8455 Fannin St...8455 Fannin St PREPARED BY Amit Mehta Realtor Underwriting Report 9,540 SF Office...

8455 Fannin St

PREPARED BY

Amit Mehta

Realtor

Underwriting Report

9,540 SF Office Building

Houston, Texas - South Main/Medical Center Submarket

SUBJECT PROPERTY

Property Details 2

MARKET SUMMARY

SOUTH MAIN/MEDICAL CENTER Submarket Trends 5

HOUSTON Market Summary 6

HOUSTON Economic Summary 7

PEER PROPERTIES

Peer Properties Summary 11

Peer Property Photos 13

Peer Property Comparison 15

Peer Property Details 19

LEASING ANALYTICS

Vacancy Analytics 25

Rent Analytics 31

Absorption Analytics 33

Leasing Analytics 34

LEASE COMPS

Lease Comps Summary 37

Lease Comps Details 39

CONSTRUCTION COMPS

Overall Construction Summary 54

Construction Activity 58

Under Construction Summary 63

Under Construction Details 65

Completed Construction Past 12 Months 67

Deliveries Past 12 Months Details 69

SALE COMPS

Sale Comps 73

Sale Comps Detail 77

Sales Volume 85

Sales Pricing 86

Cap Rates 88

Top Buyers & Sellers 89

DEMOGRAPHICS

8455 Fannin St

8/9/2017Copyrighted report licensed to Amit Mehta INC - 410049.

Overview 92

APPENDIX

Historical Leasing Data 94

Historical Construction Data 96

8455 Fannin St


Subject Property

8455 Fannin StHouston, TX 77054 - South Main/Medical Center Submarket

PROPERTY

Type: Class C Office

Yr Blt/Renov: 1989

Property Size: 9,540 SF

Stories: 1

Typical Floor: 9,540 SF

Parking Spaces: 40: 4.19/1,000 SF

LOCATION

Distance To Tran… 5 Minute Walk

Walk Score®: Somewhat Walkable (54)

Transit Score®: Good Transit (60)

EXPENSES PER SF

Taxes: $2.77/SF (2016)

OWNER

Saroj Inc

Purchased 8/5/2011

VACANCY

Current:

Last Quarter:

0.0%

0.0%

Year Ago: 0.0%

Peers: 15.7%

Submarket 1-3 Star: 8.0%

GROSS ASKING RENT PER SF

Current:

Last Quarter:

-

-

Year Ago: -

Peers: $25.21

Submarket 1-3 Star: $26.08

12 MO. LEASING SF ACTIVITY

Subject Property:

Peers Total:

0

44,935

Peers Avg: 4,992

Submarket Total: 261,757

Submarket Avg: 1,099

AMENITIES

Bus Line, Commuter Rail, Signage

AVAILABLE SPACES

Currently No Available Spaces

Tenant # Emps Move Date Exp DateFloor SFIndustry

KEY TENANTS

Select Physical Therapy - Dec 2009 -2,4521stMedical

Monarch Dental Associates - Apr 2012 -2861st-

CoStar Research Moving Out Moving In My Data Shared Data


Page 2

http://gateway.costar.com/Gateway/Redir/RedirectToProduct.aspx?productId=PPW&redirUrl=%2Fredir%2Fdefault.aspx%3Feid%3D359497%26ProductMode%3DProperty%26external%3D1

Subject Property

TRUE OWNER

Saroj Inc

Sugar Land, TX 77478

14723 Armitage Ln

(281) 575-0044

Manish Goel

Owner

(281) 575-0044

RECORDED OWNER

Saroj Fannin LLC

Sugar Land, TX 77478

14723 Armitage Ln


Page 3

8455 Fannin St

PREPARED BY

Amit Mehta

Realtor

Market Summary



Market Summary8455 Fannin St

SOUTH MAIN/MEDICAL CENTER SUBMARKET TRENDS

The South Main/Medical Center Submarket, three milessouthwest of the CBD, is a specialty market focused onmedical office tenants. Major medical institutionsincluding the Texas Medical Center (TMC), UniversityGeneral Health System, and Memorial Hermann areamong the top tenants. Due to the impressive growth ofthe TMC, supply here has been steady, with nearly a fifthof the submarket’s inventory delivering over the pastdecade.

Fundamentals in the submarket performed well in2016—the vacancy rate was among the lowest in themetro. The only other submarkets to perform better wereoutlying and eastern ones without a great deal of newsupply. The pipeline, which was busy in the last cycle,remained quiet. Except for the large Anderson CancerCenter in 2012, less than 100,000 SF was added to thesubmarket’s inventory. Sales picked up recently, withseveral large buildings trading hands.

SOUTH MAIN/MEDICAL CENTER NET ABSORPTION, DELIVERIES & VACANCY


Page 5


HOUSTON MARKET SUMMARY

First and foremost, Houston is poised to benefit longterm from its status as a global energy headquarters,with many talented workers in all areas of the industry.However, the recent slide in oil prices is a stark reminderof the risks of relying on a single industry.

The Houston office market has endured three years oflagging fundamentals. Now into the second half of 2017,

a fourth year of softness could be expected.Fundamentally, Houston’s office market is in bad shape.Some of the problems include negative demand,elevated available sublet space, expanding vacancies,falling rents, and the fleeing of institutional capital. Withfew levels of support on the horizon, the next fewquarters will be a test for the office market in Houston.

HOUSTON NET ABSORPTION, DELIVERIES & VACANCY


Page 6


HOUSTON ECONOMIC SUMMARY

The Houston economy is one of the largest and usuallyone of the strongest in the United States. The metro ofHouston is the fifth-most-populous in the United Statesand, at growing at its current pace, could overtakeChicago. If Houston were a nation, it would be the 23rd-largest economy in the world and is currently the fourth-largest economy in the U.S. More than 24 Fortune 500companies call Houston home, helping to spur the morethan three million jobs that exist here.

Perhaps the most significant factor for Houston’s revival(after the Great Recession) and subsequent survival (oilcrash) can be found in the demographic trends. Since2010, the Houston metro’s population grew by almost950,000 residents, among the most of any metro: D-FW's growth ranked second at about 800,000 residentsand New York's third at just under 600,000. What’s moreimpressive is the recent year-over-year populationgrowth. According to the U.S. Census Bureau, Houstonadded about 125,000 residents in 2016. This is thesecond-largest gain of any metro, behind only D-FW.All projections were pointing to lower population growthbecause of the local economic shock, but a combinationof factors could explain the surprise to the upside:climate, low cost of living, affordable home prices, andimmigrant migration.

These leading indicators demonstrate a strong andlasting economy, but dependency on oil casts a darkshadow in times of trouble. The recent oil crash hasbeen compared to the 1980s' bust, one of the worst inthe history of Houston. Oil prices fell more than 50%between 1982 and 1986, and over 220,000 jobs werelost. Unemployment climbed above 9%—nearly doubletoday’s rate—and a generation of young technicalworkers left the industry never to return.

Compare that crash to what has happened recently: Inthe recent implosion, the number of rig counts reachedall-time lows, more than 170 North American oilproducers and oil field services have gone bankrupt, thedecline occurred much faster, and the current fall inupstream capital spending (adjusted for inflation) was 2.5times bigger than the decline in the 1980s. The net resultof this crash resulted in more than 75,000 oil-relatedjobs lost in Houston, which is about 30% of the losses inthe 1980s.

Houston’s current economic problems have resultedalmost exclusively from the collapse in oil prices andrecord-low levels of drilling activity. The mining andmanufacturing industries posted negative growth from

December 2015–December 2016.

Outside of Houston, the energy market has begun togain footing once again, which will eventually be a boonfor Houston’s economy. Rig counts as of July 2017 werenear 940, more than 500 rigs than this time last year. Oilprices are trying to get back to $50/barrel, and becauseof technological and operation efficiencies in the industry,many energy companies can be profitable with lower oilprices. The continued operations at the Permian Basincould provide a substantial recovery. The Permian Basinis the second-largest oil field in the world, and a few ofHouston’s largest firms are taking advantage. OccidentalPetroleum has the largest footprint, compared to othercompanies, in the basin and is headquartered inHouston, after moving in 2014 from Los Angeles, whereit now has more than 2,000 employees. The other largecompanies operating in the Permian Basin include ExxonMobil (12,000 Houston employees), Chevron (8,000),and Apache (2,000). In total, there are hundreds ofenergy companies operating in the basin, and Houston’semployers are sure to benefit from the increase inproduction.

The differences between this downturn and the 1980shave been the strength of the U.S. economy, low naturalgas prices, and diversification. Houston’s job market hasnot grown significantly in recent years, but it also showsfew signs of a downturn outside of oil. More than150,000 jobs were added from 2014–16, completelyoffsetting the losses from oil. These jobs came inindustries like healthcare, food service, local government,retail trade, finance, and arts/entertainment.

Houston’s diversification has come from a few industries,but primarily healthcare and downstream operations.Houston is home to the world’s largest medical complex,the Texas Medical Center (TMC). In aggregate, TMC’svarious branches employ nearly 100,000 people. Themedical mega-hub is wrapping up a multibillion-dollarexpansion to over 45 million SF and has added tens ofthousands of employees. In addition, Houston hasbecome a central location for the top research facilitiesand cutting-edge technological advances. There aremore than 175,000 high-tech professionals operatingthrough the Texas Medical Center, Rice University, andthe University of Houston.

Then there are downstream operations, which have beenbooming because of the low natural gas prices.Companies like Exxon Mobil, Chevron, and Phillips 66have large footprints and are expanding to take


Page 7


advantage of low natural gas prices by investing billionsin new facilities. Because of the success of the industryand the prevalence of these companies in South andEast Houston, these areas have been able to add jobs,

especially in the construction and manufacturing sectors.These companies are taking advantage of the largestGulf Coast container port and the largest export port inthe United States.

HOUSTON EMPLOYMENT BY INDUSTRY IN THOUSANDS

NAICS Industry Jobs LQ MarketUS USMarketUSMarket

Current Jobs Current Growth 10 Yr Historical 5 Yr Forecast

-1.15%0.13%-1.15%0.04%0.40%4.60%0.9233Manufacturing

0.51%1.85%0.28%1.45%0.66%-0.60%1.1606Trade, Transportation and Utilities

0.62%2.31%0.21%1.47%0.13%-0.81%0.9304 Retail Trade

0.70%1.30%0.10%0.68%2.00%0.63%0.9156Financial Activities

0.80%0.96%0.07%1.42%0.62%2.82%0.9415Government

1.80%2.59%-1.00%0.31%3.32%-2.10%1.9301Natural Resources, Mining and Construction

1.27%2.10%2.16%3.50%2.14%4.04%0.8396Education and Health Services

1.48%2.37%1.44%2.12%3.01%4.09%1.1485Professional and Business Services

0.29%1.02%-1.10%-1.58%-2.24%-2.64%0.632Information

1.31%2.54%1.73%3.47%1.97%3.12%1.0321Leisure and Hospitality

0.38%1.62%0.47%1.21%1.35%2.64%0.9110Other Services

Total Employment 3,054 1.0 2.01% 1.53% 1.66% 0.59% 1.82% 0.84%

Source: Moody's Analytics

LQ = Location Quotient


Page 8


Moody’s Analytics, CoStar Portfolio Strategy

YEAR OVER YEAR JOB GROWTH


Page 9

8455 Fannin St

PREPARED BY

Amit Mehta

Realtor

Peer Properties



Peer Properties Summary8455 Fannin St

No. Peers

9Gross Direct Asking Rent

$25.21Availability Rate

23.1%Vacancy Rate

15.7%PEER LOCATIONS

PEER SUMMARY STATISTICS

Property Attributes Low Average Median High

Building SF 15,120 64,447 43,203 213,130

Year Built 1974 1983 1980 1999

Stories 1 3 2 12

Typical Floor SF 7,350 17,937 16,484 34,173

Vacancy Rate 0% 15.7% 14.7% 46.1%

Availability Rate 11.8% 23.1% 19.9% 100%

Star Rating 2.7

Available Space Attributes Low Average Median High

Space SF 3,005 14,910 13,454 29,986

Gross Direct Asking Rent Per SF $12.00 $25.21 $21.00 $35.76

Months On Market 9.2 27.0 21.2 59.2

Floor Number 1 3 3 11


Page 11

Peer Properties Summary8455 Fannin St

Property Name / Address Rating Yr Blt/Renov Bldg SF Stories SF Avail %

Property Size

Spcs

Availability

Vac % Gross Direct Rent

-1 8515 Fannin St1994/- 27,760 1 27,760 100%1 0% $35.76

-2 One Fannin1985/- 213,130 12 29,986 14.1%

7400 Fannin St6 14.1% $30.00

-3 Fannin Medical Plaza1974/- 98,906 6 11,690 11.8%

7505 Fannin St6 14.6% $21.00

-4 Fannin South Professional1981/- 70,345 2 11,133 15.8%

7707 Fannin St4 15.8% $21.00

-5 Aloha Bldg1979/- 15,368 2 15,368 100%

1328 S Loop Fwy W2 0% $20.76

-6 Houston Tri-Atrium1979/2003 81,007 6 14,798 18.3%

2600 S Loop Fwy W17 14.7% $19.50

-7 Bldg F-21980/- 43,203 2 13,454 31.1%

8968-8998 Kirby Dr5 31.1% $12.00

-8 8181 N Stadium Dr1980/- 15,180 2 7,000 46.1%1 46.1% -

-9 8111 N Stadium Dr1999/- 15,120 1 3,005 19.9%1 19.9% -

-8455 Fannin St

1989/- 9,540 1 0 0%0 0% -


Page 12











Fannin Medical Plaza7505 Fannin St

98,906 SF / 6 Stories

Owner: Cambridge Properties

Rent/SF $21.00, Vacancy 14.6%

3One Fannin7400 Fannin St

213,130 SF / 12 Stories

Owner: HCP, Inc.


28515 Fannin St8515 Fannin St

27,760 SF / 1 Story

Owner: 8515 FANNIN LLC

Rent/SF $35.76, Vacancy 0%

1

Houston Tri-Atrium2600 S Loop Fwy W


Owner: Hari Agrawal


6Aloha Bldg1328 S Loop Fwy W


Owner: Aloha Building 1 Ltd

Rent/SF $20.76, Vacancy 0%

5Fannin South7707 Fannin St


Owner: -


4

8111 N Stadium Dr8111 N Stadium Dr

15,120 SF / 1 Story

Owner: All Care Pediatrics

Rent/SF -, Vacancy 19.9%

98181 N Stadium Dr8181 N Stadium Dr


Owner: Anupama Hiremaglur

Rent/SF -, Vacancy 46.1%

8Bldg F-28968-8998 Kirby Dr


Owner: The Interchange


7

Peer Property Photos8455 Fannin St


Page 13

Peer Property Photos8455 Fannin St

8455 Fannin St8455 Fannin St

9,540 SF / 1 Story

Owner: Saroj Inc

Rent/SF -, Vacancy 0%

Subject Property


Page 14

Property Name/Address Rating Gross Direct Rent Per SF Vacancy Rate

8515 Fannin St1 $35.76 0%

One Fannin

7400 Fannin St2 $30.00 14.1%

Fannin South Professional

7707 Fannin St4 $21.00 15.8%

Fannin Medical Plaza

7505 Fannin St3 $21.00 14.6%

Aloha Bldg

1328 S Loop Fwy W5 $20.76 0%

Houston Tri-Atrium

2600 S Loop Fwy W6 $19.50 14.7%

Bldg F-2

8968-8998 Kirby Dr7 $12.00 31.1%

8181 N Stadium DrWithheld8 46.1%

8111 N Stadium DrWithheld9 19.9%

8455 Fannin St

Average

(Arrows indicate trend over last quarter)

0%

15.4%$25.21

Peer Property Comparison8455 Fannin St


Page 15












Property Name/Address Rating Availability Rate Vacancy Rate

Aloha Bldg

1328 S Loop Fwy W5 100% 0%

8515 Fannin St1 100% 0%

8181 N Stadium Dr8 46.1% 46.1%

Bldg F-2

8968-8998 Kirby Dr7 31.1% 31.1%

8111 N Stadium Dr9 19.9% 19.9%

Houston Tri-Atrium

2600 S Loop Fwy W6 18.3% 14.7%


7707 Fannin St4 15.8% 15.8%

One Fannin

7400 Fannin St2 14.1% 14.1%


7505 Fannin St3 11.8% 14.6%

8455 Fannin St

Average


0% 0%

15.4%22.8%


Page 16












Property Name/Address Rating Gross Direct Rent Per SF Median Months on Market

8515 Fannin St1 $35.76 11

One Fannin

7400 Fannin St2 $30.00 23


7505 Fannin St3 $21.00 59


7707 Fannin St4 $21.00 15

Aloha Bldg

1328 S Loop Fwy W5 $20.76 21

Houston Tri-Atrium

2600 S Loop Fwy W6 $19.50 11

Bldg F-2

8968-8998 Kirby Dr7 $12.00 46

8111 N Stadium DrWithheld9 47

8181 N Stadium DrWithheld8 9

8455 Fannin St

Average


26$25.21


Page 17












Property Name/Address Rating 12 Mo. Leasing Activity in Thousand SF 12 Mo. Net Absorption in Thousand SF

One Fannin

7400 Fannin St2 20 (6)


7707 Fannin St4 10 (7)


7505 Fannin St3 8 6

Houston Tri-Atrium

2600 S Loop Fwy W6 8 (5)

8455 Fannin St0 0

Aloha Bldg

1328 S Loop Fwy W5 0 0

8111 N Stadium Dr9 0 0

8515 Fannin St1 0 0

Bldg F-2

8968-8998 Kirby Dr7 0 (3)

8181 N Stadium Dr

Average

8 0 (7)

(2)5


Page 18











Peer Property Details8455 Fannin St

1 8515 Fannin StDistance to Subject Property: 0.0 Miles

EXPENSES

Taxes: $4.30/SF (2016)

PROPERTY


Yr Blt/Renov: 1994

RBA: 27,760 SF

Stories: 1



# of Tenants: 1

OWNER

Purchased 1/27/2017

COMPARISON SUBJECTTHIS PROPERTY

Vacancy %: 0% 0%

Available SF: 27,760 -

Gross Ask Rent: $35.76 -

Months To Lease: - -

Time On Market: 11 mo -

Walk Score®: 54 54

Transit Score®: 60 60

AVAILABILITY OFFICE

Spaces: 1

Square Feet: 27,760

Range: 2,000 - 27,760

Max Contig: 27,760

% Sublet: 0 %

Asking Rent: $30.00/NNN

2 One Fannin - 7400 Fannin StDistance to Subject Property: 0.8 Miles

EXPENSES

Taxes: $4.28/SF (2016)

Op. Exp: $8.76/SF (2009)

PROPERTY

Type: Class A Office

Yr Blt/Renov: 1985

RBA: 213,130 SF

Core Factor: 17%

Stories: 12


Parking Spaces: 1,000: 3.00/1,000 SF

# of Tenants: 26

OWNER

HCP, Inc.


Vacancy %: 14.1% 0%



Months To Lease: 52 mo -


Walk Score®: 58 54


AVAILABILITY OFFICE

Spaces: 0

Square Feet: 0

Range: -

Max Contig: -

% Sublet: 0 %

Asking Rent: -


Page 19




3 Fannin Medical Plaza - 7505 Fannin StDistance to Subject Property: 0.7 Miles

EXPENSES

Taxes: $3.51/SF (2016)

Op. Exp: $11.53/SF (2008)

PROPERTY


Yr Blt/Renov: 1974

RBA: 98,906 SF

Core Factor: 15%

Stories: 6


Parking Spaces: 1,105: 3.50/1,000 SF

# of Tenants: 22

OWNER

Cambridge Properties


Vacancy %: 14.6% 0%





Walk Score®: 58 54


AVAILABILITY OFFICE

Spaces: 6

Square Feet: 14,393

Range: 100 - 5,873

Max Contig: 8,536

% Sublet: 0 %

Asking Rent: $21.00/FS

4 Fannin South Professional - 7707 Fannin StDistance to Subject Property: 0.5 Miles

EXPENSES

Taxes: $3.40/SF (2016)

Op. Exp: $10.10/SF (2008)

PROPERTY

Type: Class B Office

Yr Blt/Renov: 1981

RBA: 70,345 SF

Core Factor: 16%

Stories: 2



# of Tenants: 13

OWNER

Purchased 5/31/2002

Price $6,600,000; $94/SF


Vacancy %: 15.8% 0%





Walk Score®: 54 54


AVAILABILITY OFFICE

Spaces: 4

Square Feet: 11,133

Range: 1,458 - 4,417

Max Contig: 4,417

% Sublet: 0 %



Page 20




5 Aloha Bldg - 1328 S Loop Fwy WDistance to Subject Property: 0.3 Miles

EXPENSES

Taxes: $1.10/SF (2016)

PROPERTY


Yr Blt/Renov: 1979

RBA: 15,368 SF

Stories: 2



# of Tenants: 1

OWNER

Aloha Building 1 Ltd


Vacancy %: 0% 0%



Months To Lease: - -


Walk Score®: 53 54


AVAILABILITY OFFICE

Spaces: 2

Square Feet: 15,368

Range: 6,500 - 7,684

Max Contig: 15,368

% Sublet: 0 %

Asking Rent: $15.00/MG

6 Houston Tri-Atrium - 2600 S Loop Fwy WDistance to Subject Property: 1.0 Miles

PROPERTY


Yr Blt/Renov: 1979/2003

RBA: 81,007 SF

Core Factor: 15%

Stories: 6



# of Tenants: 98

OWNER

Hari Agrawal

Purchased 2/29/2016


Vacancy %: 14.7% 0%





Walk Score®: 46 54


AVAILABILITY OFFICE

Spaces: 17

Square Feet: 16,730

Range: 56 - 2,391

Max Contig: 3,119

% Sublet: 2.9 %

Asking Rent: $17.50/+ELEC


Page 21




7 Bldg F-2 - 8968-8998 Kirby DrDistance to Subject Property: 0.9 Miles

EXPENSES

Taxes: $1.77/SF (2008)

Op. Exp: $2.93/SF (2013-Est)

PROPERTY


Yr Blt/Renov: 1980

RBA: 43,203 SF

Stories: 2



# of Tenants: 8

OWNER

The Interchange


Vacancy %: 31.1% 0%





Walk Score®: 41 54


AVAILABILITY OFFICE

Spaces: 5

Square Feet: 13,454

Range: 1,307 - 5,203

Max Contig: 5,203

% Sublet: 0 %


8 8181 N Stadium DrDistance to Subject Property: 0.6 Miles

EXPENSES

Taxes: $2.57/SF (2016)

PROPERTY


Yr Blt/Renov: 1980

RBA: 15,180 SF

Stories: 2


OWNER

Anupama Hiremaglur

Purchased 3/29/2016


Vacancy %: 46.1% 0%


Gross Ask Rent: - -



Walk Score®: 53 54


AVAILABILITY OFFICE

Spaces: 1

Square Feet: 7,000

Range: 7,000

Max Contig: 7,000

% Sublet: 0 %

Asking Rent: -


Page 22




9 8111 N Stadium DrDistance to Subject Property: 0.6 Miles

EXPENSES

Taxes: $4.65/SF (2016)

PROPERTY


Yr Blt/Renov: 1999

RBA: 15,120 SF

Stories: 1



# of Tenants: 2

OWNER

All Care Pediatrics

Purchased 6/30/2014


Vacancy %: 19.9% 0%


Gross Ask Rent: - -



Walk Score®: 61 54


AVAILABILITY OFFICE

Spaces: 1

Square Feet: 3,005

Range: 3,005

Max Contig: 3,005

% Sublet: 0 %

Asking Rent: -


Page 23


8455 Fannin St

PREPARED BY

Amit Mehta

Realtor

Leasing Analytics



HOUSTON VACANCY OVERVIEW

Once the pride and joy of investors and energycompanies alike, Houston’s metro fundamentals—not justthe office market, but apartments as well—has fallen inconjunction with the decline in oil prices. Some of thenumbers that Houston has posted are staggering, and itis little wonder that the metro is experiencing trouble.Demand, sublet space, occupancies, rents, andinvestments are all down on a relative basis.

The story, which has played out for three years, hasbeen the rise and fall of oil prices. Soaring prices liftedHouston out of the Great Recession and allowed forexceptional growth. The metro was adding more than100,000 jobs per year, and many of the largest Houstonemployers were increasing their employee count andfootprints within Houston. Supply from 2010—16 toppedalmost 40 million SF, the highest in the nation. Forcomparison, Dallas-Fort Worth ranked second at lessthan 30 million SF, and Washington, D.C., and New Yorkranked third and fourth at around 23 million SF apiece.

Most of this space was designated for the energycompanies that couldn’t find space quickly enough in theboom years from 2012–14. When prices began to fall, sotoo did demand for office space. Demand has been infree fall since mid-2015, which coincided with more than13 million SF of office deliveries. Much of that spaceremains empty, because demand over the past twoquarters was negative. In 2016, total net absorption wasless than 300,000 SF, which is a dire situation for ametro that absorbed on average about five million SFfrom 2010–14.

This slowdown in demand gave way to vacancy

expansion. Vacancies expanded for the 11th straightquarter in 17Q2. And in keeping with the trend so far,vacancies in Houston ranked highest among the top 54U.S. metros—Northern New Jersey, Phoenix, Las Vegas,and Dallas rounded out the top five.

The actions of the large energy companies are beingwatched closely. Many of these large firms led the way inleasing earlier this cycle, building and absorbing all of thenew space entering the market. However, when pricesbegan to plummet these companies were forced toreduce both their budgets and their footprints. Mostretreated to their corporate campuses or owned spaceand placed their leftover sublet space on the market.From 14Q1–16Q1 the amount of available sublet spacegrew more than 120%. As of 17Q3, there was about 11million SF of available sublet space.

There are a few factors that could provide strength forthe Houston office market: A strong national economyhas boosted other sectors in Houston, which allowed forsome job growth over the past two years; the amount ofavailable sublet space has fallen for the second straightquarter; and the pipeline has finally begun to slow.

The slowdown in supply is perhaps the most significant,because it should alleviate many of the leasing troublesthat have been caused by oversupply. In 15Q3, morethan 11 million SF of office space was underconstruction. That pipeline emptied over the precedingquarters, and just 2.5 million SF was under constructionin 17Q3. This is still excessive given market conditions,but it isn’t nearly as much as the almost 20 million SFthat was under construction in 14Q3–Q4.

SOUTH MAIN/MEDICAL CENTER VACANCY OVERVIEW

The South Main/Medical Center is an importantemployment center for the metro. The Texas MedicalCenter (TMC), a network of more than 50 hospitals,research institutions, and clinics, is the largest medicalcenter in the world, employing more than 100,000 andadmitting six million–plus patients a year. The submarketis also home to Rice University, renowned as a researchinstitution, and the Museum District, a collection of nearly20 institutions. Plus, the METRORail Red Line providesaccess from the TMC to the CBD.

The largest office tenant in the submarket is the

University of Texas, which occupies and owns more than895,000 SF at the MD Anderson Cancer Center at 7007Bertner Ave. The building houses more than 17,000employees. Schulmberger has a significant presencehere as well, occupying 285,000 SF at 7030 Ardmore St.

The largest buildings here are fully leased, with a fewexceptions. The 3 Star 280,000 SF building at 1020Holcombe Blvd. was most unoccupied as of 17Q3 andhas sat empty since the University of Texas and Bank ofAmerica left in 2013.

Vacancy Analytics8455 Fannin St


Page 25


VACANCY RATE

VACANCY RATE

Vacancy Trend (YOY) VacancyTrend (YOY) Trend (YOY)VacancyTrend (YOY)Vacancy

8455 Fannin St Peers South Main/Medical Center 1 - 2 Star Houston 1 - 2 Star

0.4%12.6%-0.8%4.5%14.1%24.3%-33.5%0%2011

0.1%12.7%0.6%5.1%4.6%28.9%0%0%2012

0.4%13.0%3.7%8.8%1.2%30.1%0%0%2013

-1.3%11.7%-1.4%7.4%-11.3%18.8%0%0%2014

-0.9%10.9%-5.1%2.3%-3.1%15.7%0%0%2015

-0.3%10.6%-0.7%1.6%-1.2%14.5%0%0%2016

0.7%10.5%0.7%2.7%4.3%15.7%0%0%2017 YTD

-0.1%10.6%1.4%3.1%2017

0.3%10.8%0.6%3.6%2018

0.3%11.1%0.6%4.2%2019 Forecast >

-0.1%11.0%0.2%4.4%2020

0%11.0%0.3%4.7%2021


Page 26


AVAILABILITY RATE

AVAILABILITY RATE

Availability Trend (YOY) AvailabilityTrend (YOY) Trend (YOY)AvailabilityTrend (YOY)Availability

8455 Fannin St Peers South Main/Medical Center 1-2 Star Houston 1-2 Star

1.1%16.6%-0.4%6.9%0.7%26.4%-33.5%0%2011

-0.5%16.1%0.7%7.6%2.9%29.3%0%0%2012

-0.1%16.0%2.8%10.5%-0.5%28.8%0%0%2013

-1.5%14.6%0.4%10.9%-10.1%18.6%0%0%2014

-1.3%13.2%-5.4%5.4%1%19.7%0%0%2015

0.5%13.7%-1.2%4.3%4.2%23.9%0%0%2016

0.6%13.3%1.4%5.8%3.5%23.1%0%0%2017 YTD


Page 27


MEDIAN MONTHS ON MARKET

MEDIAN MONTHS ON MARKET

Peers South Main/Medical Center Houston

2007 10.5 9.8 11.2

2008 14.6 10.6 11.6

2009 16.0 12.1 12.4

2010 25.2 14.2 13.9

2011 27.6 18.6 16.3

2012 29.1 21.2 18.1

2013 24.4 19.9 17.0

2014 28.3 17.3 16.9

2015 27.6 19.7 17.7

2016 30.3 22.3 15.6

2017 19.9 13.8 13.8


Page 28


MONTHS TO LEASE BY BLOCK SIZE (PAST 3 YEARS)

MONTHS TO LEASE BY BLOCK SIZE (PAST 3 YEARS)

Peers South Main/Medical Center Houston

0-9,999 SF 8.6 9.7 10.8

10,000-19,999 SF - 24.0 16.1

20,000-49,999 SF - 4.5 16.4

50,000-99,999 SF - - 11.2

100,000+ SF - - 14.6


Page 29


RENEWAL RATES

RENEWAL RATES

South Main/Medical Center & Adjacent Houston

2007 66.5% 57.1%

2008 71.0% 55.4%

2009 73.3% 55.8%

2010 80.4% 63.1%

2011 65.9% 62.3%

2012 79.9% 63.4%

2013 71.1% 61.3%

2014 76.2% 62.9%

2015 76.1% 52.3%

2016 64.5% 49.2%


Page 30

HOUSTON RENT TRENDS

Since 2015, rent growth not only remained below thehistorical average but was negative, a shift that hasn’thappened since the Great Recession. Most of theleading indicators dictating Houston’s office fundamentalsremain bearish, and—based on weakened demand,available sublet space, and more construction—rentsshould continue to lose footing through the next fewquarters.

But this has been a recent development. From 2010–14,Houston ranked sixth alongside some of the fastestgrowing cities for best rent growth—among cities likeSan Francisco, San Jose, New York, Denver, Austin,Seattle, and Boston. Despite the significant slowdown inthe near term, rents outperformed overall this cycle.

SOUTH MAIN/MEDICAL CENTER RENT TRENDS

South Main/Medical Center’s rent growth wasn’t theworst in the metro in 2016, but it was well below thehistorical average. Despite the negative rents over the

past two years, rents remained about 5% above pre-recession levels.

GROSS ASKING RENT PER SQUARE FOOT

Rent Analytics8455 Fannin St


Page 31

Rent Analytics8455 Fannin St


Rent Trend (YOY) RentTrend (YOY) Trend (YOY)RentTrend (YOY)Rent

8455 Fannin St (Direct) Peers (Direct)South Main/Medical Center 1 - 2 Star

(Overall)Houston 1 - 2 Star (Overall)

-0.1%$16.29-3%$19.450.3%$22.55--2011

2.2%$16.65-4.4%$18.61-1.9%$22.13--2012

4%$17.316.8%$19.87-1.6%$21.77--2013

0.6%$17.4110.9%$22.041.5%$22.11--2014

7.6%$18.730.7%$22.203.4%$22.86--2015

1.6%$19.030.8%$22.3710.3%$25.22--2016

0.4%$19.02-2.9%$21.24-2%$25.21--2017 YTD

0.6%$19.14-3.7%$21.562017

-1.1%$18.931.8%$21.942018

1.3%$19.174.2%$22.872019 Forecast >

1.8%$19.514.3%$23.852020

2.1%$19.924.4%$24.902021


Page 32

Absorption Analytics8455 Fannin St

NET ABSORPTION IN PEERS IN SQUARE FEET

NET ABSORPTION IN SOUTH MAIN/MEDICAL CENTER SUBMARKET IN SQUARE FEET

NET ABSORPTION IN HOUSTON IN SQUARE FEET


Page 33

Leasing Analytics8455 Fannin St

LEASING ACTIVITY IN PEERS IN SQUARE FEET

LEASING ACTIVITY IN SOUTH MAIN/MEDICAL CENTER SUBMARKET IN SQUARE FEET

LEASING ACTIVITY IN HOUSTON IN SQUARE FEET


Page 34

Leasing Analytics8455 Fannin St

SUBLEASE SPACE AVAILABLE IN HOUSTON IN SQUARE FEET


Page 35

8455 Fannin St

PREPARED BY

Amit Mehta

Realtor

Lease Comps



Lease Comps Summary8455 Fannin St

Deals

13Gross Asking Rent Per SF

$18.05Gross Starting Rent Per SF

$17.34Avg. Months On Market

16LEASE COMPARABLES

SUMMARY STATISTICS

Rent Deals Low Average Median High

Gross Asking Rent Per SF

Gross Starting Rent Per SF

Gross Effective Rent Per SF

Asking Rent Discount

TI Allowance

Months Free Rent

13

13

9

13

-

4

$12.06

$11.50

$12.16

-16.7%

-

0

$18.05

$17.34

$17.42

4.3%

-

0

$17.06

$17.81

$15.81

0.0%

-

0

29.2%

-

2

$29.64

$29.64

$29.64

Lease Attributes Deals Low Average Median High

Months on Market

Deal Size

Lease Deal in Years

Floor Number

13

13

13

13

0

145

1.0

1

16

1,438

2.4

MEZZ

4

1,100

2.0

3 5

87

3,533

6.9


Page 37

Lease Comps Summary8455 Fannin St

Property Name - Address Rating SF Leased Floor Sign Date Rent Rent Type

Lease

Type

Rents

-1 3116 Telge St1,000 1st 5/1/2017 $12.00/+e&c EffectiveNew

-2 International Bank of Co…1,050 4th 3/1/2017 $18.00/nnn Effective

5615 Kirby DrNew

-3 2646 S Loop Fwy W1,518 3rd 1/2/2017 $11.35/+elec EffectiveNew

-3 2646 S Loop Fwy W336 2nd 1/1/2017 $17.00/+elec EffectiveNew

-4 NRG Office Complex3,168 2nd 12/13/2016 $18.54/+elec Effective

2626 S Loop Fwy WNew

-3 2646 S Loop Fwy W528 4th 12/1/2016 $15.00/+elec EffectiveNew

-3 2646 S Loop Fwy W3,533 4th 11/1/2016 $15.00/+elec EffectiveNew

-5 2636 S Loop Fwy W2,417 2nd 9/13/2016 $19.00/fs StartingNew

-5 2636 S Loop Fwy W1,700 5th 9/13/2016 $19.00/fs StartingNew

-5 2636 S Loop Fwy W1,000 5th 9/13/2016 $19.00/fs StartingNew

-1 3116 Telge St1,100 1st 9/7/2016 $10.36/+elec StartingNew

-3 2646 S Loop Fwy W145 5th 8/24/2016 $17.24/+elec EffectiveNew

-1 3116 Telge St1,200 1st 8/10/2016 $14.00/+elec EffectiveNew


Page 38

http://gateway.costar.com/Gateway/Redir/RedirectToProduct.aspx?productId=PPW&redirUrl=%2Fredir%2Fdefault.aspx%3Feid%3D8230676%26ProductMode%3DProperty%26SelectedTab%3Dlease%26external%3D1













Lease Comps Details8455 Fannin St

1 3116 Telge StHouston, TX 77054 - South Main/Medical Center Submarket

RENTS

Asking Rent: $12.00/+E&C

Starting Rent: $12.00/+E&C

Effective Rent: $12.00/+E&C

CONCESSIONS AND BUILDOUT

Asking Discount: 0.00%

PROPERTY EXPENSES

Taxes: $0.45/SF (2009)

LEASE

SF Leased: 1,000 SF

Sign Date: May 2017

Space Use: Office

Lease Type: Direct

Floor: 1st Floor

Suite: Suite H

LEASE TERM

Start Date: May 2017

Expiration Date: Apr 2019

Lease Term: 2 Years

TIME VACANT

Date Vacated: Jul 2016

Date Occupied: May 2017

Months Vacant: 9 Months

TIME ON MARKET

Date On Market: Jul 2016

Date Off Market: May 2017

Months on Market: 10 Months

LEASING REP

Wolfe Properties

3115 Tilden St

Houston, TX 77225

Dan Wolfe (832) 687-4355

PROPERTY

Rentable Area: 6,645 SF

Stories: 1

Floor Size: 6,645 SF

Vacancy at Lease: 0.0%

Land Acres: 1.79

Property Type: Office

Status: Built 1979

Tenancy: Multi

Class: C

Construction: Masonry

Parking: 35 free Surface Spa…

MARKET AT LEASE

Vacancy Rate 2017 Q2 YOY

0.2%

1.9%

0.0%Current Building 0.0%

Submarket 1-3 Star

Metro Overall 15.9%

7.7%

Gross Asking Rent Per SF 2017 Q2 YOY

0.5%

0.5%

Current Building $14.17

Submarket 1-3 Star

Metro Overall $27.54

$25.71

-

Submarket Leasing Activity 2017 Q2 YOY

8.1

39.6%12 Mo. Leased SF 267,020

Months On Market 14.5


Page 39



2 5615 Kirby Dr - International Bank of CommerceHouston, TX 77005 - Greenway Plaza Submarket

RENTS

Asking Rent: $18.00/NNN

Starting Rent: $18.00/NNN

Effective Rent: $18.00/NNN

Escalations: $0.50 Annual



PROPERTY EXPENSES

Total Exp.: $11.13/SF (2017)

LEASE

SF Leased: 1,050 SF

Sign Date: Mar 2017

Space Use: Office

Lease Type: Direct

Floor: 4th Floor

Suite: 410

LEASE TERM

Start Date: May 2017

Expiration Date: Mar 2024

Lease Term: 6 Years 11 Months

TIME VACANT

Date Vacated: Mar 2016

Date Occupied: May 2017


TIME ON MARKET

Date On Market: Nov 2015

Date Off Market: May 2017


LEASING REP

S.E. Covington & Company, Inc.

4669 Southwest Fwy, Suite 800

Houston, TX 77027

Scott Covington (713) 800-3150

JC Realty

5235 Calle Montilla

Houston, TX 77007

Julie Combs Rogers (713) 869-0012

PROPERTY


Stories: 9



Land Acres: 2.48


Status: Built 1981

Tenancy: Multi

Class: B

Construction: Reinforced Concrete


MARKET AT LEASE


1.7%

2.0%


Submarket 2-4 Star

Metro Overall 15.8%

10.0%


2.8%

2.3%


Submarket 2-4 Star


$32.23

-


0.7

50.5%12 Mo. Leased SF 608,341



Page 40



3 2646 S Loop Fwy WHouston, TX 77054 - South Main/Medical Center Submarket

TENANT

Tenant Name: S. Moncrief Consulting

RENTS

Asking Rent: $14.50-$18.00/+ELEC

Starting Rent: $11.50/+ELEC

Effective Rent: $11.35/+ELEC

Escalations: Steps



Mo. Free Rents: 2 Months

Buildout Status: Full Build-Out

PROPERTY EXPENSES

Taxes: $1.07/SF (2016)

Operating Exp.: $4.15/SF (2010)

LEASE

SF Leased: 1,518 SF

Sign Date: Jan 2017

Space Use: Office

Lease Type: Direct

Floor: 3rd Floor

Suite: 378

LEASE TERM

Start Date: Feb 2017

Expiration Date: Mar 2020

TIME VACANT

Date Vacated: Aug 2016

Date Occupied: Feb 2017


TIME ON MARKET

Date On Market: Aug 2016

Date Off Market: Jan 2017


LEASING REP

Oxley Leasing, LLC

2646 S Loop Fwy W, Suite 122

Houston, TX 77054-2665

Dina Shipman (713) 322-7730

Oxley Real Estate


Houston, TX 77074

Abe MacNeil (512) 677-9069

PROPERTY


Stories: 6



Land Acres: 3.23


Status: Built Jun 1983

Tenancy: Multi

Class: B

Construction: Steel

Parking: 350 free Surface Sp…

MARKET AT LEASE


1.3%

2.0%


Submarket 2-4 Star

Metro Overall 15.8%

7.8%


1.1%

2.3%

1.0%Current Building $17.06

Submarket 2-4 Star


$26.89


11.9

43.8%12 Mo. Leased SF 261,103



Page 41




TENANT

Tenant Name: Elite Educational Ent LLC

Industry: Personal Services

RENTS





Asking Discount: -4.62%



PROPERTY EXPENSES

Taxes: $1.07/SF (2016)


LEASE

SF Leased: 336 SF

Sign Date: Jan 2017

Space Use: Office

Lease Type: Direct

Floor: 2nd Floor

Suite: 505-H

LEASE TERM

Start Date: Jan 2017

Expiration Date: Dec 2017

Lease Term: 1 Year

TIME VACANT


Date Occupied: Jan 2017


TIME ON MARKET


Date Off Market: Jan 2017


LEASING REP

Oxley Leasing, LLC




Oxley Real Estate


Houston, TX 77074

Abe MacNeil (512) 677-9069

PROPERTY


Stories: 6



Land Acres: 3.23



Tenancy: Multi

Class: B

Construction: Steel


MARKET AT LEASE


1.3%

2.0%


Submarket 2-4 Star

Metro Overall 15.8%

7.8%


1.1%

2.3%


Submarket 2-4 Star


$26.89


11.9

43.8%12 Mo. Leased SF 261,103



Page 42



4 2626 S Loop Fwy W - NRG Office ComplexHouston, TX 77054 - South Main/Medical Center Submarket

TENANT

Tenant Name: South Healthcare Services

Industry: Medical

RENTS




Escalations: $1 Annual





PROPERTY EXPENSES

Taxes: $1.17/SF (2016)

LEASE

SF Leased: 3,168 SF

Sign Date: Dec 2016

Space Use: Office

Lease Type: Direct

Floor: 2nd Floor

Suite: 260

LEASE TERM

Start Date: Jan 2017

Expiration Date: Jan 2020

Lease Term: 3 Years

TIME VACANT

Date Vacated: Nov 2016

Date Occupied: Jan 2017


TIME ON MARKET

Date On Market: Nov 2016

Date Off Market: Dec 2016


LEASING REP

Boxer Property

720 N Post Oak Rd, Suite 500


Trey Miller (713) 263-6298

Brian Hines (713) 766-4867

Kellie Bunyi (713) 777-7368

PROPERTY


Stories: 6



Land Acres: 3.36


Status: Built 1982

Tenancy: Multi

Class: C

Construction: Steel


MARKET AT LEASE


2.1%

1.4%


Submarket 2-4 Star

Metro Overall 14.9%

7.4%


0.7%

2.0%


Submarket 2-4 Star


$26.51


4.9

1.8%12 Mo. Leased SF 364,666



Page 43




TENANT

Tenant Name: Altus Construction

RENTS







PROPERTY EXPENSES

Taxes: $1.07/SF (2016)


LEASE

SF Leased: 528 SF

Sign Date: Dec 2016

Space Use: Office

Lease Type: Direct

Floor: 4th Floor

Suite: 415

LEASE TERM

Start Date: Dec 2016

Expiration Date: Nov 2017

Lease Term: 1 Year

TIME VACANT


Date Occupied: Dec 2016


TIME ON MARKET




LEASING REP

Oxley Leasing, LLC




Oxley Real Estate


Houston, TX 77074

Abe MacNeil (512) 677-9069

PROPERTY


Stories: 6



Land Acres: 3.23



Tenancy: Multi

Class: B

Construction: Steel


MARKET AT LEASE


2.1%

1.4%


Submarket 2-4 Star

Metro Overall 14.9%

7.4%


0.7%

2.0%


Submarket 2-4 Star


$26.51


4.9

1.8%12 Mo. Leased SF 364,666



Page 44




TENANT

Tenant Name: Opulent Visions Consulting Firm

RENTS







PROPERTY EXPENSES

Taxes: $1.07/SF (2016)


LEASE

SF Leased: 3,533 SF

Sign Date: Nov 2016

Space Use: Office

Lease Type: Direct

Floor: 4th Floor

Suite: 400

LEASE TERM

Start Date: Dec 2016

Expiration Date: Nov 2017

Lease Term: 1 Year

TIME VACANT

Date Vacated: Oct 2016

Date Occupied: Dec 2016


TIME ON MARKET

Date On Market: Sep 2016



LEASING REP

Oxley Leasing, LLC




Oxley Real Estate


Houston, TX 77074

Abe MacNeil (512) 677-9069

PROPERTY


Stories: 6



Land Acres: 3.23



Tenancy: Multi

Class: B

Construction: Steel


MARKET AT LEASE


2.1%

1.4%


Submarket 2-4 Star

Metro Overall 14.9%

7.4%


0.7%

2.0%


Submarket 2-4 Star


$26.51


4.9

1.8%12 Mo. Leased SF 364,666



Page 45




TENANT

Tenant Name: Community Health Choice


RENTS


Starting Rent: $19.00/FS



PROPERTY EXPENSES

Taxes: $1.00/SF (2016)


LEASE

SF Leased: 2,417 SF

Sign Date: Sep 2016

Space Use: Office

Lease Type: Direct

Floor: 2nd Floor

Suite: 700

LEASE TERM

Start Date: Nov 2016

Lease Term: 3 Years

TIME VACANT

Date Occupied: Nov 2016

TIME ON MARKET

Date On Market: Oct 2012

Date Off Market: Sep 2016


LEASING REP

SLS Properties

2500 W Loop South, Suite 518

Houston, TX 77027

Danny Sheena (713) 224-6508

PROPERTY


Stories: 9



Land Acres: 3.99



Tenancy: Multi

Class: B

Construction: Steel


MARKET AT LEASE


2.2%

1.9%


Submarket 2-4 Star

Metro Overall 14.5%

7.8%


0.2%

0.5%


Submarket 2-4 Star


$26.46


2.0

24.4%12 Mo. Leased SF 440,837



Page 46




TENANT



RENTS





Buildout Status: Partial Build-Out

PROPERTY EXPENSES

Taxes: $1.00/SF (2016)


LEASE

SF Leased: 1,700 SF

Sign Date: Sep 2016

Space Use: Office

Lease Type: Direct

Floor: 5th Floor

Suite: 700

LEASE TERM


Lease Term: 3 Years

TIME VACANT

Date Vacated: Dec 2009



TIME ON MARKET

Date On Market: Jun 2009



LEASING REP

SLS Properties


Houston, TX 77027


PROPERTY


Stories: 9



Land Acres: 3.99



Tenancy: Multi

Class: B

Construction: Steel


MARKET AT LEASE


2.2%

1.9%


Submarket 2-4 Star

Metro Overall 14.5%

7.8%


0.2%

0.5%


Submarket 2-4 Star


$26.46


2.0

24.4%12 Mo. Leased SF 440,837



Page 47




TENANT



RENTS






PROPERTY EXPENSES

Taxes: $1.00/SF (2016)


LEASE

SF Leased: 1,000 SF

Sign Date: Sep 2016

Space Use: Office

Lease Type: Direct

Floor: 5th Floor

Suite: 700

LEASE TERM


Lease Term: 3 Years

TIME VACANT

Date Vacated: Dec 2009



TIME ON MARKET




LEASING REP

SLS Properties


Houston, TX 77027


PROPERTY


Stories: 9



Land Acres: 3.99



Tenancy: Multi

Class: B

Construction: Steel


MARKET AT LEASE


2.2%

1.9%


Submarket 2-4 Star

Metro Overall 14.5%

7.8%


0.2%

0.5%


Submarket 2-4 Star


$26.46


2.0

24.4%12 Mo. Leased SF 440,837



Page 48




RENTS





PROPERTY EXPENSES

Taxes: $0.45/SF (2009)

LEASE

SF Leased: 1,100 SF

Sign Date: Sep 2016

Space Use: Office/Retail

Lease Type: Direct

Floor: 1st Floor

Suite: H

LEASE TERM

Start Date: Oct 2016

Lease Term: 1 Year

TIME VACANT


Date Occupied: Oct 2016


TIME ON MARKET




LEASING REP

Wolfe Properties

3115 Tilden St

Houston, TX 77225

Dan Wolfe (832) 687-4355

PROPERTY


Stories: 1



Land Acres: 1.79


Status: Built 1979

Tenancy: Multi

Class: C



MARKET AT LEASE


3.4%

1.9%


Submarket 1-3 Star

Metro Overall 14.5%

9.2%


1.7%

0.5%


Submarket 1-3 Star


$25.79

-


2.0

24.4%12 Mo. Leased SF 440,837



Page 49




TENANT

Tenant Name: Elete Transportation

Industry: Retailers/Wholesalers

RENTS




Escalations: $0.50 Annual




TI Allowance: $0


PROPERTY EXPENSES

Taxes: $1.07/SF (2016)


LEASE

SF Leased: 145 SF

Sign Date: Aug 2016

Space Use: Office

Lease Type: Direct

Floor: 5th Floor

Suite: 505-G

LEASE TERM

Start Date: Sep 2016

Expiration Date: Aug 2018

Lease Term: 2 Years

TIME VACANT

Date Vacated: Apr 2016

Date Occupied: Sep 2016


TIME ON MARKET

Date On Market: Apr 2016

Date Off Market: Aug 2016


LEASING REP

Oxley Leasing, LLC




Oxley Real Estate


Houston, TX 77074

Abe MacNeil (512) 677-9069

MARKET AT LEASE


2.2%

1.9%


Submarket 2-4 Star

Metro Overall 14.5%

7.8%


0.2%

0.5%


Submarket 2-4 Star


$26.46


2.0

24.4%12 Mo. Leased SF 440,837



Page 50



PROPERTY


Stories: 6



Land Acres: 3.23



Tenancy: Multi

Class: B

Construction: Steel


8/9/2017Copyrighted report licensed to Amit Mehta INC - 410049. Page 51



RENTS






PROPERTY EXPENSES

Taxes: $0.45/SF (2009)

LEASE

SF Leased: 1,200 SF

Sign Date: Aug 2016

Space Use: Office

Lease Type: Direct

Floor: 1st Floor

Suite: G

LEASE TERM

Start Date: Sep 2016

Expiration Date: Sep 2017

Lease Term: 1 Year

TIME VACANT

Date Occupied: Sep 2016

TIME ON MARKET




LEASING REP

Wolfe Properties

3115 Tilden St

Houston, TX 77225

Dan Wolfe (832) 687-4355

PROPERTY


Stories: 1



Land Acres: 1.79


Status: Built 1979

Tenancy: Multi

Class: C



MARKET AT LEASE


3.4%

1.9%


Submarket 1-3 Star

Metro Overall 14.5%

9.2%


1.7%

0.5%


Submarket 1-3 Star


$25.79

-


2.0

24.4%12 Mo. Leased SF 440,837



Page 52


8455 Fannin St

PREPARED BY

Amit Mehta

Realtor

Construction Comps



All-Time Annual Avg. SF

308,728Delivered SF Past 4 Qtrs

3,724Delivery SF Next 4 Qtrs

238,859Proposed SF Next 4 Qtrs

261,940PAST 4 QUARTERS DELIVERIES, UNDER CONSTRUCTION, & PROPOSED

PAST & FUTURE DELIVERIES IN SQUARE FEET

Overall Construction Summary8455 Fannin St


Page 54


HOUSTON CONSTRUCTION TRENDS

There is only one metro in the entire U.S. that hasdelivered more than 40 million SF this cycle and that isHouston. In fact, there is only a handful of metro’s thathave delivered more than 30 million SF. From 2010–16,supply additions averaged more than five million SF peryear, with 2015 delivering a total of 13 million SF. Thesesupply levels are excessive for any metro, especially fora metro where demand completely reversed.

The development cycle has finally begun to slow andcould provide the relief that the office market hasneeded. Most of the submarkets that received the mostdeliveries over the past few years have the remainingconstruction. The Katy Freeway West Submarketdelivered nine million SF this cycle and had another160,000 SF under construction in 17Q3. Similar to theWest Houston submarket, the CBD delivered about 1.5million SF, but now has about 780,000 SF underconstruction because of the Capitol Tower.

You cannot talk about the Houston office market withouttouching on the CBD and the Energy Corridor. A lot ofthe buzz in Houston’s CBD began with 609 Main, a onemillion SF office tower that finished in 17Q1. The buildingwas about 50% leased as of 17Q3, with noteworthy lawfirm tenants taking 200,000 SF and United Airlines takingjust shy of 240,000 SF. The next was the announcement

from Skanska that construction would continue onCapitol Tower, the highly talked about 775,000 SF towerthat built a parking garage and then halted constructionas it waited for more tenant commitments. The signing ofBank of America certainly helped, but Skanska reportedlyattributed the green light to the “optimism that themarketplace will present new opportunities for the projectas we move through 2017.” Closely monitoring theleasing velocity at 609 Main and the overall vacancydirection could provide insight into the expected demandfor Capitol Tower when it delivers in late2018—construction should be quicker, because thefoundation has already been poured.

The Energy Corridor is the other economic driver for theHouston office market. The corridor, which is west of theCBD along I-10, contains the Katy Freeway West andEast submarkets and more than 40 million SF of officespace. The tenant mix in this area of the metro is awho’s who of energy companies: Citgo Petroleum,McDermott, Shell, BP, and ConocoPhillips are just a fewof those companies. Because of this reliance on oil,West Houston ramped up construction and is now payingthe price. Since 2015, vacancies have stayed above the20% threshold and with a few new deliveries completelyempty.


Page 55


HOUSTON NET DELIVERIES

SOUTH MAIN/MEDICAL CENTER CONSTRUCTION TRENDS

The South Main/Medical Center Submarket makes upabout 5% of the metro’s inventory. WIth more than 12million SF, it's the metro's seventh-largest submarket.More than three million of the square footage was builtsince 2000. The largest building to deliver this cycle wasthe 895,000 SF University of Texas building, whichfinished construction in 2012. More recently, a 4 Star

50,000 SF asset delivered in July 2014. The pipelineshould be quiet over the next few quarters, given thatonly one property is set to break ground. Mostconstruction in the area of Houston is medical relatedbecause of the significant demand driven by the TexasMedical Center and universities like Rice.


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SOUTH MAIN/MEDICAL CENTER NET DELIVERIES


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UNDER CONSTRUCTION IN SQUARE FEET

PROJECTED DELIVERIES IN SQUARE FEET

5 Mile Radius Construction Activity8455 Fannin St


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DELIVERIES IN SQUARE FEET

STARTS IN SQUARE FEET


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PERCENT OCCUPIED AT DELIVERY

DELIVERIES AND OCCUPANCY IN SQUARE FEET


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NEW CONSTRUCTION OCCUPANCY AFTER DELIVERY BY YEAR BUILT

NET ABSORPTION IN SQUARE FEET


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Properties

4Square Feet

238,859Percent of Inventory

0.7%Preleased

4.3%UNDER CONSTRUCTION PROPERTIES

UNDER CONSTRUCTION SUMMARY STATISTICS

Low Average Median High

Building SF 4,346 59,715 22,983 188,547

Stories 2 5 2 13

Typical Floor SF 2,560 9,346 9,913 15,000

Preleasing 0% 4.3% 9.8% 100%

Estimated Delivery Date September 2017 November 2017 November 2017 March 2018

Months to Delivery 1 4 4 7

Construction Period in Months 9 14 13 23

Star Rating 3.8

Under Construction Summary8455 Fannin St


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Under Construction Summary8455 Fannin St

COMPLETIONS WITHIN NEXT 3 MONTHS

Property Name/Address Rating Bldg SF Stories Start Complete Developer/Owner

Oct-20153200 Kirby Dr

Kirby Collection188,547 13 Sep-2017

Thor Properties LLC

Thor Properties LLC1

Apr-20163306 W Main St

4,346 2 Sep-2017-

-2

COMPLETIONS MORE THAN 6 MONTHS AWAY

Property Name/Address Rating Bldg SF Stories Start Complete Developer/Owner

Jun-2017211 Fairview St

The Fairview District30,000 2 Mar-2018

-

-3

Jun-2017120 Fairview St

The Fairview District15,966 3 Mar-2018

-

-4


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Under Construction Property Details8455 Fannin St

1 3200 Kirby Dr - Kirby CollectionDistance to Subject Property: 3.8 Miles

AVAILABILITY

Percent Leased: 0%

Available SF: 188,545

Gross Asking Rent: -

PROPERTY


Year Built: 2017

RBA: 188,547 SF

Core Factor: -

Stories: 13


Parking Spaces: -

CONSTRUCTION

Start Date: Oct-2015

Completion Date: Sep-2017

Build Time: 23 Months

Time To Delivery: 1 MonthCONTACTS

Developer: Thor Properties LLC

Owner: Thor Properties LLC

2 3306 W Main StDistance to Subject Property: 4.0 Miles

AVAILABILITY

Percent Leased: 100%

Available SF: -


PROPERTY


Year Built: 2017

RBA: 4,346 SF

Core Factor: -

Stories: 2


Parking Spaces: -

CONSTRUCTION

Start Date: Apr-2016



Time To Delivery: 1 MonthCONTACTS

Developer: -

Owner: -


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Under Construction Property Details8455 Fannin St

3 211 Fairview St - The Fairview DistrictDistance to Subject Property: 4.7 Miles

AVAILABILITY

Percent Leased: 19.7%



PROPERTY


Year Built: Delivers Mar 2018

RBA: 30,000 SF

Core Factor: -

Stories: 2


Parking Spaces: 3.00/1,000 SF

CONSTRUCTION

Start Date: Jun-2017

Completion Date: Mar-2018


Time To Delivery: 7 MonthsCONTACTS

Developer: -

Owner: -

4 120 Fairview St - The Fairview DistrictDistance to Subject Property: 4.7 Miles

AVAILABILITY

Percent Leased: 0%



PROPERTY


Year Built: Delivers Mar 2018

RBA: 15,966 SF

Core Factor: -

Stories: 3


Parking Spaces: 3.00/1,000 SF

CONSTRUCTION

Start Date: Jun-2017

Completion Date: Mar-2018


Time To Delivery: 7 MonthsCONTACTS

Developer: -

Owner: -


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Properties

2Square Feet

187,800Percent Leased

57.0%Asking Rent

$28.50COMPLETED CONSTRUCTION PAST 12 MONTHS

CONSTRUCTION SUMMARY STATISTICS

Low Average Median High

RBA 5,800 93,900 93,900 182,000

Stories 3 7 7 11

Typical Floor SF 1,933 9,239 9,239 16,545

Leases Signed 0 9 9 17

Percent Leased 55.7% 57.0% 77.8% 100%

Asking Rent $28.50 $28.50 $28.50 $28.50

Star Rating 3.5

Completed Construction Past 12 Months8455 Fannin St


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Completed Construction Past 12 Months8455 Fannin St

Property Name/Address Rating RBA Stories Complete Leased Developer/Owner

Sep-20161500 W Alabama St

5,800 3 100%Dillon Kyle Architects

Dillon Kyle Architects1

Aug-20163773 Richmond Ave

Regions Financial Center182,000 11 55.7%

TRC Capital Partners, LLC

TRC Capital Partners, LLC2


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Deliveries Past 12 Months8455 Fannin St

1 1500 W Alabama StHouston, TX 77006 - Midtown Submarket

AVAILABILITY

Percent Leased: 100%

Available SF: -

Asking Rent: -

PROPERTY


Yr Blt/Renov: 2016


Stories: 3


Distance To Subj… 3.9 Miles

Distance To Transit: 19 Minute Walk

CONSTRUCTION

Start Date: Jan-2016



Time Since Delivery: 11 MonthsDEVELOPER

Dillon Kyle Architects

OWNER

Dillon Kyle Architects

-

AVAILABLE SPACES

Currently No Available Spaces

-


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2 3773 Richmond Ave - Regions Financial CenterHouston, TX 77046 - Greenway Plaza Submarket

AVAILABILITY

Percent Leased: 55.7%


Asking Rent: $28.50

PROPERTY


Tenancy: Multi-Tenant

Yr Blt/Renov: 2016


Stories: 11


Distance To Subj… 4.0 Miles

CONSTRUCTION

Start Date: Dec-2014

Completion Date: Aug-2016


Time Since Delivery: 12 MonthsDEVELOPER


OWNER


-

AVAILABLE SPACES

Rent

Space Type

Floor Use

Square Feet

Type SF AvailOccupancySuite Listing CompanyBldg Contig

Barbour Investments$28.50/NNN1,8871,887NewOfficeP 2nd 215 Vacant

Barbour Investments$28.50/NNN629629NewOfficeP 2nd 220 Vacant






Barbour Investments$28.50/NNN24,64815,048NewOfficeP 3rd - Vacant

Barbour Investments$28.50/NNN24,6489,600NewOfficeP 4th - Vacant

Barbour Investments$28.50/NNN1,3051,305NewOfficeP 5th 500 Vacant



Barbour Investments$28.50/NNN886886NewOfficeP 5th 585 Vacant





Barbour Investments$28.50/NNN35,75817,879NewOfficeE 6th - Vacant

Barbour Investments$28.50/NNN35,75817,879NewOfficeE 7th - Vacant

All Spaces 80,696 35,758 $28.50/SF/Yr


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-


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8455 Fannin St

PREPARED BY

Amit Mehta

Realtor

Sale Comps



Sale Comps8455 Fannin St

Sale Comparables

15Avg. Cap Rate

6.8%Avg. Price/SF

$244Avg. Vacancy At Sale

9.8%SALE COMPARABLE LOCATIONS

SALE COMPARABLES SUMMARY STATISTICS

Sales Attributes Low Average Median High

Sale Price $545,000 $2,224,000 $1,650,000 $5,630,000

Price Per SF $110 $244 $185 $561

Cap Rate 6.0% 6.8% 6.1% 8.3%

Time Since Sale in Months 1.1 6.9 5.3 13.3

Property Attributes Low Average Median High

Building SF 4,800 9,133 8,403 18,939

Stories 1 2 2 3

Typical Floor SF 2,400 6,424 6,398 11,570

Vacancy Rate At Sale 0% 9.8% 0% 100%

Year Built 1918 1978 1982 2016

Star Rating 2.5


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Property Name - Address Rating Yr Built Bldg SF Vacancy Price Price/SF

Property

Sale Date

Sale

Cap Rate

-1 Banta House1918 7,203 0% $1,255,000 $174

117-119 E 20th St7/7/2017 -

-2 3803-3813 Highway 6 S1982 9,000 0% $1,225,000 $1366/1/2017 -

-3 711 W Alabama St1950 4,813 0% $1,350,000 $2805/30/2017 -

-4 Fresenius2016 11,570 0% $5,630,000 $487

4901 E Sam Houston Pky S5/9/2017 6.1%

-5 3315 Marquart St1983 10,000 0% $1,850,000 $1854/19/2017 -

-6 INTERNATIONAL EYECA…1970 7,806 0% $2,550,000 $327

926 N Wilcrest Dr3/29/2017 8.3%

-7 565 N Egret Bay Blvd1999 5,300 0% $800,000 $1513/28/2017 -

-8 1500 Bingle Rd1984 4,800 0% $1,650,000 $3443/1/2017 -

-9 829 Peakwood Dr1981 6,398 100% $995,000 $15612/15/2016 -

-10 Booker Bldg1982 15,300 0% $3,500,000 $229

14201 Memorial Dr11/15/2016 -

-11 Fresenius Medical Care2015 8,403 0% $4,710,000 $561

4810 E Sam Houston Pky N10/27/2016 6.0%

-12 1520 Rutland St1920 4,940 0% $545,000 $1108/9/2016 -

-13 1470 First Colony Blvd2002 18,939 36.7% $3,300,000 $1747/29/2016 -

-14 2201 Mangum Rd1974 13,522 0% $2,700,000 $2007/12/2016 -

-15 17170 Mill Forest Rd1997 9,000 0% $1,300,000 $1447/1/2016 -


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http://gateway.costar.com/Gateway/Redir/RedirectToProduct.aspx?productId=PPW&redirUrl=%2Fredir%2Fdefault.aspx%3Feid%3D1252691%26ProductMode%3DProperty%26SelectedTab%3Dsale%26external%3D1
















SOUTH MAIN/MEDICAL CENTER INVESTMENT TRENDS

Sales were strong in 2016, most likely due to the healthyoutlook for this submarket. Insulated by the TexasMedical Center, this southwestern area of the metroexperienced strong growth in both office and apartmentinvestment.

One of the more recently built assets, the 4 Star 350,000SF Life Science Plaza, was sold to CS CapitalManagement for an undisclosed price in December 2015.The Ontario-based Metrontario Group sold the fullyleased property, and the University of Texas was thelargest tenant, occupying almost 100,000 SF.

The other major trade was Texas Children’s Hospital'sacquisition of the iconic O’Quinn Medical Tower and theBaylor Clinic Building. Pricing totaled $175 million and aspart of the purchase, Texas Children’s Hospital will leaseback a portion of each building to Baylor College ofMedicine and CHI St. Luke’s Health until construction ofthe new Baylor St. Luke’s McNair Campus is finished.

More typically, smaller 3 Star properties sold in 2016. Inone example with a reported sale price, the 3 Star10,000 SF building at 1335 La Concha Ln. traded inFebruary 2016 for $2 million ($200/SF).

SOUTH MAIN/MEDICAL CENTER SALES VOLUME & PRICE PER SF


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HOUSTON INVESTMENT TRENDS

Houston’s office market was quick to recover after therecession, and inventory turnover quickly picked up.From 2010–16, the market averaged about 7% turnoverannually. Most of these sales came during the run-up ofoil prices and the growing expansions of Houston’s officemarket in 2012–14. Since then, Houston hasexperienced a pullback in investment activity, trading just4% of inventory in 2016, levels not seen since the2008–09 recession.Through the first half of 2017, lessthan 3% of inventory traded.

Despite this slowdown, Houston’s diverse economy is amajor draw for investors. In early 2017, a three-propertyportfolio was purchased by San Francisco-based SpearStreet Capital for $272 million. The sale of that portfolio,consisting of the Energy Center I, 5 Houston Center, and515 Post Oak Blvd., marked the first large transaction ofthe year and the largest investment since October 2016,when Cousins Properties and Parkway Propertiesmerged.

Spear Street Capital made another major play in 17Q1when it acquired the former Exxon Mobil property inGreenway Plaza. The acquisition included the six-story450,000 SF office building, a 100,000 SF training center,13 auxiliary buildings, and a parking garage. The firmplans to develop a mixed-use project on the site, butJohn Grassi—the firm’s president—said that the “projectwill take a while.”

In April, Parkway was involved in another GreenwayPlaza asset, this one dubbed the “Greenway Portfolio,”which includes the five million SF campus consisting of11 office properties, most notably the Phoenix Tower.Parkway Inc. sold a 49% interest in the properties for$512 million, or an implied $210/SF. The ownership ofthe Greenway Portfolio is now distributed among the jointventure of Parkway (51% stake), TH Real Estate GlobalAsset Management (24.5%), and the Canada PensionPlan Investment Board (24.5%).

HOUSTON SALES VOLUME & PRICE PER SF


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Sale Comps Details8455 Fannin St

1 117-119 E 20th St - Banta HouseDistance to Subject Property: 8.4 Miles

SALE

Sale Type: Owner/User

Sale Date: 7/7/2017

Time On Mar… 321 Days

Sale Price: $1,255,000

Price/SF: $174

PROPERTY


Yr Blt/Renov: 1918; Renov 2014

RBA: 7,203 SF

Stories: 2


Vacancy At S… 0%

Parking: 25: 3.47/1,000 SF-

CONTACTS

Seller: Drake & Muriel Forney

2 3803-3813 Highway 6 SDistance to Subject Property: 14.6 Miles

SALE

Sale Type: Investment

Sale Date: 6/1/2017



Price/SF: $136

PROPERTY


Yr Blt/Renov: 1982

RBA: 9,000 SF

Stories: 1


Vacancy At S… 0%

Parking: 24SALE TERMS

Sale Conditio… Auction Sale

CONTACTS

Buyer: Imperial Lake Investme…

Seller: U.S. Department of the…

Listing Broker: CWS Marketing Group -…


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3 711 W Alabama StDistance to Subject Property: 4.0 Miles

SALE


Sale Date: 5/30/2017



Price/SF: $280

PROPERTY



RBA: 4,813 SF

Stories: 2


Vacancy At S… 0%

Parking: 13: 2.70/1,000 SF-

CONTACTS

Buyer: Baolin Ma

Seller: Kennedy Hodges LLP

Listing Broker: Cresa Houston - Steven…


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4 4901 E Sam Houston Pky S - FreseniusDistance to Subject Property: 14.8 Miles

PROPERTY


Yr Blt/Renov: 2016

RBA: 11,570 SF

Stories: 1


Vacancy At S… 0%

SALE


Sale Date: 5/9/2017



Price/SF: $487

Cap Rate: 6.1%

CONTACTS

Buyer: KB Property Advisors

Seller: Luther Properties LLC

Listing Broker: Stan Johnson Compan…

SALE TERMS

Sale Conditio… Investment Triple Net

TRANSACTION NOTES

The newly constructed Fresenius Medical Care Center sold for $5.63 million, or approximately $487 per square foot.

The buyer took ownership through a Delaware Statutory Trust. They acquired, from the same seller, a similar asset last October: see COMP 3773217for 4810 E Sam Houston Pky N. also tenanted by Fresenius. The properties had separate marketing and the transactions were not related.

The property is under a 15-year NNN lease to the tenant. The cap rate was reported at 6.1%.

The buyer offered interests in the DST, which includes two other similar properties, one in Bolivar, MO, the other in Houston, as the SouthwestMedical Portfolio, at a 6.04% cap rate.

5 3315 Marquart StDistance to Subject Property: 4.1 Miles

PROPERTY


Yr Blt/Renov: 1983

RBA: 10,000 SF

Stories: 2


Vacancy At S… 0%

Parking: 40: 4.00/1,000 SF

SALE





Price/SF: $185

CONTACTS

Buyer: 3315 Marquart LLC

Seller: Angel Ridge Properties…

Buyer Broker: Realty Associates - Jon…

Listing Broker: The Guess Group - Jen…

-

TRANSACTION NOTES

This office complex sold as an investment with four tenants occupying the building at time of sale. It sold with deferred maintenance. There was roofand structural damage in the approximate amount of $655,000.


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6 926 N Wilcrest Dr - INTERNATIONAL EYECARE LASERDistance to Subject Property: 12.5 Miles

PROPERTY



RBA: 7,806 SF

Stories: 2


Vacancy At S… 0%

Parking: 20: 2.56/1,000 SF

SALE





Price/SF: $327

Cap Rate: 8.3%

CONTACTS

Buyer: Wen Sheng Liu

Seller: Broadstone Net Lease,…

Buyer Broker: Yida International Tradi…

Listing Broker: NAI Partners - Joshua L…

SALE TERMS


TRANSACTION NOTES

Both the buyer and seller, along with the buyers broker, confirmed the sale. The listing broker acknowledged the sale, but disagreed with theinformation provided by the other parties. However, he did not provide his side of the story. The buyer will continue to lease out the building to asingle tenant as an investment. The seller stated that they sell about 5% of their portfolio per year regularly and this happened to be one of theproperties they decided to dispose of.

7 565 N Egret Bay BlvdDistance to Subject Property: 22.1 Miles

PROPERTY


Yr Blt/Renov: 1999

RBA: 5,300 SF

Stories: 2


Vacancy At S… 0%

Parking: 5.60/1,000 SF

SALE




Sale Price: $800,000

Price/SF: $151

CONTACTS

Seller: R P Enterprises Llp

Listing Broker: Bob Holmes Commerci…

-


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8 1500 Bingle RdDistance to Subject Property: 9.8 Miles

SALE


Sale Date: 3/1/2017



Price/SF: $344

PROPERTY


Yr Blt/Renov: 1984

RBA: 4,800 SF

Stories: 1


Vacancy At S… 0%

Parking: 91: 1.46/1,000 SFSALE TERMS

Sale Conditio… Sale Leaseback

Financing: Unknown: Wells Far… CONTACTS

Buyer: Weiser Insurance

Seller: Gardline Surveys Inc

Buyer Broker: Streetwise Retail Advis…

Listing Broker: Commercial Realty Co…

9 829 Peakwood DrDistance to Subject Property: 23.5 Miles

SALE


Sale Date: 12/15/2016



Price/SF: $156

PROPERTY


Yr Blt/Renov: 1981

RBA: 6,398 SF

Stories: 1


Vacancy At S… 100%

Parking: 30: 4.69/1,000 SFSALE TERMS

Financing: 1st Mortgage Bal/P…

CONTACTS

Buyer: Martha J Murphy, Tabit…

Seller: Snr-4 Investments Llc


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10 14201 Memorial Dr - Booker BldgDistance to Subject Property: 13.0 Miles

SALE


Sale Date: 11/15/2016


Price/SF: $229

PROPERTY


Yr Blt/Renov: 1982

RBA: 15,300 SF

Core Factor: 10%

Stories: 2


Vacancy At S… 0%

Parking: 53: 3.50/1,000 SF

SALE TERMS

Financing: 1st Mortgage: Texas…

CONTACTS

Buyer: 14201 Memorial Llc

Seller: Sd Memorial Investmen…

11 4810 E Sam Houston Pky N - Fresenius Medical CareDistance to Subject Property: 16.4 Miles

SALE


Sale Date: 10/27/2016



Price/SF: $561

Cap Rate: 6.0%

PROPERTY


Yr Blt/Renov: 2015

RBA: 8,403 SF

Stories: 1


Vacancy At S… 0%

SALE TERMS


Financing: 1st Mortgage: Canto…

CONTACTS

Buyer: KB Property Advisors

Seller: Luther Properties LLC

Listing Broker: Stan Johnson Compan…


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12 1520 Rutland StDistance to Subject Property: 8.1 Miles

PROPERTY


Yr Blt/Renov: 1920

RBA: 4,940 SF

Stories: 1


Vacancy At S… 0%

Parking: 5: 1.01/1,000 SF

SALE


Sale Date: 8/9/2016

Time On Mar… 1 Yr 8 Mos


Price/SF: $110

CONTACTS

Seller: Staging Solutions Inc

Listing Broker: Intero Real Estate Servi…

-

TRANSACTION NOTES

On August 9, 2016, Staffing Solutions sold this 4,940 SF Office Building to a private buyer for $545,000.00.

This information was deemed from a reliable source.

13 1470 First Colony BlvdDistance to Subject Property: 15.2 Miles

PROPERTY


Yr Blt/Renov: 2002

RBA: 18,939 SF

Stories: 3


Vacancy At S… 36.7%

Parking: 80: 4.22/1,000 SF

SALE



Time On Mar… 1 Yr 7 Mos


Price/SF: $174

CONTACTS

Buyer: Aman Dhuka

Seller: API Realty LLC

Listing Broker: Fritsche Anderson Real…

-

TRANSACTION NOTES

The property located at 1470 First Colony Blvd. sold for $3,300,000.00 or $174 a square foot.

The price was confirmed by a party deemed reliable.


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14 2201 Mangum RdDistance to Subject Property: 9.3 Miles

PROPERTY


Yr Blt/Renov: 1974

RBA: 13,522 SF

Stories: 2


Vacancy At S… 0%

Parking: 65: 4.81/1,000 SF

SALE





Price/SF: $200

CONTACTS

Seller: Gramercy Property Tru…

Buyer Broker: Marcus & Millichap - Bil…

Listing Broker: Marcus & Millichap Inc…

-

TRANSACTION NOTES

This sale was reported by the listing broker. The tenant has approximately 10.5 Years Remaining on their lease.

15 17170 Mill Forest RdDistance to Subject Property: 19.2 Miles

PROPERTY


Yr Blt/Renov: 1997

RBA: 9,000 SF

Stories: 1


Vacancy At S… 0%

Parking: 40: 4.08/1,000 SF

SALE


Sale Date: 7/1/2016



Price/SF: $144

CONTACTS

Buyer: The Shape of Behavior

Seller: Gregg & Gregg, P.C.

Listing Broker: Zann Commercial Brok…

SALE TERMS

Financing: 1st Mortgage: Comp…


Page 84



Sales Volume8455 Fannin St

SOUTH MAIN/MEDICAL CENTER SUBMARKET SALES VOLUME IN SQUARE FEET

SOUTH MAIN/MEDICAL CENTER SUBMARKET CLUSTER SALES VOLUME IN SQUARE FEET

HOUSTON METRO SALES VOLUME IN SQUARE FEET


Page 85

Sales Pricing8455 Fannin St

NATIONAL PRICE INDICES

REGIONAL OFFICE PRICE INDICES


Page 86

Sales Pricing8455 Fannin St

PRICE PER SF INDEX

UNITED STATES OFFICE PRICE PER SF IN PAST YEAR HOUSTON OFFICE PRICE PER SF IN PAST YEAR

PRICE PER SF SUMMARY OF SALES IN PAST YEAR

Geography HighTop 25%AverageMedianBottom 25%LowTransactions

$4,081United States 18,993 $0.01 $39 $118 $234 $397

$682Houston 117 $9.25 $52 $156 $221 $378

$321South Main/Medical Center 2 $179 N/A $250 $272 N/A

$561Selected Sale Comps 15 $110 $135 $185 $244 $429


Page 87

Cap Rates8455 Fannin St

CAP RATE TRENDS

UNITED STATES OFFICE CAP RATES IN PAST YEAR HOUSTON OFFICE CAP RATES IN PAST YEAR

CAP RATE SUMMARY OF SALES IN PAST YEAR

Geography HighTop 25%AverageMedianBottom 25%LowTransactions

25.3%United States 3,905 0.7% 5.1% 7.3% 7.3% 9.7%

15.0%Houston 29 5.0% 5.2% 7.0% 7.3% 9.7%

-South Main/Medical Center 0 - - - - -

8.3%Selected Sale Comps 3 6.0% N/A 6.1% 6.8% N/A


Page 88

Buyers8455 Fannin St

TOP HOUSTON OFFICE BUYERS PAST TWO YEARS

Purchased at least one asset in South Main/Medical Center submarket

Properties Bought

Company Name Bldgs VolumeSF

Properties Sold

SF BldgsVolume

Canada Pension Plan Investment Board 11 4,901,454 $512,100,000 0 0 -

Silverpeak Real Estate Partners 11 4,901,454 $512,100,000 0 0 -

TIAA-CREF Investment Management, LLC 11 4,901,454 $512,100,000 0 0 -

Gemini Rosemont 19 2,492,185 $390,559,275 2 382,726 $13,500,000

Wells Fargo & Company 1 546,604 $275,000,000 0 0 -

Spear Street Capital 3 1,187,458 $272,000,000 0 0 -

Texas Children's Hospital 2 643,000 $175,000,000 0 0 -

Masaveu Inmobliaria S.A. 1 326,200 $172,000,000 0 0 -

CalSTRS 1 470,623 $155,000,000 0 0 -

JPMorgan Chase & Co. 1 92,021 $117,703,148 1 203,149 $47,000,000

Oliver McMillan 1 92,021 $117,703,148 1 92,021 $117,703,148

Whitestone REIT 2 168,444 $114,913,121 0 0 -

Morgan Stanley & Co. 11 1,281,014 $110,000,002 0 0 -

Equus Capital Partners, Ltd 3 496,560 $91,400,000 0 0 -

Healthcare Trust of America, Inc. 3 206,715 $78,883,897 0 0 -

Cole Capital 2 298,950 $78,400,000 0 0 -

Moody National Companies 1 217,782 $58,000,000 0 0 -

Lingerfelt Commonwealth Partners 1 272,941 $52,000,000 0 0 -

Nabors 1 340,956 $47,500,000 0 0 -

KBS Realty Advisors 1 203,149 $47,000,000 1 13,522 $2,200,000

Physicians Realty Trust 3 157,605 $46,700,000 0 0 -

Hariri Interests, Inc. 1 550,000 $33,106,156 0 0 -

Hines Securities, Inc. 1 550,000 $33,106,156 0 0 -

ElmTree Funds 1 95,640 $27,500,000 0 0 -

Buchanan Street Partners 1 159,056 $27,000,000 0 0 -

TYPES OF OFFICE HOUSTON BUYERS PAST TWO YEARS

Company Type Bldgs Billions Avg PricePrice/SF

Average Purchase

SF

Buying Volume

Institutional 80 21,969,468 $139 $38,225,944$3.1

Private 61 4,956,493 $123 $10,052,727$0.6

REIT/Public 11 915,864 $370 $30,836,092$0.3

User 21 1,318,988 $194 $12,238,957$0.3

Private Equity 1 95,640 $287 $27,500,000$0

$0 $0.8 $1.6 $2.4 $3.2


Page 89

Sellers8455 Fannin St

TOP HOUSTON OFFICE SELLERS PAST TWO YEARS

Sold at least one asset in South Main/Medical Center submarket

Properties Sold

Company Name Bldgs VolumeSF

Properties Bought

SF BldgsVolume

Parkway Realty Services 11 4,901,454 $512,100,000 0 0 -

CBRE 2 1,017,227 $430,000,000 0 0 -

Rosemont Realty 19 2,492,185 $390,559,275 0 0 -

Principal Financial Group 1 546,604 $275,000,000 0 0 -

Columbia Property Trust 3 1,187,458 $272,000,000 0 0 -

Stream Realty Partners, LP 2 529,349 $219,000,000 0 0 -

Catholic Health Initiatives 2 643,000 $175,000,000 0 0 -

L&B Realty Advisors, LLP 1 326,200 $172,000,000 0 0 -

TRC Capital Partners, LLC 1 326,200 $172,000,000 0 0 -

Oliver McMillan 1 92,021 $117,703,148 1 92,021 $117,703,148

The Baupost Group, LLC 1 92,021 $117,703,148 0 0 -

Bailard 2 168,444 $114,913,121 0 0 -

Wulfe & Co. 2 168,444 $114,913,121 0 0 -

HCP, Inc. 11 1,281,014 $110,000,002 0 0 -

Parkway Properties, Inc. 3 643,518 $107,500,000 0 0 -

Northern Healthcare Land, Ltd 3 206,715 $78,883,897 0 0 -

CORE Real Estate, LLC 1 230,000 $60,000,000 0 0 -

Academy Sports and Outdoors, Ltd. 1 217,782 $58,000,000 0 0 -

Bridge Investment Group Partners, LLC 1 272,941 $52,000,000 0 0 -

JPMorgan Chase & Co. 1 203,149 $47,000,000 1 92,021 $117,703,148

Nimble Development, LLC 2 107,737 $40,400,000 0 0 -

The Hearst Corporation 1 550,000 $33,106,156 0 0 -

Cousins Properties Incorporated 1 193,998 $31,400,000 0 0 -

The Grocers Supply Co., Inc. 1 44,000 $29,300,000 0 0 -

Maersk, Inc. 1 95,640 $27,500,000 0 0 -

TYPES OF OFFICE HOUSTON SELLERS PAST TWO YEARS

Company Type Bldgs Billions Avg PricePrice/SF

Average Sale

SF

Selling Volume

Institutional 34 5,634,572 $291 $48,322,957$1.6

Private 72 2,485,692 $340 $11,762,091$0.8

REIT/Public 21 3,492,088 $158 $26,323,809$0.6

User 24 2,491,055 $155 $16,130,604$0.4

Private Equity 0 0 - --

$0 $0.5 $1 $1.5 $2


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8455 Fannin St

PREPARED BY

Amit Mehta

Realtor

Demographics



Demographic Overview8455 Fannin St

Population (1 mi)

15,454Avg. HH Size (1 mi)

1.8Avg. Age (1 mi)

32Med. HH Inc. (1 mi)

$43,345DEMOGRAPHIC RADIUS RINGS

DEMOGRAPHIC SUMMARY

5 Mile3 Mile1 MilePopulation

375,517118,41015,4542017 Population

409,333129,05516,8522022 Population

9.0%9.0%9.1%Pop Growth 2017-2022

3735322017 Average Age

Households

159,64852,2488,1472017 Households

174,13157,0108,8692022 Households

9.1%9.1%8.9%Household Growth 2017-2022

$61,308$57,015$43,345Median Household Income

2.22.11.8Average Household Size

211Average HH Vehicles

Housing

$294,655$360,864$117,311Median Home Value

197119791986Median Year Built


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8455 Fannin St

PREPARED BY

Amit Mehta

Realtor

Appendix



Historical Leasing Data8455 Fannin St

PEERS HISTORICAL LEASING DATA

Available Space Gross Direct Asking Rent

Quarter AvailabilitySF Vacancy Direct Net Absorption SFRent Growth Leasing SF

Demand

QTD 23.1% 15.7% $25.21 -0.4% (10,748) 2,771134,194

2017 Q2 24.1% 13.8% $25.32 -2.0% 16,279 11,852139,768

2017 Q1 24.6% 16.6% $25.84 2.5% (12,297) 13,675142,845

2016 Q4 23.9% 14.5% $25.22 -1.9% (18,157) 9,115138,358

2016 Q3 19.6% 11.4% $25.72 18.7% 2,371 7,522113,877

2016 Q2 15.6% 11.8% $21.67 0.6% 5,214 7,18490,206

2016 Q1 14.8% 12.7% $21.54 -5.8% 17,524 15,33885,838

2015 Q4 19.7% 15.7% $22.86 3.1% 8,026 16,213114,153

2015 Q3 19.6% 17.1% $22.18 -0.7% 1,919 2,469113,824

2015 Q2 17.7% 17.4% $22.34 -0.1% 2,128 5,458102,556

2015 Q1 17.9% 17.8% $22.35 1.1% 5,988 2,602103,729

2014 Q4 18.6% 18.8% $22.11 2.2% 9,589 15,991108,078

SOUTH MAIN/MEDICAL CENTER SUBMARKET HISTORICAL LEASING DATA



Demand

QTD 8.0% 6.5% $27.88 -0.4% (16,034) 15,279973,181

2017 Q2 8.1% 6.3% $27.99 3.3% 64,164 58,568985,137

2017 Q1 8.3% 6.9% $27.09 1.3% (45,784) 69,6101,013,388

2016 Q4 7.2% 6.5% $26.74 0.0% (56,722) 67,817878,740

2016 Q3 6.5% 6.0% $26.74 0.7% 31,227 50,483795,888

2016 Q2 7.5% 6.3% $26.54 -1.3% 106,746 79,110912,228

2016 Q1 8.5% 7.2% $26.90 -0.3% 33,171 63,6931,037,250

2015 Q4 8.7% 7.4% $26.97 1.2% 68,161 51,8531,066,303

2015 Q3 8.8% 8.0% $26.65 -0.7% 12,237 126,6541,079,403

2015 Q2 9.3% 8.1% $26.84 1.6% 62,851 80,3081,139,361

2015 Q1 9.6% 8.6% $26.42 -1.4% (223,772) 85,9901,171,107

2014 Q4 9.8% 6.8% $26.81 6.8% 20,161 65,2291,202,509


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Historical Leasing Data8455 Fannin St

SOUTH MAIN/MEDICAL CENTER SUBMARKET CLUSTER HISTORICAL LEASING DATA



Demand

QTD 8.0% 6.5% $27.88 -0.4% (16,034) 15,279973,181

2017 Q2 8.1% 6.3% $27.99 3.3% 64,164 58,568985,137

2017 Q1 8.3% 6.9% $27.09 1.3% (45,784) 69,6101,013,388

2016 Q4 7.2% 6.5% $26.74 0.0% (56,722) 67,817878,740

2016 Q3 6.5% 6.0% $26.74 0.7% 31,227 50,483795,888

2016 Q2 7.5% 6.3% $26.54 -1.3% 106,746 79,110912,228

2016 Q1 8.5% 7.2% $26.90 -0.3% 33,171 63,6931,037,250

2015 Q4 8.7% 7.4% $26.97 1.2% 68,161 51,8531,066,303

2015 Q3 8.8% 8.0% $26.65 -0.7% 12,237 126,6541,079,403

2015 Q2 9.3% 8.1% $26.84 1.6% 62,851 80,3081,139,361

2015 Q1 9.6% 8.6% $26.42 -1.4% (223,772) 85,9901,171,107

2014 Q4 9.8% 6.8% $26.81 6.8% 20,161 65,2291,202,509

HOUSTON METRO HISTORICAL LEASING DATA



Demand

QTD 20.4% 16.0% $28.14 -0.1% (349,871) 999,11266,330,403

2017 Q2 20.4% 15.9% $28.16 0.3% (608,163) 3,659,77966,187,795

2017 Q1 20.0% 15.5% $28.07 0.0% (733,611) 3,203,59464,577,852

2016 Q4 19.6% 14.8% $28.07 -1.0% (876,778) 3,680,25063,347,335

2016 Q3 19.6% 14.5% $28.35 1.0% 33,980 4,711,85463,300,381

2016 Q2 19.1% 14.0% $28.09 -0.9% 459,034 4,539,95161,396,066

2016 Q1 18.5% 13.5% $28.33 0.8% 1,168,662 3,487,44059,591,683

2015 Q4 17.5% 13.3% $28.12 -0.1% 1,012,826 5,095,20756,316,792

2015 Q3 17.1% 12.5% $28.13 0.4% 908,370 4,339,99054,630,844

2015 Q2 17.1% 12.5% $28.01 0.9% 1,079,553 3,837,52254,581,942

2015 Q1 16.7% 11.8% $27.76 1.0% 486,671 4,089,17653,349,582

2014 Q4 16.1% 10.7% $27.48 0.4% 3,713,365 5,165,56651,131,495


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Historical Construction Data8455 Fannin St

5 MILE RADIUS HISTORICAL DATA

Bldgs Bldg SF Vacancy Bldgs Bldg SF Leased

Inventory Deliveries

Quarter

Under Construction

Bldg SFBldgs Preleased

QTD 35,506,043 10.3% 0 0 0.0%1,050 4 238,859 4.3%

2017 Q2 35,506,043 10.0% 0 0 0.0%1,050 4 238,859 4.3%

2017 Q1 35,506,043 10.0% 0 0 0.0%1,050 2 192,893 2.3%

2016 Q4 35,755,089 10.3% 0 0 0.0%1,055 2 192,893 2.3%

2016 Q3 35,902,541 10.6% 2 187,800 49.6%1,058 2 192,893 2.3%

2016 Q2 35,714,741 9.6% 0 0 0.0%1,056 4 380,693 23.4%

2016 Q1 35,767,826 10.3% 0 0 0.0%1,057 3 376,347 22.7%

2015 Q4 35,916,464 11.0% 2 634,480 40.5%1,060 2 370,547 21.8%

2015 Q3 35,529,861 9.9% 1 167,562 28.7%1,062 3 816,480 39.6%

2015 Q2 35,377,430 9.6% 0 0 0.0%1,062 4 984,042 35.8%

2015 Q1 35,456,763 10.0% 0 0 0.0%1,063 4 984,042 33.0%

2014 Q4 35,456,763 8.9% 2 16,712 90.2%1,063 4 984,042 24.1%

SOUTH MAIN/MEDICAL CENTER SUBMARKET HISTORICAL DATA



Quarter

Under Construction


QTD 12,217,569 6.5% 0 0 0.0%229 0 0 0.0%

2017 Q2 12,217,569 6.3% 0 0 0.0%229 0 0 0.0%

2017 Q1 12,217,569 6.9% 0 0 0.0%229 0 0 0.0%

2016 Q4 12,217,569 6.5% 0 0 0.0%229 0 0 0.0%

2016 Q3 12,337,096 6.9% 0 0 0.0%230 0 0 0.0%

2016 Q2 12,337,096 6.2% 0 0 0.0%230 0 0 0.0%

2016 Q1 12,337,096 8.1% 0 0 0.0%230 0 0 0.0%

2015 Q4 12,337,096 8.3% 0 0 0.0%230 0 0 0.0%

2015 Q3 12,337,096 8.9% 0 0 0.0%230 0 0 0.0%

2015 Q2 12,337,096 9.0% 0 0 0.0%230 0 0 0.0%

2015 Q1 12,416,429 10.1% 0 0 0.0%231 0 0 0.0%

2014 Q4 12,416,429 8.3% 0 0 0.0%231 0 0 0.0%


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Historical Construction Data8455 Fannin St

SOUTH MAIN/MEDICAL CENTER CLUSTER HISTORICAL DATA



Quarter

Under Construction


QTD 12,217,569 6.5% 0 0 0.0%229 0 0 0.0%

2017 Q2 12,217,569 6.3% 0 0 0.0%229 0 0 0.0%

2017 Q1 12,217,569 6.9% 0 0 0.0%229 0 0 0.0%

2016 Q4 12,217,569 6.5% 0 0 0.0%229 0 0 0.0%

2016 Q3 12,337,096 6.9% 0 0 0.0%230 0 0 0.0%

2016 Q2 12,337,096 6.2% 0 0 0.0%230 0 0 0.0%

2016 Q1 12,337,096 8.1% 0 0 0.0%230 0 0 0.0%

2015 Q4 12,337,096 8.3% 0 0 0.0%230 0 0 0.0%

2015 Q3 12,337,096 8.9% 0 0 0.0%230 0 0 0.0%

2015 Q2 12,337,096 9.0% 0 0 0.0%230 0 0 0.0%

2015 Q1 12,416,429 10.1% 0 0 0.0%231 0 0 0.0%

2014 Q4 12,416,429 8.3% 0 0 0.0%231 0 0 0.0%

HOUSTON METRO HISTORICAL DATA



Quarter

Under Construction


QTD 321,595,916 16.0% 8 88,052 45.6%8,827 69 3,560,751 50.1%

2017 Q2 321,507,864 15.9% 26 497,550 42.3%8,819 73 3,437,903 47.9%

2017 Q1 321,851,572 15.8% 21 1,951,101 58.1%8,803 68 2,580,546 62.4%

2016 Q4 320,372,936 14.9% 14 105,965 59.4%8,797 69 3,927,545 57.8%

2016 Q3 320,414,423 14.5% 28 1,765,474 63.5%8,786 63 3,790,774 56.1%

2016 Q2 318,656,049 14.0% 26 2,552,344 57.1%8,759 74 5,004,672 58.6%

2016 Q1 316,978,006 13.7% 23 1,882,952 86.5%8,740 78 6,858,023 54.4%

2015 Q4 315,435,891 13.5% 38 4,143,909 39.6%8,724 78 8,235,368 59.4%

2015 Q3 311,590,771 12.7% 26 1,212,657 40.4%8,693 94 11,556,053 61.6%

2015 Q2 310,477,561 12.6% 32 3,564,250 87.0%8,670 104 12,405,710 61.4%

2015 Q1 307,039,106 12.0% 42 4,351,477 70.1%8,644 112 15,462,573 67.6%

2014 Q4 302,767,815 10.9% 38 3,299,875 80.2%8,603 126 18,052,166 65.3%


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