144,746 11.5% 43,216 0 0 0 0 $15.60

2008 3q 86 1,261,651 187,962 14.9% (3,307) 0 0 0 0 $15.57

2008 2q 86 1,261,651 184,655 14.6% (12,199) 0 0 0 0 $15.47

2008 1q 86 1,261,651 172,456 13.7% (803) 0 0 0 0 $16.03

2007 4q 86 1,261,651 171,653 13.6% 68,861 0 0 0 0 $15.33

2007 3q 87 1,322,431 301,294 22.8% (39,967) 0 0 0 0 $15.02

2007 2q 87 1,322,431 261,327 19.8% (11,222) 1 25,000 0 0 $14.12

2007 1q 86 1,297,431 225,105 17.4% (68,791) 2 12,873 1 25,000 $13.69

2006 4q 84 1,284,558 143,441 11.2% 3,283 0 0 3 37,873 $13.69



(0.080)

(0.060)

(0.040)

(0.020)

0.000

0.020

0.040

0.060

0.080


Millio

ns

SF

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Perce

nt V

acant


$13.00

$13.50

$14.00

$14.50

$15.00

$15.50

$16.00

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

Dollar

s/SF/Y

ear

0.00

0.02

0.04

0.06

0.08

0.10

0.12

0.14

0.16

0.18

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

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 3q 447 30,859,151 4,029,923 13.1% 173,637 1 80,977 0 0 $22.94

2010 2q 446 30,778,174 4,122,583 13.4% 91,498 0 0 1 80,977 $23.10

2010 1q 446 30,778,174 4,214,081 13.7% 310,949 1 3,500 1 80,977 $23.37

2009 4q 445 30,774,674 4,521,530 14.7% (19,744) 2 310,528 2 84,477 $23.43

2009 3q 443 30,464,146 4,191,258 13.8% 21,793 4 1,240,430 4 395,005 $23.30

2009 2q 439 29,223,716 2,972,621 10.2% 621,958 6 741,718 6 1,549,458 $23.03

2009 1q 433 28,481,998 2,852,861 10.0% 542,035 5 1,296,691 11 2,287,676 $23.18

2008 4q 428 27,185,307 2,098,205 7.7% 100,193 1 101,300 15 3,569,043 $23.36

2008 3q 427 27,084,007 2,097,098 7.7% 656,932 2 582,655 14 3,620,271 $23.58

2008 2q 425 26,501,352 2,171,375 8.2% 198,201 7 51,810 15 4,183,532 $23.19

2008 1q 418 26,449,542 2,317,766 8.8% 802,589 6 1,142,818 20 3,859,342 $23.73

2007 4q 412 25,306,724 1,977,537 7.8% 246,126 1 170,000 22 4,080,001 $22.98

2007 3q 411 25,136,724 2,053,663 8.2% 93,055 1 174,521 20 3,491,687 $21.25

2007 2q 410 24,962,203 1,972,197 7.9% 238,382 4 79,944 17 2,673,082 $19.84

2007 1q 406 24,882,259 2,130,635 8.6% (75,670) 2 13,711 11 1,749,682 $19.52

2006 4q 406 25,023,160 2,195,866 8.8% 636,110 3 557,183 10 1,366,494 $20.07



(0.200)

0.000

0.200

0.400

0.600

0.800

1.000

1.200

1.400


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


$22.60

$22.70

$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 2010 2q 2010 3q

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 2010 2q 2010 3q

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






2010 2q 126 2,618,309 230,164 8.8% 37,431 0 0 0 0 $20.31

2010 1q 126 2,618,309 267,595 10.2% 15,030 1 22,929 0 0 $20.33

2009 4q 125 2,595,380 259,696 10.0% (7,714) 0 0 1 22,929 $20.32

2009 3q 125 2,595,380 251,982 9.7% 14,656 0 0 1 22,929 $20.33

2009 2q 125 2,595,380 266,638 10.3% 5,507 6 26,400 1 22,929 $21.01

2009 1q 119 2,568,980 245,745 9.6% (13,528) 0 0 7 49,329 $21.50

2008 4q 119 2,568,980 232,217 9.0% (5,511) 0 0 2 26,529 $21.76

2008 3q 119 2,568,980 226,706 8.8% (3,157) 0 0 1 22,929 $20.89

2008 2q 119 2,568,980 223,549 8.7% 15,464 0 0 0 0 $21.58

2008 1q 119 2,568,980 239,013 9.3% 21,889 1 16,100 0 0 $21.92

2007 4q 118 2,552,880 244,802 9.6% (14,351) 1 2,620 1 16,100 $21.95

2007 3q 117 2,550,260 227,831 8.9% 42,886 2 67,688 2 18,720 $21.69

2007 2q 115 2,482,572 203,029 8.2% 14,184 0 0 4 86,408 $21.82

2007 1q 115 2,482,572 217,213 8.7% 122,895 2 199,156 2 67,688 $21.64

2006 4q 113 2,283,416 140,952 6.2% (1,562) 0 0 4 266,844 $21.83



(0.050)

0.000

0.050

0.100

0.150

0.200

0.250


Millio

ns

SF

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Perce

nt V

acant


$19.00

$19.50

$20.00

$20.50

$21.00

$21.50

$22.00

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

Dollar

s/SF/Y

ear

0.20

0.21

0.22

0.23

0.24

0.25

0.26

0.27

0.28

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

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 3q 299 8,752,858 781,528 8.9% 18,108 0 0 2 19,632 $20.22

2010 2q 299 8,752,858 799,636 9.1% 6,071 1 12,000 2 19,632 $20.18

2010 1q 298 8,740,858 793,707 9.1% 4,815 1 13,000 3 31,632 $20.61

2009 4q 297 8,727,858 785,522 9.0% 51,941 3 32,350 1 13,000 $20.73

2009 3q 294 8,695,508 805,113 9.3% 75,541 2 51,240 4 45,350 $20.33

2009 2q 292 8,644,268 829,414 9.6% 21,782 0 0 6 96,590 $20.70

2009 1q 292 8,644,268 851,196 9.8% (59,973) 0 0 5 83,590 $20.22

2008 4q 292 8,644,268 791,223 9.2% 122,612 2 138,407 4 71,590 $20.17

2008 3q 290 8,505,861 775,428 9.1% 98,897 1 1,800 5 206,757 $19.89

2008 2q 289 8,504,061 872,525 10.3% 8,358 1 4,800 4 149,207 $19.58

2008 1q 288 8,499,261 876,083 10.3% (30,119) 3 27,820 5 154,007 $19.13

2007 4q 285 8,471,441 818,144 9.7% 18,101 4 46,118 6 144,420 $18.11

2007 3q 282 8,463,777 828,581 9.8% (2,898) 3 65,600 9 188,738 $17.16

2007 2q 279 8,398,177 760,083 9.1% 185,642 3 96,084 10 139,538 $16.73

2007 1q 276 8,302,093 849,641 10.2% 88,738 2 16,005 11 220,822 $15.76

2006 4q 274 8,286,088 922,374 11.1% 152,225 2 122,537 8 140,609 $14.96



(0.100)

(0.050)

0.000

0.050

0.100

0.150

0.200


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 2010 2q 2010 3q

Dollar

s/SF/Y

ear

0.66

0.68

0.70

0.72

0.74

0.76

0.78

0.80

0.82

0.84

0.86

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

Millio

ns

SF

Direct SF Sublet SF







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





Net QuotedPeriod # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates2010 3q 158 13,685,264 2,066,575 15.1% (106,417) 0 0 1 100,000 $16.01

2010 2q 158 13,685,264 1,960,158 14.3% (19,274) 0 0 1 100,000 $16.23

2010 1q 158 13,685,264 1,940,884 14.2% (87,039) 0 0 0 0 $16.69

2009 4q 158 13,685,264 1,853,845 13.5% 92,150 0 0 0 0 $16.88

2009 3q 158 13,685,264 1,945,995 14.2% (271,300) 0 0 0 0 $17.42

2009 2q 158 13,685,264 1,674,695 12.2% (54,028) 1 63,621 0 0 $17.41

2009 1q 157 13,621,643 1,557,046 11.4% 6,259 0 0 1 63,621 $17.39

2008 4q 157 13,621,643 1,563,305 11.5% (27,251) 1 84,125 1 63,621 $16.96

2008 3q 156 13,537,518 1,451,929 10.7% 155,698 0 0 2 147,746 $16.61

2008 2q 156 13,537,518 1,607,627 11.9% (76,707) 0 0 2 147,746 $16.97

2008 1q 156 13,537,518 1,530,920 11.3% 75,482 1 40,000 1 84,125 $16.99

2007 4q 155 13,497,518 1,566,402 11.6% 107,515 0 0 2 124,125 $16.84

2007 3q 155 13,497,518 1,673,917 12.4% 61,972 1 135,030 2 124,125 $16.65

2007 2q 154 13,362,488 1,600,859 12.0% 12,030 0 0 3 259,155 $16.09

2007 1q 154 13,362,488 1,612,889 12.1% 121,337 0 0 1 135,030 $15.67

2006 4q 154 13,362,488 1,734,226 13.0% 87,591 0 0 1 135,030 $15.91



(0.300)

(0.250)

(0.200)

(0.150)

(0.100)

(0.050)

0.000

0.050

0.100

0.150

0.200


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


$15.00

$15.50

$16.00

$16.50

$17.00

$17.50

$18.00

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

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 2010 2q 2010 3q

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






2010 2q 101 1,448,780 141,810 9.8% (23,094) 0 0 0 0 $16.51

2010 1q 101 1,448,780 118,716 8.2% 32,961 0 0 0 0 $16.76

2009 4q 101 1,448,780 151,677 10.5% 1,996 0 0 0 0 $16.83

2009 3q 101 1,448,780 153,673 10.6% 18,167 0 0 0 0 $16.83

2009 2q 101 1,448,780 171,840 11.9% 30,877 1 8,000 0 0 $16.84

2009 1q 100 1,440,780 194,717 13.5% (8,620) 0 0 1 8,000 $18.41

2008 4q 100 1,440,780 186,097 12.9% 21,141 0 0 1 8,000 $18.36

2008 3q 100 1,440,780 207,238 14.4% 20,863 0 0 1 8,000 $17.82

2008 2q 100 1,440,780 228,101 15.8% 36,664 0 0 0 0 $16.40

2008 1q 100 1,440,780 264,765 18.4% 3,021 1 9,682 0 0 $15.70

2007 4q 99 1,431,098 258,104 18.0% (3,032) 0 0 1 9,682 $16.33

2007 3q 99 1,431,098 255,072 17.8% (8,597) 0 0 1 9,682 $16.12

2007 2q 99 1,431,098 246,475 17.2% 9,459 0 0 1 9,682 $16.04

2007 1q 99 1,431,098 255,934 17.9% (18,142) 0 0 0 0 $17.64

2006 4q 99 1,431,098 237,792 16.6% 11,169 0 0 0 0 $16.35



(0.030)

(0.020)

(0.010)

0.000

0.010

0.020

0.030

0.040


Millio

ns

SF

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

Perce

nt V

acant


$15.50

$16.00

$16.50

$17.00

$17.50

$18.00

$18.50

$19.00

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

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 2010 2q 2010 3q

Millio

ns

SF

Direct SF Sublet SF







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






2010 2q 398 16,231,473 3,214,632 19.8% (62,261) 0 0 0 0 $19.19

2010 1q 398 16,231,473 3,152,371 19.4% 103,950 0 0 0 0 $19.42

2009 4q 398 16,231,473 3,256,321 20.1% (128,864) 1 95,269 0 0 $19.00

2009 3q 397 16,136,204 3,032,188 18.8% 84,743 1 92,420 1 95,269 $19.25

2009 2q 396 16,043,784 3,024,511 18.9% 233,615 3 405,639 2 187,689 $19.23

2009 1q 393 15,638,145 2,852,487 18.2% (21,117) 1 250,000 5 593,328 $19.20

2008 4q 392 15,388,145 2,581,370 16.8% 140,694 3 373,629 6 843,328 $18.91

2008 3q 389 15,014,516 2,348,435 15.6% 164,070 1 48,139 9 1,216,957 $19.02

2008 2q 388 14,966,377 2,464,366 16.5% 32,458 1 163,436 9 1,172,676 $19.82

2008 1q 387 14,802,941 2,333,388 15.8% 167,226 2 54,000 8 1,002,873 $20.07

2007 4q 385 14,748,941 2,446,614 16.6% 142,102 3 308,857 8 889,204 $19.22

2007 3q 382 14,440,084 2,279,859 15.8% 218,469 1 158,518 9 766,247 $18.54

2007 2q 381 14,281,566 2,339,810 16.4% 241,192 1 130,000 7 569,514 $17.37

2007 1q 380 14,151,566 2,451,002 17.3% 2,749 3 76,597 5 597,375 $17.01

2006 4q 377 14,074,969 2,377,154 16.9% 47,483 1 65,000 7 668,251 $16.55



(0.200)

(0.100)

0.000

0.100

0.200

0.300

0.400

0.500


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 2010 2q 2010 3q

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 2010 2q 2010 3q

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






2010 2q 89 2,196,544 156,619 7.1% 8,252 0 0 0 0 $14.77

2010 1q 89 2,196,544 164,871 7.5% 19,070 0 0 0 0 $14.52

2009 4q 89 2,196,544 183,941 8.4% 10,173 0 0 0 0 $14.43

2009 3q 89 2,196,544 194,114 8.8% 11,202 0 0 0 0 $14.61

2009 2q 89 2,196,544 205,316 9.3% 12,942 0 0 0 0 $14.73

2009 1q 89 2,196,544 218,258 9.9% 2,007 0 0 0 0 $14.33

2008 4q 89 2,196,544 220,265 10.0% 36,975 0 0 0 0 $14.41

2008 3q 89 2,196,544 257,240 11.7% 45,488 0 0 0 0 $13.65

2008 2q 89 2,196,544 302,728 13.8% 14,858 0 0 0 0 $13.98

2008 1q 89 2,196,544 317,586 14.5% 7,054 0 0 0 0 $13.64

2007 4q 89 2,196,544 324,640 14.8% 33,324 0 0 0 0 $13.48

2007 3q 89 2,196,544 357,964 16.3% (30,173) 0 0 0 0 $13.31

2007 2q 89 2,196,544 327,791 14.9% (31,687) 0 0 0 0 $14.59

2007 1q 89 2,196,544 296,104 13.5% (96,785) 0 0 0 0 $14.23

2006 4q 89 2,196,544 199,319 9.1% (33) 0 0 0 0 $13.85



(0.120)

(0.100)

(0.080)

(0.060)

(0.040)

(0.020)

0.000

0.020

0.040

0.060


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


$13.50

$14.00

$14.50

$15.00

$15.50

$16.00

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

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 2010 2q 2010 3q

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






2010 2q 51 5,561,494 618,383 11.1% 19,039 0 0 0 0 $22.56

2010 1q 51 5,561,494 637,422 11.5% (24,426) 0 0 0 0 $22.60

2009 4q 51 5,561,494 612,996 11.0% 10,540 0 0 0 0 $22.63

2009 3q 51 5,561,494 623,536 11.2% (80,075) 0 0 0 0 $23.12

2009 2q 51 5,561,494 543,461 9.8% 12,606 0 0 0 0 $23.51

2009 1q 51 5,561,494 556,067 10.0% (74,449) 0 0 0 0 $24.47

2008 4q 51 5,561,494 481,618 8.7% (48,159) 0 0 0 0 $23.61

2008 3q 51 5,561,494 433,459 7.8% 4,412 0 0 0 0 $24.41

2008 2q 51 5,561,494 437,871 7.9% (34,535) 0 0 0 0 $23.94

2008 1q 52 5,640,994 482,836 8.6% 63,122 0 0 0 0 $21.94

2007 4q 52 5,640,994 545,958 9.7% 101,798 0 0 0 0 $20.30

2007 3q 52 5,640,994 647,756 11.5% 100,761 0 0 0 0 $19.83

2007 2q 52 5,640,994 748,517 13.3% 131,539 0 0 0 0 $19.78

2007 1q 52 5,640,994 880,056 15.6% 74,244 1 8,333 0 0 $19.55

2006 4q 51 5,632,661 945,967 16.8% 13,674 0 0 1 8,333 $19.09



(0.100)

(0.050)

0.000

0.050

0.100

0.150


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 2010 2q 2010 3q

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 2010 2q 2010 3q

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

2010 2q 1 2,882 0 0.0% 0 0 0 0 0 $0.00

2010 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



0.000

0.000

0.000

0.000

0.000

0.000

0.000

0.000

0.000

0.000

0.000


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 2010 2q 2010 3q

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 2010 2q 2010 3q

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






2010 2q 138 1,872,425 325,853 17.4% 32,535 0 0 0 0 $21.24

2010 1q 138 1,872,425 358,388 19.1% (3,134) 0 0 0 0 $21.09

2009 4q 138 1,872,425 355,254 19.0% 41,444 0 0 0 0 $21.99

2009 3q 138 1,872,425 396,698 21.2% 54,632 1 80,000 0 0 $22.32

2009 2q 137 1,792,425 371,330 20.7% (65,533) 0 0 1 80,000 $21.99

2009 1q 137 1,792,425 305,797 17.1% 12,080 1 20,000 1 80,000 $22.00

2008 4q 136 1,772,425 297,877 16.8% 37,809 1 25,000 2 100,000 $21.62

2008 3q 135 1,747,425 310,686 17.8% 11,520 1 72,000 2 45,000 $19.88

2008 2q 134 1,675,425 250,206 14.9% (14,184) 0 0 3 117,000 $17.22

2008 1q 134 1,675,425 236,022 14.1% (32,262) 1 35,015 3 117,000 $18.66

2007 4q 133 1,640,410 168,745 10.3% 4,426 0 0 2 60,015 $18.05

2007 3q 133 1,640,410 173,171 10.6% 30,016 0 0 2 60,015 $15.49

2007 2q 133 1,640,410 203,187 12.4% 5,034 0 0 2 60,015 $15.84

2007 1q 133 1,640,410 208,221 12.7% (34,551) 1 37,714 2 60,015 $15.12

2006 4q 132 1,602,696 135,956 8.5% 34,860 3 64,738 1 37,714 $13.05



(0.080)

(0.060)

(0.040)

(0.020)

0.000

0.020

0.040

0.060

0.080

0.100


Millio

ns

SF

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Perce

nt V

acant


$20.40

$20.60

$20.80

$21.00

$21.20

$21.40

$21.60

$21.80

$22.00

$22.20

$22.40

$22.60

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

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 2010 2q 2010 3q

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 3q 42 327,014 21,946 6.7% (11,240) 0 0 0 0 $17.41

2010 2q 42 327,014 10,706 3.3% (105) 0 0 0 0 $18.80

2010 1q 42 327,014 10,601 3.2% 1,500 0 0 0 0 $15.91

2009 4q 42 327,014 12,101 3.7% (425) 0 0 0 0 $17.05

2009 3q 42 327,014 11,676 3.6% (3,151) 0 0 0 0 $11.50

2009 2q 42 327,014 8,525 2.6% (900) 0 0 0 0 $10.25

2009 1q 42 327,014 7,625 2.3% 3,900 0 0 0 0 $10.25

2008 4q 42 327,014 11,525 3.5% 7,380 0 0 0 0 $10.25

2008 3q 42 327,014 18,905 5.8% 9,775 0 0 0 0 $11.97

2008 2q 42 327,014 28,680 8.8% (24,780) 0 0 0 0 $13.28

2008 1q 42 327,014 3,900 1.2% 0 0 0 0 0 $10.02

2007 4q 42 327,014 3,900 1.2% 3,800 0 0 0 0 $10.02

2007 3q 42 327,014 7,700 2.4% 6,900 0 0 0 0 $19.75

2007 2q 42 327,014 14,600 4.5% 23,154 0 0 0 0 $19.75

2007 1q 42 327,014 37,754 11.5% (29,854) 0 0 0 0 $19.75

2006 4q 42 327,014 7,900 2.4% (500) 0 0 0 0 $23.76



(0.040)

(0.030)

(0.020)

(0.010)

0.000

0.010

0.020

0.030


Millio

ns

SF

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

Perce

nt V

acant


$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

$16.00

$18.00

$20.00

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

Dollar

s/SF/Y

ear

0.00

0.01

0.01

0.02

0.02

0.03

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

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





Net QuotedPeriod # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates2010 3q 203 11,215,143 876,309 7.8% 12,808 1 9,646 0 0 $24.42

2010 2q 202 11,205,497 879,471 7.8% (10,142) 0 0 1 9,646 $24.08

2010 1q 202 11,205,497 869,329 7.8% (63,883) 0 0 1 9,646 $23.83

2009 4q 202 11,205,497 805,446 7.2% 43,818 0 0 1 9,646 $23.99

2009 3q 202 11,205,497 849,264 7.6% 69,133 0 0 0 0 $24.09

2009 2q 202 11,205,497 918,397 8.2% 51,610 0 0 0 0 $23.78

2009 1q 202 11,205,497 970,007 8.7% 37,014 0 0 0 0 $23.79

2008 4q 202 11,205,497 1,007,021 9.0% 235,666 0 0 0 0 $25.65

2008 3q 202 11,205,497 1,242,687 11.1% (188,789) 1 23,000 0 0 $25.24

2008 2q 201 11,182,497 1,030,898 9.2% 137,064 1 300,000 1 23,000 $25.19

2008 1q 200 10,882,497 867,962 8.0% (3,218) 2 8,453 2 323,000 $24.38

2007 4q 198 10,874,044 856,291 7.9% (9,821) 0 0 4 331,453 $24.21

2007 3q 198 10,874,044 846,470 7.8% 88,616 1 12,000 3 308,453 $24.05

2007 2q 197 10,862,044 923,086 8.5% (50,362) 0 0 4 320,453 $22.76

2007 1q 197 10,862,044 872,724 8.0% 175,723 2 514,285 2 312,000 $21.17

2006 4q 195 10,347,759 534,162 5.2% 213,790 0 0 4 826,285 $21.31



(0.300)

(0.200)

(0.100)

0.000

0.100

0.200

0.300

0.400

0.500

0.600


Millio

ns

SF

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Perce

nt V

acant


$23.40

$23.60

$23.80

$24.00

$24.20

$24.40

$24.60

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

Dollar

s/SF/Y

ear

0.00

0.20

0.40

0.60

0.80

1.00

1.20

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

Millio

ns

SF

Direct SF Sublet SF







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






2010 2q 278 13,452,823 2,439,390 18.1% 12,612 0 0 0 0 $15.10

2010 1q 278 13,452,823 2,452,002 18.2% (21,483) 0 0 0 0 $15.26

2009 4q 278 13,452,823 2,430,519 18.1% (58,097) 0 0 0 0 $15.43

2009 3q 278 13,452,823 2,372,422 17.6% (40,907) 0 0 0 0 $15.31

2009 2q 278 13,452,823 2,331,515 17.3% 78,626 0 0 0 0 $15.33

2009 1q 278 13,452,823 2,410,141 17.9% (105,676) 1 20,500 0 0 $15.21

2008 4q 277 13,432,323 2,283,965 17.0% 34,676 0 0 1 20,500 $15.41

2008 3q 277 13,432,323 2,318,641 17.3% (213,594) 0 0 1 20,500 $15.61

2008 2q 277 13,432,323 2,105,047 15.7% (44,647) 1 37,884 0 0 $15.55

2008 1q 276 13,394,439 2,022,516 15.1% 30,245 2 12,229 1 37,884 $15.35

2007 4q 274 13,382,210 2,040,532 15.2% 109,440 1 4,750 3 50,113 $15.12

2007 3q 273 13,377,460 2,145,222 16.0% 431,379 1 211,587 4 54,863 $14.97

2007 2q 272 13,165,873 2,365,014 18.0% 253,795 3 55,200 4 228,566 $14.93

2007 1q 269 13,110,673 2,563,609 19.6% (85,281) 2 154,958 5 271,537 $14.84

2006 4q 267 12,955,715 2,323,370 17.9% 344,362 0 0 6 421,745 $14.82



(0.300)

(0.200)

(0.100)

0.000

0.100

0.200

0.300

0.400

0.500


Millio

ns

SF

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Perce

nt V

acant


$14.60

$14.70

$14.80

$14.90

$15.00

$15.10

$15.20

$15.30

$15.40

$15.50

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

Dollar

s/SF/Y

ear

1.95

2.00

2.05

2.10

2.15

2.20

2.25

2.30

2.35

2.40

2.45

2.50

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

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 3q 127 23,269,022 2,975,127 12.8% (35,026) 0 0 0 0 $26.43

2010 2q 127 23,269,022 2,940,101 12.6% 12,104 0 0 0 0 $26.05

2010 1q 127 23,269,022 2,952,205 12.7% 182,304 0 0 0 0 $26.56

2009 4q 127 23,269,022 3,134,509 13.5% (94,963) 0 0 0 0 $25.55

2009 3q 127 23,269,022 3,039,546 13.1% (17,778) 0 0 0 0 $26.63

2009 2q 127 23,269,022 3,021,768 13.0% (381,925) 0 0 0 0 $27.34

2009 1q 127 23,269,022 2,639,843 11.3% (409,638) 1 70,131 0 0 $27.25

2008 4q 127 23,321,891 2,283,074 9.8% (70,880) 0 0 1 70,131 $27.14

2008 3q 127 23,321,891 2,212,194 9.5% (45,602) 0 0 1 70,131 $26.68

2008 2q 127 23,321,891 2,166,592 9.3% 72,806 0 0 1 70,131 $26.17

2008 1q 127 23,321,891 2,239,398 9.6% 37,305 0 0 1 70,131 $24.73

2007 4q 127 23,321,891 2,276,703 9.8% 114,528 0 0 1 70,131 $24.54

2007 3q 127 23,321,891 2,391,231 10.3% 358,595 0 0 0 0 $23.09

2007 2q 127 23,321,891 2,749,826 11.8% 8,564 0 0 0 0 $22.69

2007 1q 127 23,321,891 2,758,390 11.8% 199,437 0 0 0 0 $21.88

2006 4q 127 23,321,891 2,957,827 12.7% 410,481 0 0 0 0 $20.54



(0.500)

(0.400)

(0.300)

(0.200)

(0.100)

0.000

0.100

0.200

0.300

0.400


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 2010 2q 2010 3q

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 2010 2q 2010 3q

Millio

ns

SF

Direct SF Sublet SF







W E S T C H A S E M A R K E T






2010 2q 121 15,930,049 2,553,331 16.0% 24,558 0 0 0 0 $25.63

2010 1q 121 15,930,049 2,577,889 16.2% (26,128) 0 0 0 0 $24.53

2009 4q 121 15,930,049 2,551,761 16.0% (320,688) 0 0 0 0 $23.38

2009 3q 121 15,930,049 2,231,073 14.0% 21,640 1 272,361 0 0 $23.66

2009 2q 120 15,657,688 1,980,352 12.6% (160,840) 2 222,142 1 272,361 $23.65

2009 1q 118 15,435,546 1,597,370 10.3% (210,568) 1 12,321 3 494,503 $23.91

2008 4q 117 15,423,225 1,374,481 8.9% (135,894) 1 24,000 4 506,824 $23.16

2008 3q 116 15,399,225 1,214,587 7.9% 107,988 0 0 5 530,824 $23.27

2008 2q 116 15,399,225 1,322,575 8.6% 472,049 2 371,458 5 530,824 $24.16

2008 1q 114 15,027,767 1,423,166 9.5% (57,184) 2 309,200 6 833,482 $24.14

2007 4q 112 14,718,567 1,056,782 7.2% 115,211 0 0 6 716,979 $22.71

2007 3q 112 14,718,567 1,171,993 8.0% 76,641 0 0 4 680,658 $22.82

2007 2q 112 14,718,567 1,248,634 8.5% 46,938 0 0 3 627,751 $22.10

2007 1q 112 14,718,567 1,295,572 8.8% 90,815 0 0 3 627,751 $21.32

2006 4q 112 14,718,567 1,386,387 9.4% 267,641 0 0 0 0 $20.39



(0.400)

(0.300)

(0.200)

(0.100)

0.000

0.100

0.200

0.300

0.400

0.500

0.600


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


$22.00

$22.50

$23.00

$23.50

$24.00

$24.50

$25.00

$25.50

$26.00

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

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 2010 2q 2010 3q

Millio

ns

SF

Direct SF Sublet SF







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





Net QuotedPeriod # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates2010 3q 314 10,016,035 1,280,200 12.8% 12,489 0 0 2 75,011 $23.73

2010 2q 314 10,016,035 1,292,689 12.9% (27,210) 0 0 2 75,011 $24.36

2010 1q 314 10,016,035 1,265,479 12.6% 71,499 1 30,000 2 75,011 $24.66

2009 4q 313 9,986,035 1,306,978 13.1% 28,736 0 0 2 94,000 $23.85

2009 3q 313 9,986,035 1,335,714 13.4% 64,024 5 426,342 2 94,000 $24.33

2009 2q 308 9,559,693 973,396 10.2% 70,023 3 84,981 6 456,342 $24.96

2009 1q 305 9,474,712 958,438 10.1% 136,821 5 303,274 8 511,323 $25.46

2008 4q 300 9,171,438 791,985 8.6% (62,751) 6 114,971 11 774,616 $25.36

2008 3q 294 9,056,467 614,263 6.8% 25,252 11 149,181 14 866,997 $25.74

2008 2q 283 8,907,286 490,334 5.5% 90,052 1 4,500 21 787,142 $25.58

2008 1q 282 8,902,786 575,886 6.5% 217,080 4 353,770 19 755,338 $27.18

2007 4q 278 8,549,016 439,196 5.1% 79,415 1 60,000 20 861,273 $25.27

2007 3q 277 8,489,016 458,611 5.4% 79,821 0 0 19 845,742 $25.12

2007 2q 277 8,489,016 538,432 6.3% 20,944 1 25,000 7 715,742 $24.77

2007 1q 276 8,464,016 534,376 6.3% 105,105 2 29,122 4 428,938 $23.56

2006 4q 274 8,434,894 610,359 7.2% 230,661 3 76,804 6 458,060 $23.42



(0.100)

0.000

0.100

0.200

0.300

0.400

0.500


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


$22.50

$23.00

$23.50

$24.00

$24.50

$25.00

$25.50

$26.00

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

Dollar

s/SF/Y

ear

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

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

Millio

ns

SF

Direct SF Sublet SF

Documents

Costar Advisory Report: Houston Office - 3Q 2010