HOUSTON'S MARKET REPORT - Downtown Houston

HOUSTON’S MARKET REPORT
FOURTH QUARTER 2012

LETTER FROM THE PARTNERS
FOURTH quarter 2012
STREAM REALTY PARTNERS, L.P.
2012 was a great year for the city of Houston, easily exceeding even the most optimistic
projections for the year. Nation-leading job growth was definitely the driver behind our success,
directly contributing to record levels of tenant demand for office, retail and industrial space. Strong
absorption has pushed vacancy rates to historical levels while capital markets constraints, specifically
for speculative debt, have kept new supply very much in check. To the extent these storylines continue
the table is set for significant rent growth across all product lines in 2013.
We would like to specifically thank Cabot Properties, Inc., CapLease, Inc., Donerail Corporation,
Franklin Street Properties, Industrial Income Trust, Principal Global Investors and The Seligman Group
for entrusting us on their important assets over this past quarter. We look forward to working with you
on these assignments.
Please enjoy this latest version of The Quarter.
Warmest Regards,
Kyle Valentine
Regional Managing Partner
Preston Young
Regional Managing Partner
1

FOURTH quarter 2012
STREAM REALTY PARTNERS, L.P.
HOUSTON’S MARKET REPORT
FOURTH QUARTER 2012

TABLE OF
CONTENTS
THE QUARTER
MEET THE TEAM
OFFICE SUBMARKETS
CENTRAL BUSINESS DISTRICT
ENERGY CORRIDOR
GALLERIA / UPTOWN
GREENWAY PLAZA
INNER LOOP
NORTH BELT
WESTCHASE
WESTWAY
THE WOODLANDS
INDUSTRIAL SUBMARKETS
NORTH
NORTHWEST
SOUTHWEST
SOUTH
SOUTHEAST
EAST
05
06
08
10
12
14
16
18
20
22
24
26
28
30
32
34
36
38
40

THE QUARTER: overview
FOURTH quarter 2012
STREAM REALTY PARTNERS, L.P.
t
he Quarter is a unique publication that tracks the latest statistics, trends, threats and opportunities
within the greater Houston office and industrial markets. The submarkets identified in this
report may not directly correspond with submarkets as defined by other publications. Our
geographical areas are determined purely by the market – understanding which buildings compete
directly with each other, diligently researching market perceptions and analyzing recent trends.
Moreover, we internally track each submarket on a building-by-building, tenant-by-tenant basis.
Our conclusions reported in this publication are for the following submarkets:
Houston Office
Central Business District
Energy Corridor
Galleria / Uptown
Greenway
Inner Loop
North Belt
Westchase
Westway
The Woodlands
Houston Industrial
North Industrial
Northwest Industrial
Southwest Industrial
South Industrial
Southeast Industrial
East Industrial
The statistics contained in this report are distinctly unique in three primary ways:
1. Only buildings that are on par with the competitive for lease assets in the area are included in
this study. By eliminating the functionally obsolete buildings in each submarket we are able to
provide a much more accurate picture of the true availability rate.
2. The submarkets identified and reported on in this study were specifically grouped together,
because they represent unique geographic areas that compete internally for the same deals
and operate independently from each of the other submarkets.
3. Each building tracked in this publication is grouped into a specific Classification in order to
better understand how each type of product is performing within a given submarket. The
Classifications for the office submarkets include: A (tier I), A (tier II), B, and Owner User
buildings. The industrial Classifications are determined based on what size tenant the building
was designed to accommodate. The industrial Classifications include: Flex, Small Distribution,
Medium Distribution, Large Distribution, Extra Large Distribution and Owner Users.
The information contained in this study represents a brief summary of our data. The figures reflected in this survey are
inherently arbitrary due to the manner in which we report these statistics. If you require any additional information regarding
this report, please contact us at 713.300.0300.
5

MEET THE TEAM
LEADERSHIP
KYLE VALENTINE
Regional Managing Partner
kvalentine@streamrealty.com
LEASING
PRESTON YOUNG
Regional Managing Partner
pyoung@streamrealty.com
ADAM JACKSON
Managing Director
ajackson@streamrealty.com
JUSTIN ROBINSON
Managing Director
jrobinson@streamrealty.com
PAUL COONROD
Managing Director
pcoonrod@streamrealty.com
RYAN BISHOP
Managing Director
rbishop@streamrealty.com
BRAD FRICKS
Senior Vice President
bfricks@streamrealty.com
STEWART LYMAN
Vice President
slyman@streamrealty.com
JEREMY LUMBRERAS
Senior Associate
jlumbreras@streamrealty.com
LEASING (CONT.)
MATTESON HAMILTON
Senior Associate
mhamilton@streamrealty.com
CRAIG MCKENNA
Associate
cmckenna@streamrealty.com
MICHAEL FLOWERS
Associate
mflowers@streamrealty.com
PHILIP ARMES
Associate
parmes@streamrealty.com
COURT RICHARDSON
Financial Analyst
crichardson@streamrealty.com
SEAN DURKIN
Financial Analyst
sdurkin@streamrealty.com
TENANT REPRESENTATION
ANTHONY SQUILLANTE
Managing Director
asquillante@streamrealty.com
GRAHAM HORTON
Managing Director
ghorton@streamrealty.com
JON FARRIS
Managing Director
jfarris@streamrealty.com
CHRIS JOHNSON
Senior Associate
cjohnson@streamrealty.com
DAVID BUESCHER
Senior Associate
dbuescher@streamrealty.com
JEREMY HUNT
Senior Associate
jhunt@streamrealty.com
ANDREW JOHNSON
Associate
ajohnson@streamrealty.com
TENANT REPRESENTATION (CONT.)
CONSTRUCTION MANAGEMENT
JOSH MORROW
Associate
jmorrow@streamrealty.com
SCOTT GOODMAN
Associate
sgoodman@streamrealty.com
TRAVIS SECOR
Associate
tsecor@streamrealty.com
KYLE ROBERSON
Vice President
kroberson@streamrealty.com
CLIF KENNEDY
Senior Project Manager
ckennedy@streamrealty.com
GRANT ROLLO
Associate Project Manager
grollo@streamrealty.com
6

FOURTH quarter 2012
STREAM REALTY PARTNERS, L.P.
RETAIL
Heather Nguyen
Managing Director
hnguyen@streamrealty.com
Mark Sondock
Managing Director
msondock@streamrealty.com
Ralph Tullier
Managing Director
rtullier@streamrealty.com
Kyle Knight
Senior Associate
kknight@streamrealty.com
Caitlin Jones
Marketing and Leasing Associate
cjones@streamrealty.com
JOHN NGUYEN
Leasing Analyst
jnguyen@streamrealty.com
PROPERTY MANAGEMENT
GREG PELL
Managing Director
gpell@streamrealty.com
LAURIE GAJEVSKY
Managing Director
lgajevsky@streamrealty.com
KRISTINE FOX
Vice President
kfox@streamrealty.com
ROBERT HALICK
Vice President
rhalick@streamrealty.com
CHRIS BOSLER
Senior Property Manager
cbosler@streamrealty.com
MICHAEL KENT
Senior Property Manager
mkent@streamrealty.com
MISTY KELLY
Senior Property Manager
mkelly@streamrealty.com
PROPERTY MANAGEMENT (CONT.)
Ananesia Ware
Property Manager
aware@streamrealty.com
Charles Oesch
Property Manager
coesch@streamrealty.com
DELILAH PEREZ
Property Manager
dperez@streamrealty.com
Julie Sanders
Property Manager
jsanders@streamrealty.com
Kris Powell
Property Manager
kpowell@streamrealty.com
ROBERT GRAHAM
Property Manager
rgraham@streamrealty.com
SCOTT FERGUSON
Property Manager
sferguson@streamrealty.com
MARKETING
JENNIFER BACHAND
National Marketing Coordinator
jbachand@streamrealty.com
MANDY OSTERHOUT
Senior Brand Coordinator
mosterhout@streamrealty.com
BONNIE CASSEB
Marketing Coordinator
bcasseb@streamrealty.com
BROOKE BAGBY
Marketing Coordinator
bbagby@streamrealty.com
NICE. SMART. HONEST. PASSIONATE.
Comprised of the best and the brightest, we have
developed a track record of successful performance and
continuously strive to be on the cutting edge in providing
first-class services.
7

FOURTH QUARTER OFFICE SUMMARY
AVAILABLE
OFFICE SPACE
10,729,398
SQUARE FEET
OFFICE
INVENTORY
125,768,106
SQUARE FEET
FOURTH QUARTER
OFFICE AVAILABILITY
8.5
Percent
MAJOR HOUSTON
OFFICE SUBMARKETS
NINE
OVERALL INVESTMENT GRADE INVENTORY
OFFICE
SUBMARKET
INVENTORY
AVAILABLE
SQUARE FEET
4 q 2 0 1 2
AVAILABILITY
CENTRAL BUSINESS DISTRICT
40,563,695
3,452,951
8.5%
ENERGY CORRIDOR
16,213,702
675,097
4.2%
GALLERIA / UPTOWN
18,837,854
2,249,577
11.9%
GREENWAY PLAZA
8,988,172
718,206
8.0%
INNER LOOP
5,636,703
384,559
6.8%
NORTH BELT
11,145,082
1,521,503
13.7%
WESTCHASE
14,859,291
1,459,224
9.8%
WESTWAY
2,457,168
73,402
3.0%
THE WOODLANDS
7,066,439
194,879
2.8%
125,768,106
10,729,398
8.5%

.......
GALLERIA
.......
.......
.......
.......
OFFICE SUBMARKETS
This map reflects the location of the office submarkets within
the greater Houston area. Up-to-date market statistics, recent
transactions, new development summaries and current market
trends can be found for each submarket on the following pages.
THE WOODLANDS
45
249
NORTH BELT
59
290
BELTWAY
8
WESTWAY
.......
ENERGY CORRIDOR
10
INNER LOOP
610
10
....... CBD
WESTCHASE
.......
.......
GREENWAY
610
59
45
90
BELTWAY
8
288

CENTRAL BUSINESS DISTRICT
class a tiers
Most prestigious buildings; Typically new,
recently renovated, or architecturally
rich buildings with high quality standard
finishes, state of the art building systems,
and exceptional market perception.
TIER 1
TIER
2
Typically
taller buildings with recent
renovations, market standard finishes,
and strong market perception.
Typically older buildings in original
conditions, with below market standard
finishes and neutral market perception.
TIER 3
5 HOUSTON CENTER
One new change with this quarter’s report is how the Central
Business District’s (“CBD”) Class A market is subdivided. Because
of the large range of asset quality, we have decided to further
demise this subset for analytical purposes. Please see descriptions
of each classification above.
As the Houston market garners more attention from investors
around the world, certain building traits have begun to stand out.
Buildings that exhibit the traits described in our tier I classification
will drive new development and investment in the CBD. To this
point, availability in this subset is currently at 4.0%, its tightest
level in over five years. For perspective, availability in this subset
was 6.2% prior to the delivery of BG Group Place in 2011.
For more on the leasing front, the CBD experienced a slight
increase in availability, up 46 basis points to 8.5%. The only subset
other than Class A, tier I with positive absorption was Owner User
Properties, as Kinder Morgan Tower executed its 50,000 square
foot lease with Superior Energy this quarter. With this deal done,
availability in Owner User Properties dropped 78 basis points to
1.4%.
Each of the other subsets saw space come back, with 1.05%
of negative absorption in Class A, tier II, 1.39% of negative
absorption in Class A, tier III, and 1.24% of negative absorption
in Class B. Additionally, sublease space across the submarket
increased by 474,000 square feet, due mainly to Devon Energy’s
space at Two and Three Allen coming to the market. Overall, the
CBD market sits at 8.5% available with Class A at 7.8% and Class
B at 15.9%. These numbers indicate 130 basis points in total net
positive absorption in 2012.
These fundamentals will improve as the following transactions
are imminent and expected to be reflected in the numbers for
the first quarter of 2013. Chevron will sublease 315,000 square
feet of the Devon sublease space in Allen Center through 2017;
PricewaterhouseCoopers has executed a one year extension at
Total Plaza and will execute a 120,000 square foot lease in Wells
Fargo Plaza, backfilling the Petrohawk space; and BakerHostetler
will execute a 75,737 square foot lease at BG Group Place.
The vibrant Houston economy along with sustained positive real
estate fundamentals and support from the City of Houston has
prompted development news and activity across many asset
classes in the CBD. To date, four residential developments
S T A T I S T I C S
PRODUCT TYPE
Class A Tier 1
Class A Tier 2
Class A Tier 3
Class B
Total - Competitive Investor Owned Properties
Plus - Owner User Properties
Overall Investment Grade Inventory
INVENTORY
8,089,214
7,925,876
10,484,056
8,244,434
34,743,580
5,820,115
40,563,695
AVAILABLE
SQUARE FEET
323,762
416,851
1,320,457
1,308,629
3,369,699
83,252
3,452,951
4Q 2012
AVAILABILITY
4.0%
5.3%
12.6%
15.9%
9.7%
1.4%
8.5%
HISTORICAL AVAILABILITY TRENDS
3Q 2012
2Q 2012
5.4%
7.0%
4.2%
4.9%
11.2%
11.3%
14.6%
17.1%
9.1%
10.2%
2.2%
2.2%
8.1%
9.0%
10
Rental Rates Construction Vacancy

FOURTH quarter 2012
STREAM REALTY PARTNERS, L.P.
totaling an estimated 1,100 units and two hotels totaling 1,325
units are in some phase of development or planning. One of the
most notable is the convention center hotel to be developed by
Houston-based RIDA Development. The property located just
north of Discovery green and next door to the George R Brown
Convention Center is to be branded a Marriott and is estimated
to total 1,000 units, 100,000 square feet of meeting space, and
100,000 square feet of retail.
INVESTMENT SALES
• BG Group Place will come to market through Eastdil Secured
in the first quarter of 2013. The 972,474 square foot building
will reach stabilization with leases currently in the pipeline.
• KBR Tower has been purchased by W.P. Carey. The asset,
totaling 1,047,748 square feet, sold for $174,750,000,
or $166.80 per square foot. KBR currently occupies
approximately 900,000 square feet, or 86% of the building
and recently signed a 17 year lease.
• Kinder Morgan Tower was taken off the market this quarter.
Kinder Morgan decided to engage in a CTL debt transaction,
refinancing the property and retaining ownership.
• Exxon Mobil Corporation has announced Shorenstein as
the buyer for 800 Bell. The 45 story, 1,108,000 square foot
building came to market in March 2012 through JLL and is
expected to fetch $50,000,000.
DEVELOPMENT
• Hines is actively marketing 600 Main, a 990,000 square
foot 48 floor office development with an attached 12 floor
parking garage. The development will be contingent on
significant pre-leasing.
• Skanska has started pre-development work on its site at
811 Rusk. Plans will include demolishing the Houston Club
Building to make way for an office tower, dubbed Capitol
Tower.
• Other sites being evaluated for potential development
include Brookfield’s Block 902 and Linbeck’s Block 43, and
the site that is currently Macy’s.
FORECAST
Overall, the CBD remains Houston’s premier submarket.
Fundamentally, 2012 has been a positive year for the CBD.
Although there was a minor increase in availability this quarter,
this submarket experienced 130 basis points of net positive
absorption in 2012. Over the same period, the Class A, tier I
subset experienced 670 basis points of positive absorption,
demonstrating a flight to quality in the CBD. Just four blocks of
space greater than 100,000 square feet are currently available,
only one of which is in Class A, tier I or II. These factors, along
with increased investor appetite, lead us to project that at
least one new office development will be announced in 2013.
Houston’s growing economy along with strong fundamentals and
continued commitment to the submarket by the city indicates a
bright future for the CBD.
DEALS IN THE MARKET
TENANT SQUARE FEET EXPIRATION
PricewaterhouseCoopers
BakerHostetler
AGL Resources
Avalon Advisors
Crimson Exploration
Ware, Jackson, Lee & Chambers
LEASING ACTIVITY
TENANT
SQUARE FEET
TransCanada
162,000
Hilcorp
145,000
Superior Energy
50,000
Sidley Austin
50,000
Beck Redden
48,000
Adams & Reese
38,000
Trafigura
29,650
Cathexis
26,000
Ziegler Cooper
25,000
BB&T
21,500
Munsch, Hardt, Kopf & Harr 21,382
Plains Exploration
20,500
QA Holdings
20,057
First American Title Insurance 13,592
Parkman Whaling
12,053
Red Willow Production Co. 11,600
150,000
75,737
40,000
30,000
25,000
25,000
2014
2013
2013
2013
2013
2013
BUILDING
Bank of America Center
Total Plaza
Kinder Morgan Tower
Wells Fargo Plaza
LyondellBasell Tower
LyondellBasell Tower
5 Houston Center
Wells Fargo Plaza
Bank of America Center
Three Allen Center
Pennzoil Place
700 Milam
5 Houston Center
601 Travis
Chase Tower
Wedge International Tower
11

ENERGY CORRIDOR
F A C T S
SQUARE FEET OF
investment grade
office space
16
MILLION
over
73,000EMPLOYEES
largest employment
center in the region
4th
GREENHOUSE DEVELOPMENT
“In spite of the
quiet quarter, the
submarket continues
to tout some of
the strongest
supply and demand
fundamentals in the
nation which has
caused developers to
race to deliver new
product.”
Unlike the first three quarters of
the year, the final quarter of 2012
was a relatively quiet end to an
exciting year in the Energy Corridor
submarket. In spite of the quiet
quarter, the submarket continues to
tout some of the strongest supply
and demand fundamentals in the
nation which has caused developers
to race to deliver new product.
At the end of the year the Energy
Corridor fundamentals are at the
highest levels in 6 years, with Class
A vacancy decreasing from over
20% to 4.1% since the first quarter
of 2010.
The two key drivers to the slow
quarter were uncertainty due to the
election and the lack of available
space. In the submarket today, there
are only two 40,000 square foot
blocks of class A space available;
the same statistic holds true for
class B buildings. With the election
behind us, the uncertainty in the
market has decreased and activity
has picked up at the beginning of
2013.
Moving forward into 2013, we
expect to see more pre-leasing
in the new office developments
currently under construction. At
the end of the quarter, 1,960,000
square feet of new Class A office
space was under construction
and 35% of the space had been
pre-leased. That said, the word
on the street is Transwestern’s
Westgate project and Lincoln’s
Energy Crossing II are experiencing
S T A T I S T I C S
PRODUCT TYPE
Class A – Tier I
Class A – Tier II
Class B
Total – Competitive Investor Owned Properties
Total – Owner User Properties
Overall Investment Grade Inventory
INVENTORY
5,701,022
2,325,434
4,470,579
12,497,035
3,716,667
16,213,702
AVAILABLE
SQUARE FEET
102,411
115,102
457,584
675,097
-
675,097
4Q 2012
AVAILABILITY
1.8%
5.0%
10.2%
5.4%
100.0%
4.2%
HISTORICAL AVAILABILITY TRENDS
3Q 2012 2Q 2012 1Q 2012 4Q 2011
1.8% 3.6% 3.5% 9.3%
4.7% 6.3% 8.4% 17.4%
10.0% 10.8% 12.6% 14.5%
6.1% 6.6% 7.8% 9.6%
100.0% 100.0% 100.0% 100.0%
4.7% 5.1% 6.0% 7.4%
12
Rental Rates Construction Vacancy

FOURTH quarter 2012
STREAM REALTY PARTNERS, L.P.
tremendous activity and should both be nearing 100% leased by
delivery. Given the incredibly strong Class A fundamentals, we
expect for a large majority of the projects moving forward in the
Energy Corridor to perform very well in 2013.
INVESTMENT SALES
• DRA Advisors purchased 17000 Katy Freeway during the
quarter on a 8.8% cap. The 174,521 square foot building is
100% leased to Mustang Engineering.
• Reserve at Park Ten was purchased by CapLease for
approximately $45 MM. The building is 100%, with lead
tenant WorleyParsons in approximately 87% of the building.
Development
• Principal and Trammel Crow plan to break ground during the
first two weeks of the year on the 546,372 square foot Class
AA speculative building at Eldridge and I-10. The building
is quoting $28.00 per square foot NNN and has reportedly
been having significant pre-leasing interest.
• Mac Haik broke ground during the quarter on Energy Tower
III which is a 428,831 square foot Class A office development
at I-10 and Kirkwood. The speculative development is
expected to deliver in February 2014 and is directly adjacent
to the new Embassy Suites. The office tower has recently
taken quoted rates from $24.00 per square foot NNN to
$24.50 per square foot NNN.
• Lincoln Property is under construction on Energy Crossing
II and the building is expected to deliver in August of 2013.
Modec International pre-leased four floors, taking the
building to 68% pre-leased. The 321,508 development is
marketing available space at $23.00 per square foot NNN.
• Moody Rambin is marketing 135,716 square feet of value
office space on behalf of Myers Crow at Mason and I-10,
directly west of the Energy Corridor. The building parks
6 per 1000, is quoting $16.90 per square foot NNN and is
expected to deliver in May.
DEALS IN THE MARKET
TENANT SQUARE FEET EXPIRATION
Technip
StatOil
IHS
Air Liquide
Swift Energy
URS
BASF
Jacobs Engineering
CH2M Hill
Intermoor
Houston Offshore
Employer Flexible
Tema Oil & Gas
650,000
500,000
300,000
220,000
200,000
130,000
115,000
80,000
60,000
60,000
50,000
30,000
25,000
2014
2014
2013
2015
2014
2014
2014
2013
2013
2014
2015
2014
2014
LEASING ACTIVITY
TENANT
SQUARE FEET BUILDING
COP (Murphy sublease)
Modec International
Expro Americas
Deep Gulf Energy
Multiphase Solution Kenny
145,000
127,000
34,000
18,000
16,000
16290 Park Ten
Energy Crossing II
738 Highway 6
738 Highway 6
Park Ten Plaza
FORECAST
Expectations were high among landlords in the Energy
Corridor going into 2012 and the submarket exceeded those
expectations. In 2013, we expect for tenant’s that are interested
in upgrading their space to continue the trend of pre-leasing
space in developments currently under construction. This is in
turn appears to be leading up to a challenging year for Class
B buildings as they deal with losing major tenants to new
developments. Overall, the fundamentals in the Energy Corridor
should continue to heavily favor landlords in 2013, a trend that
doesn’t look to be changing soon.
TIMBERWAY ONE
13

GALLERIA/UPTOWN
F A C T S
SQUARE FEET OF
OFFICE SPACE
19
MILLION
HOME TO OVER
2,000COMPANIES
CENTRALLY LOCATED IN HOUSTON
BETWEEN
3
SUBMARKETS, CBD,
ENERGY CORRIDOR &
WESTCHASE
“Since the demand for Class A, tier
I space is dramatically outpacing
supply, we expect for rates in this
quality of product to continue to
increase.”
2200 POST OAK
The fourth quarter in the Galleria yielded
different results for different buildings. One of
the most compelling trends that has developed
over the last 24 months in the Galleria is the flight
to quality demand. While this is one of the most
commonly used terms in real estate vernacular, it
is clearly apparent across Uptown. Class A, tier I
space finished the fourth quarter with a vacancy
rate of 4.69%. On the other hand, Class A, tier
II and Class B vacancies stood at 13.8% and
18.2% respectively. Additionally, the differential
between quoted rents of Class A, tier I buildings
and Class A, tier II buildings ranges from 20.0%
- 35.0%.
Another statistic that cannot be ignored is the
lack of available space at Williams Tower and Four
Oaks Place. Between these two projects, which
represents approximately 3,054,571 square
feet of rentable space or 16.2% of the Galleria
submarket, there is only 25,655 square feet of
S T A T I S T I C S
PRODUCT TYPE
Class A – Tier I
Class A – Tier II
Class B
Total – Competitive Investor Owned Properties
Total – Owner User Properties
Overall Investment Grade Inventory
INVENTORY
5,105,322
9,904,399
3,544,621
18,554,342
283,512
18,837,854
AVAILABLE
SQUARE FEET
239,626
1,363,648
646,303
2,249,577
-
2,249,577
4Q 2012
AVAILABILITY
4.7%
13.8%
18.2%
12.1%
0.0%
11.9%
HISTORICAL AVAILABILITY TRENDS
3Q 2012 2Q 2012 1Q 2012 4Q 2011
6.3% 7.1% 7.7% 8.7%
11.1% 12.2% 12.7% 10.7%
13.3% 13.3% 14.6% 15.7%
10.2% 10.9% 11.7% 11.0%
0.0% 0.0% 0.0% 0.0%
10.0% 10.8% 11.5% 10.8%
14
Rental Rates Construction Vacancy

FOURTH quarter 2012
STREAM REALTY PARTNERS, L.P.
direct space available. That equates to an impressive 99.2%
occupancy rate. With almost no vacancy in the highest quality
buildings that the Galleria has to offer, rents for comparable
space continued to be on a sustainable path of appreciation.
Over the last 12 months, quoted rents in Williams Tower and
Four Oaks Place have increased approximately 16.67%.
While the Galleria contains almost 19.0 million square feet of
office space, it’s very relevant to understand the bifurcation
between demand for high-end Class A space and everything
else. These statistics provide the most compelling support for
the fact that the Galleria and Houston as a whole, is driven by
Class A demand. Since the demand for Class A, tier I space is
dramatically outpacing supply, we expect for rates in this quality
of product to continue to increase.
INVESTMENT SALES
The Galleria saw a lot of investment sales activity during the fourth
quarter. Below is a list of deals on the market in the Galleria.
• Williams Tower is on the market via JLL. The 1,480,000
square foot building is expected to set the record price in the
Galleria. The property is currently 99% leased to a number
of large tenants, including The Williams Companies, Rowan
Companies, Hines, Quanta Services, CBRE and Cadence
Bancorp. Hines REIT owns the property.
• Parmenter Realty Partners is selling 2200 West Loop through
HFF. The 201,721 square foot property is currently 88%
leased and provides for an opportunity to raise rents and
stabilize the building. Parmenter acquired 2200 West Loop
in January 2012.
DEALS IN THE MARKET
TENANT SQUARE FEET EXPIRATION
Amegy Bank
DCP Midstream
Goodman Manufacturing
LEASING ACTIVITY
TENANT
Bechtel
DataCert
Vantage Drilling
Mitsni
Worldwide Machinery
165,000
Nov-16
90,000
Sep-13
60,000
Apr-14
SQUARE FEET BUILDING
440,002 3000 Post Oak
50,000 3009 Post Oak
50,000 777 Post Oak
20,000 1300 Post Oak
15,000 2200 Post Oak
FORECAST
With new construction entering the Galleria for the first time
in 30-years, rental rates have reached an all-time high. For the
first time in almost four years, local and regional demand is
increasing, which will add to the bullish fundamentals. Demand
is expected to continue to outpace supply for Class A space
and rents should continue to rise. The Galleria should be a great
market for landlords into the foreseeable future.
TWO RIVERWAY
15

GREENWAY PLAZA
F A C T S
SQUARE FEET OF
investment grade
office space
9.9
M I L L I O N
boasts over
600,000
square feet of retail space
4
miles west of the cbd
along us-59
“When also taking into account the
abundance of multi-family projects
under construction and plans
for mixed-use developments along
Greenway’s main artery, Richmond
Avenue, the submarket is poised for
a strong start in 2013.”
3120 SOUTHWEST FREEWAY
Greenway ended the year with total availability
of 8.0%, marking two consecutive quarters
of modest negative absorption. Class A, tier
I inventory accounted for the majority, with
over 60,000 square feet coming available.
Invesco completed its restack at 11 Greenway
in October, bringing its former space on
the 23rd and 24th floors to the market and
Network Appliance vacated the 9th floor of
Phoenix tower in December, creating a 50,000
square foot block at the recently-traded asset.
However, there is a pipeline of large Greenway
transactions for 2013 and a number of tenants
waiting to snatch up the few remaining large
blocks of space. The rumors of Occidental
Oil & Gas’s renewal and expansion in
Greenway Plaza seem to be coming to
fruition, with the company expected to sign
a long-term extension and expansion totaling
approximately 850,000 square feet across the
S T A T I S T I C S
PRODUCT TYPE
Class A – Tier I
Class A – Tier II
Class B
Total – Competitive Investor Owned Properties
Total – Owner User Properties
Overall Investment Grade Inventory
INVENTORY
4,298,631
1,548,048
2,376,305
8,222,984
765,188
8,988,172
AVAILABLE
SQUARE FEET
242,133
243,966
232,107
718,206
0
718,206
4Q 2012
AVAILABILITY
5.6%
15.8%
9.8%
8.7%
0.0%
8.0%
HISTORICAL AVAILABILITY TRENDS
3Q 2012 2Q 2012 1Q 2012 4Q 2011
4.1% 3.2% 3.8% 6.8%
16.2% 16.5% 16.8% 17.6%
10.2% 10.6% 12.1% 12.7%
8.2% 7.8% 8.6% 10.5%
0.0% 0.0% 0.0% 0.0%
7.5% 7.2% 7.9% 9.6%
16
Rental Rates Construction Vacancy

FOURTH quarter 2012
STREAM REALTY PARTNERS, L.P.
Greenway Plaza complex. Additionally, Camden Property Trust is
in final negotiations to relocate and sign a long-term deal at 11
Greenway, taking the block of 87,000 square feet off the market
almost immediately after it became available. Lastly, Direct
Energy is expected to expand into all of UHY Advisor’s 93,000
square feet at 12 Greenway which will become available in March
after UHY relocates to America Tower, 2929 Allen Parkway.
Class A, tier II and Class B product both finished 2012 without
posting a single quarter of negative absorption, proving how
the strong fundamentals of Greenway’s tier I product has had
a trickle-down-effect on other asset classes. The two subsets of
properties realized 41 and 46 basis points of positive absorption,
respectively, signing a number of transactions including Wylie
and Associates leasing 14,000 square feet at 1 Greenway Plaza
on the 11th floor.
INVESTMENT SALES
• Phoenix Tower, 3200 Southwest Freeway, was purchased
by Parkway Properties in December for $123.8 million, or
$197.76 per square foot. Parkway purchased the 626,000
square foot, Class A asset from Franklin Street Properties.
• 3555 Timmons traded in November for $36.7 million, or
$162.46 per square foot. Unilev acquired the 225,895 square
foot asset from Great Point Investors, which is currently
97.6% occupied.
DEVELOPMENT
• Midway Companies owns 4.5 acres at the southwest corner
of Wakeforest and Richmond, planned to be the future site of
a 16-story, 240,000 square foot office building. The project,
named Levy Park, requires 50% pre-leasing to break ground,
and will include ground-floor retail and a two-story gym.
• PM Realty Group and partner Solvay have 5 acres at the
southeast corner of Buffalo Speedway and Richmond which
is proposed to be a 15-story, 350,000 square office building.
Longer-term plans for the land include demolishing the
existing Solvay headquarters, built in 1992, to make way for
a 300-room hotel.
• The Morgan Group is under construction on its new multifamily
project located at the northeast corner of Richmond
and Cummins, building a four-story project with 341 units,
replacing the former Central Presbyterian Church. The
project is expected to deliver in early 2013.
• PM Realty Group and partner INDURE Fund have broken
ground on a 40-story mixed-use project consisting of 250
luxury apartments and 12,500 square feet of ground-floor
retail. The project is located at the northeast corner of West
Alabama and Weslayan and is expected to be delivered in
2014.
FORECAST
Overall, Greenway remains one of Houston’s most desired
submarkets, evidenced by major tenant’s growth and long-term
commitments. When also taking into account the abundance of
multi-family projects under construction and plans for mixed-use
developments along Greenway’s main artery, Richmond Avenue,
the submarket is poised for a strong start in 2013.
DEALS IN THE MARKET
TENANT SQUARE FEET EXPIRATION
Occidental Oil & Gas
Cadence Bank
Camden Property Trust
Vanco Energy Company
FKP Architects
LEASING ACTIVITY
TENANT
Wylie & Associates
Occidental Oil & Gas
Gulf Publishing
Revenew
The Judge Group
Veterans Evaluation Services
The Production Companies
Richard Dally Law Firm
850,000
100,000
87,000
38,000
33,000
SQUARE FEET
14,156
11,475
9,948
7,320
2,674
2,471
2,098
1,212
2016
2Q 2013
2015
2015
2015
BUILDING
1 Greenway
11 Greenway
2 Greenway
9 Greenway
9 Greenway
3000 Richmond
1 Greenway
3000 Richmond
17

INNER LOOP
F A C T S
Houston’s
most affluent
neighborhoods
4
Out of ten
23 Multi-family
projects
Centrally located IN HOUSTON
3
BETWEEN
SUBMARKETS: CBD,
GALLERIA &
GREENWAY PLAZA
“New development in the area
is currently focused on multifamily
projects to justify the
costs of land and construction,
although rumors of smaller
boutique office buildings are
starting to surface.”
The Bellevue
The Inner Loop submarket remained almost
completely unchanged from an occupancy
standpoint during the fourth quarter, with total
availability increasing by only 1 basis point. Class
A availability increased 5 basis points, although
the subset signed a number of small transactions,
including 5,000 square feet across three deals at
The Campanile East. However, 3355 W Alabama’s
occupancy decreased from 98% to 92% after
five tenants below 2,500 square feet vacated the
recently-purchased asset, accounting for almost all
of the negative absorption within the submarket.
Class B product continues to benefit from the lack
of options and rising Class A rental rates, realizing 8
basis point of positive absorption to finish the year.
Norfolk Tower and 4203 Yoakum executed three
transactions totaling 9,000 square feet, leading the
subset in activity.
Although the submarket did not make any large
moves this quarter, market fundamentals are
S T A T I S T I C S
PRODUCT TYPE
Class A
Class B
Total – Competitive Investor Owned Properties
Total – Owner User Properties
Overall Investment Grade Inventory
INVENTORY
3,181,746
1,228,493
4,410,239
1,226,464
5,636,703
AVAILABLE
SQUARE FEET
298,351
86,208
384,559
0
384,559
4Q 2012
AVAILABILITY
9.4%
7.0%
8.7%
0.0%
6.8%
HISTORICAL AVAILABILITY TRENDS
3Q 2012
2Q 2012
9.3%
9.7%
7.1%
7.5%
8.7%
9.1%
0.0%
0.0%
6.8%
7.1%
18
Rental Rates Construction Vacancy
*The Inner Loop submarket is a newly reported territory by Stream
and therefore we do not have extensive historical data at this time.

FOURTH quarter 2012
STREAM REALTY PARTNERS, L.P.
strong and overall availability is well below the 10.0% historical
average. New development in the area is currently focused on
multi-family projects to justify the costs of land and construction,
although rumors of smaller boutique office buildings are starting
to surface.
Class A assets continue to take advantage of their ability to push
rents by investing in capital improvements to attract tenants. For
example, The Bellevue, located at 2323 S Shepherd, recently
completed its final phase of extensive renovations consisting of
a new main lobby and landscaping. Ownership will now focus on
securing a retail tenant for the first floor to increase the asset’s
amenity base.
2001 Kirby continues to plan renovations in anticipation of BBVA
Compass’ relocation in early 2013 to 2200 Post Oak, the new
318,000 square foot Class A trophy asset being developed in
the Galleria. BBVA Compass is expected to keep a first floor
presence at the building but extensive renovations are expected
in the first floor lobby as well as the common areas of the floors
which will be vacated. The 1968 vintage asset still commands the
highest rental rate in the Inner Loop submarket but will need to
backfill approximately 54,000 square feet of space.
DEVELOPMENT
• GID Urban Development Group is under construction
on The Sovereign, a 290-unit, twenty-one-story luxury
apartment tower which is part of the future 24-acre mixeduse
development by GID, named Regent Square. The tower,
located along Allen Parkway, will include a 30,000 square
foot amenity deck on the 8th floor including a pool, outdoor
fitness area and private gardens.
• The Finger Companies is under construction on the 431-unit,
six-story apartment complex located at 2900 West Dallas to
the east of the Whole Foods Market and south of the AIG
campus. The project is expected to deliver 1Q 2013.
• The Dinerstein Companies is under construction on The
Millennium High Street, a Class A+ multi-family project that
will include 340 units and 25,000 square feet of first floor
retail space. The project, located near the popular Highland
Village, is expected to deliver in April of 2013.
• An undisclosed energy company has purchased the 1.3-
acre YMCA site located near the intersection of Waugh and
Memorial.
DEALS IN THE MARKET
TENANT SQUARE FEET EXPIRATION
Ajilon Professional Staffing
Plavnicky & Marshall
Reva Energy
Robert J. Piro
Parkhurst Resources
HT Staffing
LWC Investments
6,000
5,000
2,500
2,200
1,800
1,300
1,300
2013
2013
2013
2013
2013
2013
2013
LEASING ACTIVITY
TENANT
SQUARE FEET BUILDING
Houston Magazine
Sacks Law Firm
Draxis Energy Management
CMG, Inc.
Area Texas Realty & Management
SC Trading
3,113
2,497
2,191
2,004
1,345
615
4203 Yoakum
The Bellevue
The Campanile East
The Campanile East
Norfolk Tower
The Campanile East
FORECAST
The Inner Loop’s market fundamentals and lack of new
development will allow owners to continue pushing rental rates
during 2013, with new high-water marks expected by Class A
assets which are completing renovations.
THE BELLEVUE LOBBY
19

NORTH BELT
F A C T S
SQUARE FEET OF
CLASS A and B
INVENTORY
11
MILLION
Highest concentration of hotel rooms
in Houston with
9,600
HOTEL ROOMS
Miles north of the CBD 14
GATEWAY I & II
“With the fastapproaching
departure of
Exxon and a
few other large
tenants from
the North Belt,
expect landlords
to remain
focused on
tenant retention
during the
coming year.”
During the fourth quarter, the North
Belt saw the overall vacancy rate
increase from 12.6% to 13.7%. For
a third consecutive quarter, statistics
for Class A, tier I buildings remained
unchanged, with only 8,500 square feet
vacant at Two and Four Greenspoint
Plaza. The vacancy rate for Class A, tier
II product witnessed a slight increase
to 8.2% when two availabilities of
less than 3,500 square feet became
available at World Houston Plaza.
The Class B sector also experienced
a quarter with negligible changes in
occupancy. These buildings closed out
the year with a vacancy rate of 25.3%,
up from 25.2% the previous quarter.
First Financial Group of America
vacated 17,838 square feet at 515 N.
Sam Houston Parkway and moved into
25,506 square feet at 11811 North
Freeway. While the vacancy rate for
Class B buildings experienced little
change, there is still activity across the
sector. Competition amongst Class
B buildings is fierce as landlords are
focused on bolstering occupancy and
poaching tenants from competing
properties.
The most notable change during the
quarter was witnessed with Value
Office product. The vacancy rate
across these buildings rose significantly
from 6.1% during the third quarter to
18.5% at the end of the fourth quarter.
The main contributor to this rise in
vacancy was IKON Office Solutions,
which vacated 78,895 square feet at
810 Gears Road and whose subtenant,
Sigue, vacated 35,790 square feet at
The Reserve at Greens Crossing.
S T A T I S T I C S
PRODUCT TYPE
Class A – Tier I
Class A – Tier II
Class A – Value Office
Class B
Total – Competitive Investor Owned Properties
Total – Owner User Properties
Overall Investment Grade Inventory
INVENTORY
2,564,942
2,604,927
981,604
4,415,967
10,567,440
577,642
11,145,082
AVAILABLE
SQUARE FEET
8,501
214,623
181,974
1,116,405
1,521,503
0
1,521,503
4Q 2012
AVAILABILITY
0.3%
8.2%
18.5%
25.3%
14.4%
0.0%
13.7%
HISTORICAL AVAILABILITY TRENDS
3Q 2012 2Q 2012 1Q 2012 4Q 2011
0.3% 0.3% 0.3% 6.5%
8.1% 8.8% 9.5% 7.2%
6.1% 12.9% 12.9% 12.9%
25.2% 26.0% 23.7% 25.7%
13.2% 14.3% 13.5% 15.3%
0.0% 0.0% 0.0% 0.0%
12.6% 13.6% 12.9% 14.5%
20
Rental Rates Construction Vacancy

FOURTH quarter 2012
STREAM REALTY PARTNERS, L.P.
2013 is poised to be a challenging year for the North Belt. In
addition to the vacancy left by IKON, Helix Energy Solutions’
92,000 square feet is available on a direct basis in August,
and Noble Energy is marketing almost 400,000 square feet of
sublease space available in September. Soon thereafter in 2014,
Exxon will begin relocating to its campus near The Woodlands.
INVESTMENT SALES
• Boxer Property purchased a three building portfolio totaling
235,766 square feet located at 507, 519 and 523 N. Sam
Houston Pky W. The Class B properties have an average
occupancy rate of 52.8%. The asking price for the portfolio
was $37.00 per square foot.
• A family trust purchased 15109 Heathrow Forest Parkway,
located in the Interwood Business Park. The 63,621 square
foot building is 88.4% leased, primarily to four different
branches of the General Services Administration.
• Greenspoint Park I, II and III have been pulled from the market.
The three building portfolio consists of approximately
350,000 square feet of Class B product that is 76.8% leased
on average.
• Heron Lakes Office Park has also been pulled from the
market. The seven building portfolio, located just west
of the North Belt with frontage on Beltway 8, consists of
314,000 square feet built between 2001 and 2008, with
current a current occupancy rate of 93% across the portfolio.
for other tenants to focus on the North Belt and the opportunity
to move into Class A space, which has been very hard to come by
in the past.
DEALS IN THE MARKET
TENANT SQUARE FEET EXPIRATION
Southwestern Energy
Swift Energy
URS
Suncoast Post Tension
Murex Petroleum
Employer Flexible
Invista
LEASING ACTIVITY
TENANT
National Trench Safety
Laurin Maritime
Posco Engineering & Construction
BOC International
SQUARE FEET
315,000
200,000
130,000
35,000
30,000
30,000
30,000
11,243
5,909
1,283
897
BUILDING
2013 & 2014
2Q 2015
1Q 2014
3Q 2013
2Q 2014
2014
4Q 2013
260 N. Sam Houston Pky E.
Gateway I
12600 Northborough
Cross Continents
DEVELOPMENT
• GE Energy has completed construction on a 50,000 square
foot oil and gas training facility at its North Belt campus,
located at 3300 N. Sam Houston Pky E.
• Sarofim Realty Advisors is marketing Northbelt Office Center
VI for pre-lease. The 135,000 square foot, Class A value
office building will offer Beltway frontage just west of I-45.
• Hines and Pinto Realty Partners have formed a joint venture
with investment firm Kohlberg Kravis Roberts & Company to
develop Pinto Business Park. The 971-acre master-planned
park is located at the southwest corner of Beltway 8 and I-45
and is anchored by Sysco Food’s 600,000 square foot office
and distribution facility. The partnership plans to focus
on build to suit opportunities and land sales for corporate
development.
• Halliburton is constructing a 100,000 square foot building
located on the south side of Beltway 8 at Milner Road that is
scheduled to deliver during the first quarter of 2013.
FORECAST
With the fast-approaching departure of Exxon and a few other
large tenants from the North Belt, expect landlords to remain
focused on tenant retention during the coming year. Rental
rates may dip as attempts are made to backfill vacancy, but look
CROSS CONTINENTS
21

WESTCHASE
F A C T S
Miles west of cbd
17
M i l e s
Over
1,500
Companies
28
Residents living in
Westchase Thousand
“With only one block of
space of 50,000 square feet
currently available and a
healthy pipeline of deals
in the market, the office
fundamentals in Westchase
will continue to be strong
for the foreseeable
future.”
TOWERS AT WESTCHASE
During the fourth quarter of 2012, the Westchase submarket
experienced 70,914 square feet of positive absorption, which
decreased the overall vacancy rate to 9.8%. The effective
vacancy rate at the close of the quarter increased slightly from
11.5% to 11.7% as the inventory of sublease space increased by
106,000 square feet.
Class A, tier I sector absorbed 7,000 square feet and witnessed
an increase of sublease inventory of 33,000 square feet. The
overall vacancy rate for tier I is now 1.5%; combined with
sublease space, the effective vacancy rate is 3.1%. Smith
Seckman & Reid placed their 33,000 square feet on the sublease
market at Westchase Park; as their new management wants a
different location. 2500 Citywest renewed and expanded Sabic
Americas (30,000 square feet).
The Class A, tier II buildings experienced positive absorption of
43,772 square feet moving the vacancy rate to 8.3%. Sublease
inventory increased by 60,000 square feet increasing the tier
II effective vacancy rate to 12.3%, up from 11.9%. Englobal
placed 22,000 square feet on the sublease market at 6051 N.
Course and Gulfmark Offshore added 17,555 square feet at
Westchase Corporate Center to sublease inventory. 10333
S T A T I S T I C S
PRODUCT TYPE
Class A – Tier I
Class A – Tier II
Class B
Total – Competitive Investor Owned Properties
Total – Owner User Properties
Overall Investment Grade Inventory
INVENTORY
3,809,346
3,416,605
5,496,284
12,722,235
2,137,056
14,859,291
AVAILABLE
SQUARE FEET
57,315
284,677
1,117,232
1,459,224
0
1,459,224
4Q 2012
AVAILABILITY
1.5%
8.3%
20.3%
11.5%
0.0%
9.8%
HISTORICAL AVAILABILITY TRENDS
3Q 2012 2Q 2012 1Q 2012 4Q 2011
1.7% 2.3% 8.4% 8.4%
9.6% 10.2% 14.2% 15.5%
20.9% 21.0% 20.7% 22.6%
12.1% 12.5% 15.3% 16.5%
0.0% 0.0% 0.0% 0.0%
10.3% 10.7% 13.2% 14.2%
22
Rental Rates Construction Vacancy

FOURTH quarter 2012
STREAM REALTY PARTNERS, L.P.
Richmond signed renewals with Robertson & Anschutz (10,254
square feet), Carisal Management LLC (3,413 square feet);
renewals and expansions with Environ International Corporation
8,098 square feet and Pape Dawson Engineers 7,538 square
feet; and a new deal with Morson International (2,245 square
feet) and Rongsheng North America (1,256 square feet). Ecosys
signed a new lease at Columbia Centre for 3,063 square feet.
The Class B sector had absorption of 19,507 square feet and
saw sublease inventory increase by roughly 14,000 square feet.
As a result, the effective vacancy rate increased from 22.2% to
22.9%. American Express placed 34,760 square feet on the
sublease market at 2901 Wilcrest. Jacobs Engineering leased
20,000 square feet at Oak Park Office Center taking the building
to 100%. Othon Consulting Engineers leased 18,065 square feet
at 11111 Wilcrest, Jordan & Skala Engineers leased 7,000 square
feet at 2929 Briarpark; and Benefit Resources leased 1,136
square feet at 2077 Gessner.
INVESTMENT SALES
• Clarion purchased Westchase Park from Simmons Vedder.
Located at 3700 W. Sam Houston Parkway, the 272,000
square foot building is 97.2% leased.
• Briar Forest Crossing, located at 1300 W. Sam Houston Pky,
is listed for sale with HFF. The 94,400 square foot, Class B
building is currently 72.9% leased.
DEVELOPMENT
• Granite Properties has topped out their new 300,000 square
foot, twelve-story building at 3141 Briarpark Drive. The
Class A building is called Granite Briarpark Green and they
expect delivery in July 2013.
• Behringer Harvard broke ground on Two Briarlake Plaza with
Samsung Engineering as the lead tenant for 159,000 square
feet in the new 340,000 square foot high-rise office building
adjacent to One Briarlake Plaza.
FORECAST
The Westchase submarket fundamentals remain very healthy,
with continued gains in absorption; however, keep an eye on
sublease inventory which has been trending up the past twelve
months. With only one block of space of 50,000 square feet
currently available and a healthy pipeline of deals in the market,
the office fundamentals in Westchase will continue to be strong
for the foreseeable future.
DEALS IN THE MARKET
TENANT SQUARE FEET EXPIRATION
Statoil
IHS
Air Liquide
URS
EnerVest
Dow Chemical
Litton Loan Services
Bury + Partners
CH2M Hill
Intermoor
Paychex
Employer Flexible
Schweitzer Engineering
Goldman Sachs
LEASING ACTIVITY
TENANT
Sabic Americas
Jacobs Engineering
Othon Inc. Consulting Engineers
Robertson & Anschutz
Environ International Corporation
Pape Dawson Engineers
Jordan & Skala Engineers
Carisal Management LLC
Ecosys
Morson International
Rongsheng North America
Benefit Resources
Ann Tran Realty
500,000
300,000
220,000
120,000
100,000
100,000
75,000
60,000
60,000
60,000
30,000
30,000
25,000
25,000
SQUARE FEET
30,000
20,000
18,065
10,254
8,098
7,538
7,000
3,413
3,063
2,245
1,256
1,136
890
BUILDING
Q2 2014
Q2 2014
Q4 2015
Q4 2012
Q3 2013
Q4 2013
Q3 2012
Q4 2014
Q4 2013
Q2 2014
Q2 2013
Q2 2014
Q1 2013
Q1 2013
2500 Citywest
Oak Park Office Center
11111 Wilcrest
10333 Richmond
10333 Richmond
10333 Richmond
2929 Briarpark
10333 Richmond
11011 Richmond
10333 Richmond
10333 Richmond
2077 Gessner
3000 Wilcrest
PINNACLE WESTCHASE
23

WESTWAY
F A C T S
SQUARE FEET OF CLASS A
AND B INVENTORY
2.5
M I L L I O N
15
Miles northwest
of the Central
Business District
6
Miles north of the
Energy corridor
“Expect development talks
to continue, however, until
substantial new inventory is
actually delivered, landlords
will continue taking advantage
of favorable fundamentals in
Westway.”
WESTWAY ONE
Westway’s most notable news in the fourth
quarter of 2012 came courtesy of the submarket’s
most recent Class A development project. 8 West
Centre, scheduled to finish construction in July
of 2013, has executed a 118,638 square foot
lease with Helix Energy Solutions. In regards to
Westway’s existing inventory, the submarket
experienced 30 basis points of positive
absorption, decreasing overall availability to an
all-time low of 3.0%.
Class A availability remained tight, but the
submarket did get back a 2,558 square foot
suite, bringing Westway’s Class A availability to
0.2%. The aforementioned suite was vacated by
a tenant involved in a company merger. Being the
only Class A vacancy in the submarket, the space
is not expected to remain on the market for long.
Originally a speculative development, 8 West
Centre was projected to increase the amount
of Class A inventory and available space upon
S T A T I S T I C S
PRODUCT TYPE
Class A
Class B
Total – Competitive Investor Owned Properties
Total – Owner User Properties
Overall Investment Grade Inventory
INVENTORY
1,165,904
1,052,864
2,218,768
238,400
2,457,168
AVAILABLE
SQUARE FEET
2,558
40,844
43,402
30,000
73,402
4Q 2012
AVAILABILITY
0.2%
3.9%
2.0%
12.6%
3.0%
HISTORICAL AVAILABILITY TRENDS
3Q 2012 2Q 2012 1Q 2012 4Q 2011
0.0% 5.5% 5.5% 5.5%
4.9% 4.8% 8.6% 8.6%
2.3% 5.2% 7.0% 7.0%
12.6% 12.6% 12.6% 0.0%
3.3% 5.9% 7.5% 6.3%
24
Rental Rates Construction Vacancy

FOURTH quarter 2012
STREAM REALTY PARTNERS, L.P.
delivery. Even with the recent 10-year lease signed by Helix
Energy Solutions the building’s remaining 109,362 square feet
would bring Class A availability to 8.03%. However, rumors are
circulating that Cameron has agreed to lease the remaining
109,362 square feet. This would result in 8 West Centre being
100% leased prior to delivery.
Class B inventory witnessed 1.0% of positive absorption in the
4th quarter as a result of a 10,928 square foot lease executed at
2930 Beltway 8. Throughout 2012, Class B assets benefited from
the limited availabilities of Class A space and resulted in 49,923
square feet of positive absorption.
From its roots as a small office park, Westway has quickly
become a dynamic submarket. Since 2011, when GE Oil & Gas
executed 230,000 square feet of leases at DNA Westway II & III,
Westway’s overall office availability has never been higher than
7.5%. A multitude of other well-known companies call Westway
home, such as Cameron, AMEC Paragon, Traveler’s Insurance,
NOV, Allstate Insurance, Seadrill, and most recently Helix Energy
Solutions.
FORECAST
Due to the continued constrain on supply and the recent success
experienced at 8 West Centre, Westway has maintained its
position as a healthy office market. Expect development talks
to continue, however, until substantial new inventory is actually
delivered, landlords will continue taking advantage of favorable
fundamentals in Westway. Rents are projected to grow and tenant
concession packages will be slim as leases roll in the market.
DEALS IN THE MARKET
TENANT SQUARE FEET EXPIRATION
URS
Cameron
LEASING ACTIVITY
TENANT
135,000
110,000
SQUARE FEET
BUILDING
2014
2013
INVESTMENT SALES
• Beltway 8 Corporate Centre II continues to be marketed by
CBRE. The 101,000 square foot Class A asset built in 2003
is 100% leased with NOV occupying 76,000 square feet
through September 2020.
Helix Energy Solutions
Canon
118,638
10,928
8 West Centre
2930 Beltway 8
DEVELOPMENT
• CORE Real Estate continues construction on 8 West Centre,
the 228,000 square foot speculative office building at 3505
W Sam Houston Parkway. The four story tilt-wall building
is expected to deliver in July of 2013 and is currently 52%
leased.
• Transwestern continues to market a 9-acre development site
at the Northwest corner of Beltway 8 and Clay Road. The
developer does not plan on building spec, thus will need a
tenant in tow to begin construction. The current plan calls
for two buildings totaling 650,000 square feet with two 8
level parking structures.
• CBRE is currently marketing a Class A office building for
a proposed 100,000 square feet at 5100 Westway Park
Boulevard. The proposed building would include two 50,000
square foot floor plates.
• On behalf of MetroNational, NewQuest continues to market
the 32 acres northwest of the Beltway 8/Corporate Centre
Drive intersection. NewQuest is marketing the land as an
ideal location for a Class A office building.
8 WEST CENTRE
25

THE WOODLANDS
F A C T S
residents in
The woodlands
97
thousand
texas’ #1 mater-planned community
with over
28 ACRESOF HOMES
25
miles north of the
Cbd along i-45
“Based upon the continued
demand and expectation of
what the Exxon relocation will
bring, we anticipate most of the
speculative office space being
absorbed by the time the projects
are complete. ”
THE RESERVE AT SIERRA PINES PHASE II
The Woodlands submarket continues to strengthen
although leasing velocity is beginning to become
difficult to gauge since space is minimal, especially
within the class A product type. Overall vacancy
currently rests at just 2.8%. Class A product remains
to garner the most demand, as this subset has
now experienced 12 straight quarters of positive
absorption and only 6,516 square feet of available
space remains. Within both Class A and B space,
there are 11 blocks of space over 10,000 square
feet. There are three blocks of Class B space over
20,000 square feet.
The lack of space has caused some developers to
expedite their construction timing to meet tenant’s
requirements. In December, Howard Hughes
announced that Layne Christensen Company will
lease 51,000 square feet at their new development,
Hughes Landing, located to the east of Lake
Woodlands. The project was initially scheduled
to be complete in February 2014. The company
S T A T I S T I C S
PRODUCT TYPE
Class A
Class B
Total – Competitive Investor Owned Properties
Total – Owner User Properties
Overall Investment Grade Inventory
INVENTORY
1,625,544
3,340,489
4,966,033
2,100,406
7,066,439
AVAILABLE
SQUARE FEET
6,516
188,363
194,879
0
194,879
4Q 2012
AVAILABILITY
0.4%
5.6%
3.9%
0.0%
2.8%
HISTORICAL AVAILABILITY TRENDS
3Q 2012 2Q 2012 1Q 2012 4Q 2011
0.9% 2.7% 3.4% 4.6%
6.3% 8.8% 9.2% 10.0%
4.7% 7.0% 7.6% 8.6%
0.0% 0.0% 0.0% 0.0%
3.2% 4.9% 5.0% 5.7%
26
Rental Rates Construction Vacancy

FOURTH quarter 2012
STREAM REALTY PARTNERS, L.P.
needed to be open for business and relocate all their employees
from Kansas by September 2013. The developer has shortened
the construction period by five months by working 24 hours a
day, seven days a week. In addition to Howard Hughes, there
is currently 1.5 million square feet under construction, with 80%
currently committed across the five projects. Based upon the
continued demand and expectation of what the Exxon relocation
will bring, we anticipate most of the speculative office space
being absorbed by the time the projects are complete.
INVESTMENT SALES
• In 2008, Tetra Technologies built a 153,000 square foot
Class B office building at 24955 I-45 that they would own
and occupy. This is a six story office building with a parking
garage located on the west side of I-45 on the southern side
of The Woodlands. CBRE retained the listing from Tetra,
and US Realty Advisors bought the property on a 15 year
sale-lease back. The purchase price was approximately $286
per square foot on a 7.0% cap rate.
DEVELOPMENT
• Warmack & Co, LLC has signed a lease with Talisman Energy
for 150,000 square feet to begin construction on his next
new Class A project on his 35 acres located along Lake
Woodlands. The total size of this project is 300,000 square
feet and will offer 150,000 square feet of Class A office
space. Asking rates are $27.00 per square foot triple-net.
This is the same company performing the build-to-suit for
Repsol.
• Howard Hughes is under construction with their next Class
A project, 3 Waterway. This project is 90.0% pre-leased
and has been under construction for nine months. Nexeo
Solutions took 110,000 square feet, Waste Connections
took 50,000 and Energy Alloys signed last month for 35,000
square feet. Rates have just been increased to $30.00 per
square foot triple-net and completion is expected for June
2013.
• Howard Hughes has been approved for a 200,000 square
foot Class A office building in East Shore. This project will
break ground in the third quarter, with 25,000 square foot
floor plates and a structured parking garage. Rates will be
approximately $27.00 per square foot triple-net, delivering
February 2014. The project is 25% pre-leased.
• Stream Realty Partners also has plans for a second building
at The Reserve at Sierra Pines. The building will be
approximately 150,000 square feet over six floors with a
structured parking garage. Stream expects to break ground
in 2013.
• Anadarko is developing a 585,000 square foot office tower
directly to the west of their current 850,000 tower. The
building will be podium style building with 10 levels of
parking underneath 20 floors of office space. Completion is
expected in the first quarter 2014.
• Granite Properties has plans for a 200,000 square foot Class
A office building along Vision Park Boulevard, located in the
northern area of The Woodlands. This property will be eight
stories with a structured parking garage, quoting $24.00 per
square foot triple-net. They will need a tenant to pre-lease
50% of the building before breaking ground.
FORECAST
Expect for demand to remain extremely high for the foreseeable
future and for more supply to be announced in 2013. With Class
A space being very scarce, look for tenants to consider pre-leasing
for new development or potential build to suits.
DEALS IN THE MARKET
TENANT SQUARE FEET EXPIRATION
HMT
Common Resources
Stone Energy
Probe Resources
LEASING ACTIVITY
TENANT
Layne Christensen Company
EnerTech
Compass Bank
Afren Resources
SQUARE FEET
51,000
20,000
18,000
5,000
25,000
25,000
15,000
10,000
BUILDING
3Q 2013
4Q 2013
1Q 2014
1Q 2014
One Hughes Landing
25025 I-45
25111 Grogans Mill
Waterway Plaza II
THE RESERVE AT SIERRA PINES PHASE II
27

FOURTH QUARTER INDUSTRIAL SUMMARY
AVAILABLE
INDUSTRIAL
SPACE
12,583,750
SQUARE FEET
INDUSTRIAL
INVENTORY
255,150,719
SQUARE FEET
FOURTH QUARTER
INDUSTRIAL
AVAILABILITY
4.9
Percent
MAJOR HOUSTON
INDUSTRIAL
SUBMARKETS
SIX
OVERALL INVESTMENT GRADE INVENTORY
INDUSTRIAL
SUBMARKET
INVENTORY
AVAILABLE
SQUARE FEET
4 q 2 0 1 2
AVAILABILITY
NORTH
41,514,446
1,791,569
4.3%
NORTHWEST
83,925,818
3,174,960
3.8%
SOUTHWEST
41,195,759
2,319,325
5.6%
SOUTH
25,490,577
1,260,077
4.9%
SOUTHEAST
26,265,150
2,766,940
10.5%
EAST
36,758,969
1,270,879
3.5%
255,150,719
12,583,750
4.9%

.......
INDUSTRIAL SUBMARKETS
This map reflects the location of the industrial submarkets within
the greater Houston area. Up-to-date market statistics, recent
transactions, new development summaries and current market
trends can be found for each submarket on the following pages.
45
249
NORTH INDUSTRIAL
59
290
BELTWAY
8
NORTHWEST INDUSTRIAL
.......
....... EAST INDUSTRIAL
610
10
10
SOUTHWEST INDUSTRIAL
.......
610
....... SOUTHEAST INDUSTRIAL
59
45
90
BELTWAY
8
.......
SOUTH INDUSTRIAL
288

NORTH INDUSTRIAL
F A C T S
IAH RANK AMONGST
BUSIEST AIRPORTS
IN THE NATION FOR
INTERNATIONAL CARGO
1.8%
DECREASE IN VACANCY
OVER LAST 12 MONTHS
10
20
MILES NORTH OF THE
CBD
“Limited opportunities
for quality available
space and development
opportunities
in the adjacent
northwest submarket
have produced a
significant increase in
attention from users,
institutional investors
and developers.”
Overview
In the three months that followed record lows in vacancy rates, the north
Houston industrial submarket continued its impressive run of strong
leasing activity throughout 2012’s fourth quarter. Second largest in the
city, the north Houston industrial submarket benefits directly from the
growing energy industry and air freight markets. Its excellent access
to major thoroughfares such as Beltway 8, Highway 59, the Hardy Toll
Road and Interstate 45 make it convenient for users to receive shipments
and distribute product throughout the region. Due to supply constraints
and tough barriers of entry for development positions in the nearby
northwest submarket, north Houston has become the most active area
for developers in the city. Look for market fundamentals to shift over the
coming year as industrial projects continue to deliver throughout 2013.
Statistics
BAMMEL BUSINESS PARK
Though a slight increase of 60 basis points, the north Houston submarket
recorded growth in overall vacancy statistics for the first time since mid-
2009. Despite the escalating vacancy figures, market fundamentals
S T A T I S T I C S
PRODUCT TYPE
Flex
Small Distribution (Tenants in building 0-20,000 sf)
Medium Distribution (Tenants in building 20-50,000 sf)
Large Distribution (Tenants in building 50-100,000 sf)
Extra Large Distribution (Tenants in building >100,000 sf)
Total - Competitive Investor Owned Properties
Total - Owner User Properties
Overall Investment Grade Inventory
INVENTORY
4,284,966
7,835,702
8,036,723
4,947,099
4,200,400
29,304,890
12,209,556
41,514,446
AVAILABLE
SQUARE FEET
497,691
496,840
311,220
206,307
0
1,512,058
279,511
1,791,569
4Q 2012
HISTORICAL AVAILABILITY TRENDS
AVAILABILITY 3Q 2012 2Q 2012 1Q 2012 4Q 2011
11.6%
6.3%
3.9%
4.2%
0.0%
5.2%
2.3%
4.3%
12.1%
5.1%
1.2%
4.2%
0.8%
4.3%
2.2%
3.7%
13.6%
5.7%
2.7%
5.7%
2.5%
5.5%
3.8%
5.0%
15.7%
5.7%
6.5%
6.6%
2.6%
7.1%
4.3%
6.3%
18.8%
5.5%
5.2%
9.5%
2.6%
7.7%
2.3%
6.1%
30
Rental Rates Construction Vacancy

FOURTH quarter 2012
STREAM REALTY PARTNERS, L.P.
continue to remain strong, leaving 4.3% of the 41 million
square foot submarket vacant at the close of 2012. Flex space
experienced positive absorption, decreasing in vacancy by 50
basis points over the fourth quarter. Small distribution increased
its vacancy by 120 basis points and medium suffered a similar
fate, increasing in vacancy by 2.7%. Despite dynamic leasing
activity, large distribution remained statistically unchanged while
extra-large distribution space increased its occupancy to 100%.
Across the submarket, expect overall vacancy numbers and total
inventory to rise throughout 2013 as new product is delivered.
DEVELOPMENT
North Houston’s industrial submarket continues to lead the
region in active speculative development. Below are updates on
each of the projects currently under construction:
• Liberty Property Trust – Northwest Business Center
After delivering three buildings the previous quarter, one
additional building totaling 111,060 square feet remains
under construction in Liberty’s Northwest Business Center.
One rear-load and one front-load, these additions will be
the finishing touches to an already successful development.
Delivery is expected in the first quarter of 2013 with a
high percentage of the project already pre-leased. Upon
completion, the six building project will total 737,630 square
feet.
• Liberty Property Trust – Central Green
One rear-load building totaling 163,600 square feet remains
under construction in this 951,550 square foot project. There
are rumors of strong leasing activity but, as of the date of
this publication, no new deals have been announced.
• Prologis – NorthPark
After completing a 146,700 square foot building last quarter,
one cross-dock facility and a rear-load building totaling
282,360 square feet remain under construction. Upon its
delivery in mid-2013, Prologis will have a total of 1,196,648
square feet on the ground in the project, as well as available
acreage for build-to-suits.
• EastGroup – World Houston
Two side load facilities designed for either one or two tenants
totaling 101,553 square feet remain under construction in
EastGroup’s popular World Houston development. Once
a former golf course, EastGroup will have a combined
total of 2,571,167 square feet throughout the project with
several tracts available for future buildings or build-to-suit
developments.
• EastGroup – Beltway Crossing
One cross-dock 86,823 square foot building is currently
under construction. Upon completion, EastGroup’s Beltway
Crossing project will total 809,900 square feet.
• Clarion Partners – Kenswick Phase II
Two buildings totaling 133,250 square feet are scheduled
to commence during the first quarter of 2013. This project
is designed to cater to tenants utilizing the expanding
international air cargo freight terminal.
• DCT – Airtex
DCT is looking to ride the wave of development success they
experienced in the nearby northwest submarket and has
broken ground on a 267,133 square foot cross dock facility
near Highway 45. This building is the first phase in their new
Airtex project.
Approximately one million square feet of new product has recently
delivered or is nearing completion in Houston’s north submarket.
In addition, there are a number of institutional investors with
significant development positions including Avera and IDI who
both hold permit-ready plans. If demand quickly absorbs a majority
of the newly added space, look for a second wave of development
to immediately follow.
FORECAST
Limited opportunities for quality available space and development
opportunities in the adjacent northwest submarket have produced
a significant increase in attention from users, institutional investors
and developers. These factors, combined with air cargo demand
related to the Intercontinental Airport and the expanding energy
industry, will make the north Houston submarket a hotbed of
activity throughout 2013.
LEASING ACTIVITY
TENANT
Schneider Electric
Schlumberger
CED Astro
Petrustech
Globalexim Corporation
Ashton Sawing & Drilling
SQUARE FEET
62,235
40,000
35,467
16,800
10,500
9,800
BUILDING
14400 Hollister Rd
16580 Air Center Blvd
850 Greens Pky
5500 N Sam Houston Pky W
747 Kenrick Dr
5500 N Sam Houston Pky W
PROLOGIS IAH LOGISTICS
31

NORTHWEST INDUSTRIAL
F A C T S
Approximate amount
of the total industrial
inventory in Houston
is in the northwest
submarket
2.2%
DECREASE IN VACANCY
OVER LAST 12 MONTHS
33
Percent
10
MILES NORTHwest OF THE
CBD
“If landlords were not in a strong
position before, their immediate
future looks even brighter, as
demand continues to increase and
development is still being curbed by
a lack of available and functional
land.”
Overview
WESTGATE SERVICE CENTER
Despite setting the previous low vacancy
watermark in the third quarter, the northwest
Houston industrial submarket made even
larger strides to finish 2012. Several large
transactions helped bring overall vacancy
to 3.8%, which is hard to believe given the
almost 84,000,000 square feet of product
in this submarket. If landlords were not in
a strong position before, their immediate
future looks even brighter, as demand
continues to increase and development is
still being curbed by a lack of available and
functional land. Tenants searching for quality
space are hard-pressed to find a handful of
options as northwest Houston continues
to be “main and main” for a majority of
industrial users in this city. One of the major
S T A T I S T I C S
PRODUCT TYPE
Flex
Small Distribution (Tenants in building 0-20,000 sf)
Medium Distribution (Tenants in building 20-50,000 sf)
Large Distribution (Tenants in building 50-100,000 sf)
Extra Large Distribution (Tenants in building >100,000 sf)
Total - Competitive Investor Owned Properties
Total - Owner User Properties
Overall Investment Grade Inventory
INVENTORY
8,112,000
17,350,726
19,348,954
9,939,909
9,655,519
64,407,108
19,518,710
83,925,818
AVAILABLE
SQUARE FEET
760,294
820,454
723,649
230,138
402,395
2,936,930
238,030
3,174,960
4Q 2012
AVAILABILITY
9.4%
4.7%
3.7%
2.3%
4.2%
4.6%
1.2%
3.8%
HISTORICAL AVAILABILITY TRENDS
3Q 2012 2Q 2012 1Q 2012 4Q 2011
9.3% 9.4% 9.5% 11.2%
5.2% 5.9% 7.2% 7.5%
4.4% 5.2% 7.0% 8.3%
4.9% 4.4% 4.8% 5.1%
4.2% 6.2% 7.4% 4.9%
5.2% 5.9% 7.1% 7.4%
0.9% 1.0% 2.1% 1.6%
4.2% 4.8% 5.9% 6.0%
32
Rental Rates Construction Vacancy

FOURTH quarter 2012
STREAM REALTY PARTNERS, L.P.
thoroughfares in this submarket, Highway 290, is getting a major
overhaul, expanding lanes and increasing accessibility which will
be a nuisance in the immediate future but will be a huge benefit
long-term.
Statistics
The end of the year saw a flurry of activity as the northwest
industrial submarket lowered overall vacancy by 40 basis points,
an astonishing 2.2% lower than this time last year. With the
exception of flex and owner-user properties, which increased
10 basis points and 30 basis points respectively, every building
classification saw improvement over an already impressive third
quarter. The transaction high point in this submarket, which also
happens to be one of the largest new deals in the entire city, was
DB Schenker USA leasing 267,201 square feet at DCT’s Northwest
8 Distribution Center. The owner’s strategy of holding out for
one user worked as they were able to secure a credit tenant
for five years while leasing it less than six months after delivery.
This coupled with a few other new transactions helped lower
the large distribution classification to 2.3% vacant. A surge of
leasing activity dropped the medium distribution classification’s
vacancy 70 basis points to 3.7%, highlighted by both Veritrust
Corporation and Redco Distribution taking space at Silber Road
Business Park bringing it to 100% leased. The small distribution
product type also made headway lowering to 4.7% vacant while
the extra-large distribution classification remained statistically
unchanged from the previous quarter.
DEVELOPMENT
As vacancy continues to lower, developers are chomping at
the bit to build new product in this submarket, but available
land priced for industrial product continues to be elusive and
challenging to make the pricing work. The few developments
under construction or in the planning phases will have little
competition when delivered and should see some opportunities
for pre-leasing given the record low vacancy rates in this
submarket. Avera and Weeks Robinson’s Rampart Corporate
Center has seen strong leasing activity which has convinced the
ownership to move forward with the next phase of the project.
Both a 327,760 square foot cross-dock facility and a 104,403
square foot front-load building are slated for a second quarter
delivery. DCT is looking to capitalize on their recent success
and is set to deliver their Beltway 8 and Tanner project in the
second quarter. It will feature a 136,725 square foot rear-load,
dock-high building fronting the Beltway with 30’ clear heights,
crane-capable infrastructure and frontage on the Beltway. Levey
Development’s Sam Houston Business Park is still in the planning
phases and will feature three buildings between 50,000 – 70,000
square feet on their 22.7 acre tract located at Fallbrook Drive
and Beltway 8. Available industrial tracts for development are still
the main hindrance to speculative construction in this submarket.
Developers will either have to get creative with possible redevelopments
or look to build further outside the city limits or in
other submarkets where the infrastructure is not as accessible but
should improve over time.
FORECAST
As leasing activity continues to outpace development and current
supply, most owners with product in the northwest industrial
submarket have a great opportunity to push rental rates and
possibly upgrade the credit in their tenant base. For the immediate
future, it may not be a bad time to get a quality vacancy back
as users are seeing fewer and fewer options when surveying
the market. Look for vacancy rates to stabilize as the previously
discussed developments deliver and are quickly absorbed
throughout the year. New development will continue to be sparse
as a few projects have been rumored to take off in 2013 but nothing
that will move the meter substantially. As oil and gas companies
continue to thrive in the Houston market, the northwest industrial
submarket will be a direct beneficiary as a large concentration of
these companies calls this area home.
LEASING ACTIVITY
TENANT
DB Schenker USA
Redco Distribution
EnerMech Services
Veritrust Corporation
Imperial Petroleum Inc.
Axistrade, Inc.
SQUARE FEET
267,201
54,555
50,000
42,000
17,150
9,840
BUILDING
10650 Okanella Drive
2155 Silber Road
14000 West Road
2155 Silber Road
4533 Brittmoore Road
16111 Park Entry
COLE CREEK NORTH
33

SOUTHWEST INDUSTRIAL
F A C T S
SQUARE FEET OF
CLASS A and b
INVENTORY
1.9%
DECREASE IN VACANCY
OVER LAST 12 MONTHS
41
MILLION
miles southwest of cbd 20
“The southwest submarket has once
again proven its strength as it was
able to absorb 187,200 square feet
of recently delivered speculative
development.”
Overview
BELTWAY CROSSING BUSINESS PARK
Through the end of 2012, Houston’s southwest
industrial submarket found itself in a very unique
and promising situation. This was proven true
by the fact that despite the delivery of over
200,000 square feet of speculative product
in this submarket during the fourth quarter,
vacancy rates continued to decline to a near
record-setting level. You have to go back five
years to the fourth quarter of 2007 to find a
quarter with lower vacancy (5.4% vacant) than
is present in this submarket today. High quality
buildings have seen unprecedented demand
as tenants continue to place a premium on this
submarket’s ingress and egress via Highway 59,
the revamped Highway 90 and the Sam Houston
Tollway. Tenants also place utmost importance
on this submarket’s proximity to the populations
centers of Houston, rivaling even that of
S T A T I S T I C S
PRODUCT TYPE
Flex
Small Distribution (Tenants in building 0-20,000 sf)
Medium Distribution (Tenants in building 20-50,000 sf)
Large Distribution (Tenants in building 50-100,000 sf)
Extra Large Distribution (Tenants in building >100,000 sf)
Total - Competitive Investor Owned Properties
Total - Owner User Properties
Overall Investment Grade Inventory
INVENTORY
7,389,482
6,766,622
5,733,126
4,233,124
6,697,555
30,819,909
10,375,850
41,195,759
AVAILABLE
SQUARE FEET
609,499
414,447
363,988
53,251
401,550
1,842,735
476,590
2,319,325
4Q 2012
AVAILABILITY
8.2%
6.1%
6.3%
1.3%
6.0%
6.0%
4.6%
5.6%
HISTORICAL AVAILABILITY TRENDS
3Q 2012 2Q 2012 1Q 2012 4Q 2011
9.0% 8.8% 9.4% 9.7%
6.7% 6.4% 6.9% 7.5%
8.1% 7.8% 8.1% 11.2%
1.3% 5.6% 6.9% 6.9%
6.0% 6.0% 6.0% 5.5%
6.4% 7.0% 7.5% 8.3%
5.2% 5.2% 3.5% 5.3%
6.3% 6.6% 6.5% 7.5%
34
Rental Rates Construction Vacancy

FOURTH quarter 2012
STREAM REALTY PARTNERS, L.P.
Houston’s largest industrial submarket, the northwest. The
renewed fervor in this submarket has many landlords’ attention
as the scales have definitely tipped back in their favor.
Statistics
The fourth quarter of 2012 brought continued improvement to
the southwest submarket as overall vacancy improved by 50
basis points to 5.6%. Over the last year, this submarket’s vacancy
rate has improved by 190 basis points. The most impactful swing
was seen in the medium distribution classification as vacancy
decreased from 8.1% to 6.3% over the last three months. This
decrease was seen despite the fact that over 200,000 square feet
of speculative product delivered in this tranche alone. Beltway
Crossing’s second phase delivery during the fourth quarter
represented 208,000 SF of new product, of which 187,200 square
feet was pre-leased to American Tire Distributors and Frank
Supply. DRA’s North Promenade project also contributed to
the declining vacancy with two transactions totaling over 70,000
square feet. Flex product and small distribution also saw vacancy
improve by 80 basis points and 60 basis points, respectively.
Large distribution held steady at an impressive 1.3% vacant
through the end of the year.
DEVELOPMENT
Here are the updates for Beltway Crossing Business Park at the
end of the fourth quarter 2012:
• Thackeray’s 208,000 square foot second phase at Beltway
Crossing delivered during the fourth quarter of 2012 with
two notable pre-lease transactions taking place in that
project. It is important to note that pre-leasing typically does
not happen in Houston, but has become more prevalent
for the best projects during this development cycle. This
project was the first speculative development to deliver in
this submarket since 2008 and the pre-leasing and landlord
friendly terms were a good barometer for tenant interest and
demand for functional front-load and cross-dock distribution
space in this submarket.
• Carson Companies also completed their $27,000,000 buildto-suit
project for Twin Star Bakeries on 22 acres in Beltway
Crossing Business Park. This project delivered ahead of
schedule with the tenant taking occupancy and firing up the
baking lines during the latter part of the fourth quarter.
• Construction of Ben E. Keith’s 475,000 square foot
foodservice distribution project continues and they are
expected to be operational by summer 2013.
Trammell Crow and Crow Holdings’ Lakeview Business Park,
another hotbed of activity in Missouri City, continued its progress
on its current build-to-suit projects:
• Southwest Energy recently completed their 52,000 square
foot design-build facility on 5.15 acres in Lakeview Business Park.
• Niagara Bottling, the nation’s second largest producer of
bottled water, continued to progress their 356,000 square
foot design-build facility. The plant is expected to be fully
operational during the first quarter of 2013. This facility will
serve as a regional distribution hub for their private label
bottled water.
These two business parks represent almost all of the development
activity in this submarket and both have displayed the impressive
amount of tenant demand this area has seen over the last year.
The southwest submarket has historically been difficult to develop
in because of its relatively high land prices. Many developers
have fallen victim to building to the price of the dirt as opposed
to where the true tenant demand lies. As evidenced by the
aforementioned second phase of Thackeray’s Beltway Crossing,
this submarket has transformed into a true contender as one of
the most desirable distribution markets in the city. That being
said, look for developers to take note of these trends and to begin
looking for less obvious land sites that are priced appropriately for
more bulk related development as this submarket will be the direct
beneficiary of the land and supply constraints in the northwest
submarket.
FORECAST
The southwest submarket has once again proven its strength as
it was able to absorb 187,200 square feet of recently delivered
speculative development. Not only was it able to handle the new
supply, the product was never vacant as the space leased before
the buildings even delivered. With this level of interest in place,
vacancy rates are likely to continue their downward trend and rental
rates should continue to climb as there is currently no speculative
product under construction in this submarket. This fact bodes well
for owners of all product classifications in this submarket as a rising
tide lifts all ships. As previously mentioned, look for developers
to take notice of the pre-leasing activity as well as the strong
economics on the recently completed deals in this submarket and
for more speculative development in this submarket by the end
of 2013.
LEASING ACTIVITY
TENANT
American Tire Distributors
Frank Supply
R Stahl
Dishaka
SQUARE FEET
116,480
70,720
40,000
30,280
BUILDING
13443 South Gessner
13513 South Gessner
13259 North Promenade
13265 North Promenade
35

SOUTH INDUSTRIAL
F A C T S
SQUARE FEET OF
CLASS A AND B
INVENTORY
1.9%
DECREASE IN VACANCY
OVER LAST 12 MONTHS
25
MILLION
MILES SOUTH OF THE CBD 5
“As quality vacant space in the
flex, small and medium distribution
categories continue to approach
record lows, look for average
rental rates to increase as
landlords leverage their firm
position in the market.”
Overview
ELLINGTON TRADE CENTER
Smallest in stature and often overlooked,
the south Houston industrial submarket
has proven to be one of the city’s most
stable. Available supply constraints and
an expanding loyal tenant base primarily
comprised of local small businesses
driven to the area due to the nearby
Medical Center, have rendered strong
market fundamentals to close 2012’s
fourth quarter. Highlighted by positive
movement in the flex and small distribution
category, overall vacancy numbers in the
submarket have continued a prolonged
descent that started in 2009. Flex, small
and medium distribution projects make
up 61% of south Houston’s 25 million
square foot industrial inventory. These
S T A T I S T I C S
PRODUCT TYPE
Flex
Small Distribution (Tenants in building 0-20,000 sf)
Medium Distribution (Tenants in building 20-50,000 sf)
Large Distribution (Tenants in building 50-100,000 sf)
Extra Large Distribution (Tenants in building >100,000 sf)
Total - Competitive Investor Owned Properties
Total - Owner User Properties
Overall Investment Grade Inventory
INVENTORY
916,126
7,341,241
7,305,762
1,418,514
2,896,184
19,877,827
5,612,750
25,490,577
AVAILABLE
SQUARE FEET
60,529
390,080
368,653
256,290
184,525
1,260,077
0
1,260,077
4Q 2012
AVAILABILITY
6.6%
5.3%
5.0%
18.1%
6.4%
6.3%
0.0%
4.9%
HISTORICAL AVAILABILITY TRENDS
3Q 2012 2Q 2012 1Q 2012 4Q 2011
7.3% 10.4% 11.1% 12.0%
6.5% 7.3% 9.2% 9.5%
5.0% 6.0% 5.2% 5.1%
18.1% 18.1% 18.4% 18.4%
6.4% 7.3% 7.3% 7.3%
6.8% 7.8% 8.4% 8.4%
0.6% 0.6% 0.6% 1.2%
5.4% 6.2% 6.7% 6.8%
36
Rental Rates Construction Vacancy

FOURTH quarter 2012
STREAM REALTY PARTNERS, L.P.
business owners rely heavily on affordable real estate prices and
flexible terms. Its convenient location halfway between the port
and Houston’s most densely populated areas, combined with a
close proximity to the Texas Medical Center, William P. Hobby
Airport, Reliant Center and the Galleria serve as major economic
drivers for the south Houston submarket.
Statistics
Continuing a trend in 2012’s fourth quarter, south Houston’s
industrial submarket has not experienced an increase in
overall vacancy since the beginning of 2009 and has recorded
positive absorption in 10 out of the last 11 quarterly periods.
This submarket has absorbed 126,971 square feet of vacancy
in the last three months, leaving only 1.26 million square feet
of available inventory. Across all product classifications, the
submarket closed out the final quarter of 2012 with a 4.9%
vacancy rate; beating the city-wide average. When analyzing
flex and small distribution buildings, one cannot help but notice
the progressive momentum and strong market fundamentals.
Consistent positive absorption in flex buildings have accounted
for a 135 basis point average increase in occupancy throughout
each quarter in 2012. As a result, this tranche ended the year
with only 6.6% of inventory left available. Small distribution has
also done well; producing a 105 basis point average quarterly
increase in occupancy for the year, ending 2012 with only 5.3%
of existing product available for lease. Medium, large and extralarge
distribution categories experienced no statistical change
throughout the quarter despite strong leasing activity finishing
at 5.0%, 18.1% and 6.4% vacant, respectively.
FORECAST
As Houston’s economy continues to thrive, it will positively affect
industrial market fundamentals throughout the region. With no
new developments planned for south Houston in the near future
and a local economy on the rise, look for the submarket to continue
down a path of positive and sustainable momentum. As quality
vacant space in the flex, small and medium distribution categories
continue to approach record lows, look for average rental rates
to increase as landlords leverage their positions in the market.
Tenants in this submarket who have long become accustomed to
lower priced options and term flexibility will be forced to adapt as
landlords push rates and hold out for longer lease commitments.
LEASING ACTIVITY
TENANT
Laminate Works, Inc.
Motor Trade
SQUARE FEET
12,000
10,000
BUILDING
8600 Telephone Rd
5708 Clarewood Dr
DEVELOPMENT
Strong market fundamentals in flex and small distribution
inventory may appear to support speculative new construction,
but there are currently no development projects slated for the
south submarket. Though supply constrained, average rental
rates remain lower than needed to produce yields strong enough
to overcome the financial risk factors developers face. The lack
of supporting financial analytics combined with an absence of
focus from investors predominantly interested in Houston’s
northwest, north and southwest submarkets; continue to
preclude development activity in this sector of the city.
SOUTHPORT BUSINESS PARK
37

SOUTHEAST INDUSTRIAL
F A C T S
Rank of busiest
ports in the
world
6
1.6%
Decrease IN VACANCY
OVER LAST 12 MONTHS
24
Miles southeast of
The cbd
“Despite recent publications,
the southeast submarket
will not feel an immediate
impact from the Panama Canal
expansion as the state and
local governments have failed
to invest in the infrastructure
needed to accommodate
larger vessels.”
Overview
The southeast Houston industrial submarket posted a
strong comeback in 2012 following the Great Recession,
which halted container traffic through the Port of
Houston, as overall vacancy plunged 160 basis points
over the course of the year. Much of this improvement
is attributed to a strong Houston macro-economic
environment and a lack of available large blocks of
institutional quality space city-wide. Landlords in the
southeast submarket chasing users over 75,000 square
feet remained aggressive as 3,000,000 square feet of
vacant institutional quality product is available.
Statistics
BAY AREA BUSINESS PARK
The southeast Houston industrial submarket was
unable to sustain last quarter’s positive momentum
as vacancy slid back into the double digits, jumping
80 basis points to 10.5%. Leasing velocity remained
S T A T I S T I C S
PRODUCT TYPE
Flex
Small Distribution (Tenants in building 0-20,000 sf)
Medium Distribution (Tenants in building 20-50,000 sf)
Large Distribution (Tenants in building 50-100,000 sf)
Extra Large Distribution (Tenants in building >100,000 sf)
Total - Competitive Investor Owned Properties
Total - Owner User Properties
Overall Investment Grade Inventory
INVENTORY
1,264,941
1,968,717
1,852,296
2,450,381
13,366,740
20,903,075
5,362,075
26,265,150
AVAILABLE
SQUARE FEET
68,302
125,916
203,487
0
2,310,335
2,708,040
58,900
2,766,940
4Q 2012
AVAILABILITY
5.4%
6.4%
11.0%
0.0%
17.3%
13.0%
1.1%
10.5%
HISTORICAL AVAILABILITY TRENDS
3Q 2012 2Q 2012 1Q 2012 4Q 2011
6.7% 7.0% 4.9% 6.4%
7.1% 5.8% 7.0% 5.8%
11.0% 11.0% 11.0% 10.8%
1.0% 1.0% 1.0% 1.0%
15.1% 21.6% 19.7% 19.8%
11.8% 15.9% 14.7% 14.7%
1.1% 1.0% 1.8% 2.1%
9.7% 12.8% 12.0% 12.1%
38
Rental Rates Construction Vacancy

FOURTH quarter 2012
STREAM REALTY PARTNERS, L.P.
active across the board although positive absorption among
deals less than 100,000 square feet were unable to overshadow
a handful of large blocks coming back online. The extra-large
distribution classification was responsible for the majority of the
negative absorption this quarter as vacancy increased 220 basis
points, ending 17.3% vacant. Hermann Services vacated 300,000
square feet at BlackRock’s Underwood Distribution Center which
proved to be the major meter mover, a blow to a classification
already encompassing 2,000,000 square feet of availability in its
immediate competitive set. On a positive note, Floor & Décor
expanded by 43,680 square feet at Principal Financial Group’s
Bay Area Business Park while IDC committed to 100,000 square
feet at 4331 Underwood Drive. Both deals represented significant
long-term leasing in a tranche notorious for generous front-end
incentives and tenant flexibility. Flex, medium distribution and
large distribution buildings shed 130, 70 and 100 basis points
respectively, ending 5.4%, 6.4% and 0% vacant. Look for owners
with 50,000 to 100,000 square foot tenants who are rolling in
the immediate future to push rates and force long term deals as
there are currently few alternatives for those users in the market.
The small distribution and owner-user classifications remained
consistent and ended at their previous mark of 11.0% and 1.1%
vacant.
Despite recent publications, it is likely the southeast submarket will
not feel an immediate impact from the Panama Canal expansion
as the state and local governments have failed to invest in the
infrastructure needed to accommodate larger vessels. Instead,
fully loaded barges will travel first to America’s southeastern most
ports and continue west to the various ports dotting the Gulf of
Mexico. If the necessary funding is allocated, Houston’s economy
will likely benefit from an increase in TEU container volume and
vacancy will dip below double digits. Expect landlords with blocks
100,000 square feet and larger to remain aggressive with incentive
packages and lease terms in 2013 as new development will deliver
vacant product to an already lagging submarket. On the other
hand, owners dealing with users between 50,000 and 100,000
square feet have the ability to push rates as there is very little
space currently available.
LEASING ACTIVITY
TENANT
IDC
Floor & Décor
SQUARE FEET
100,000
43,680
BUILDING
4331 Underwood Drive
9501 Bay Area Boulevard
DEVELOPMENT
Despite this submarket’s high vacancy rate and availability of first
generation spaces, two developers plan to deliver product in the
near future in southeast Houston. National Property Holdings
and ML Realty Group are on track to deliver a 261,291 square
foot, front-load facility in the first quarter of 2013. The rail-served
building, located in Port Crossing Commerce Center on Highway
146, will be serviced by Rail Logix and Union Pacific. Future plans
propose a rail line through the middle of the park, serving over
1,000,000 square feet of previously proposed distribution space.
Unlike traditional distribution product, rail-served facilities have
historically leased with relative ease as the competitive set is
extremely tight.
Carson Companies has announced their plans to develop three
buildings at the intersection of Beltway 8 and Highway 225.
The 355,660 square foot project will feature one front-load
and one cross-dock distribution building, both designed with
modern column spacing, ample truck court aprons and 30’ clear
heights. The third building, a cross-dock, grade-level facility, is
crane-capable and caters to the oil and gas field services and
manufacturing industries. As the production of domestic oil and
gas products has ramped up, so has the development of craneserved
manufacturing facilities which are tailored to various subsectors
of the petroleum industry.
FORECAST
The port submarket will continue to draft off the thriving Houston
economy and booming oil and gas industry into the new year.
39

EAST INDUSTRIAL
F A C T S
SQUARE FEET OF
CLASS A and b
INVENTORY
1.1%
DECREASE IN VACANCY
OVER LAST 12 MONTHS
37
MILLION
5
miles east of the
cbd
“In addition, the lack of supply
coupled with steady demand led
to many less-functional facilities
being absorbed.”
Overview
MCCARTY BUSINESS PARK
2012 was yet another successful year for
Houston’s oldest industrial submarket.
The positive movement can be attributed
to consistent health and growth within the
oil and gas industry; a major driver in this
submarket. In addition, the lack of supply
coupled with steady demand led to many
less-functional facilities being absorbed.
Historically, the east Houston industrial
submarket attracts users for a few
reasons. One, the strategic location near
the Houston Ship Channel, in addition to
immediate access to thoroughfares such
as Loop 610, Highway 90 and Highway
225. Also, the product type in place,
heavily distribution oriented, is affordable
and very functional which attracts many
users to the area, as well as, maintains
S T A T I S T I C S
PRODUCT TYPE
Flex
Small Distribution (Tenants in building 0-20,000 sf)
Medium Distribution (Tenants in building 20-50,000 sf)
Large Distribution (Tenants in building 50-100,000 sf)
Extra Large Distribution (Tenants in building >100,000 sf)
Total - Competitive Investor Owned Properties
Total - Owner User Properties
Overall Investment Grade Inventory
INVENTORY
540,596
4,908,750
6,759,306
9,808,913
10,752,487
32,770,052
3,988,917
36,758,969
AVAILABLE
SQUARE FEET
18,075
122,431
288,848
592,058
249,467
1,270,879
0
1,270,879
4Q 2012
AVAILABILITY
3.3%
2.5%
4.3%
6.0%
2.3%
3.9%
0.0%
3.5%
HISTORICAL AVAILABILITY TRENDS
3Q 2012 2Q 2012 1Q 2012 4Q 2011
3.3% 4.6% 11.7% 8.7%
2.6% 3.8% 3.6% 3.5%
3.4% 3.6% 5.5% 4.8%
6.4% 8.4% 7.1% 9.7%
2.8% 2.3% 1.9% 1.3%
4.0% 4.7% 4.6% 5.0%
0.0% 0.0% 1.1% 1.1%
3.6% 4.2% 4.3% 4.6%
40
Rental Rates Construction Vacancy

FOURTH quarter 2012
STREAM REALTY PARTNERS, L.P.
users for long periods of time. The current supply and demand
fundamental in today’s market, along with oil over $70 per barrel,
translates into good things for east Houston in the foreseeable
future.
Statistics
Picking up where the previous quarter left off, overall vacancy
levels dropped, albeit minor, ten basis points ending the year at
3.5%. This represents a 110 basis point improvement from the
end of 2011 and all-time low vacancy level since the beginning
of this publication. This vacancy level is likely near or at the low
watermark as many remaining vacancies have been on the market
over twelve months and represent the structural vacancy in the
submarket. Leading the way during the fourth quarter was the
large and extra-large distribution building classifications, which
saw vacancy levels decrease 40 and 50 basis points, ending the
quarter 6.0% and 2.3% vacant, respectively. This success can be
attributed to the extremely supply constrained environment in
place today for users searching for over 50,000 square feet of
space in east Houston. Small distribution and flex facilities did
not move the meter during the last 90 days of 2012 as vacancy
levels remained flat ending the year 2.5% and 3.3%. The lone step
back that occurred in the submarket was the medium distribution
building classification which saw vacancy levels increase 90 basis
points, ending the quarter 4.3% vacant. This should not be a
large concern to the particular landlords getting space back as
the current supply constrained environment could lead to a spike
in rental rates, in a submarket with historically little rent growth,
for functional product available today.
FORECAST
Going into 2013, the east Houston submarket is in a great position
to thrive. Vacancy levels are at all-time lows and landlords with
upcoming roll have a compelling case to push rates. Additionally,
there could be an opportunity to let tenants vacate to the extent
they will not agree to the increased rates as quality vacancies are
few and far between. A true re-education of the existing tenant
base is on the horizon as many companies that call east Houston
home, are not used to rental increases and not getting their way.
On a macro-economic level, most experts project oil to remain
over $70 a barrel throughout the year, a key barometer for most
companies as it determines the likelihood of future drilling. A
strong energy market, record low vacancy levels and steady
demand have landlords in the east Houston submarket excited
about what is to come.
LEASING ACTIVITY
TENANT
Houston Wire Cable
Third Coast Tractor
Cannon Industrial Services
SQUARE FEET
20,000
18,900
6,500
BUILDING
8910-8930 Lawndale Street
1905 Turning Basin Drive
8910-8930 Lawndale Street
DEVELOPMENT
Speculative development remains quiet within the east Houston
industrial submarket. It has proven to be quite difficult to justify
a new building as the required rental rates are well above the
current in place rents for the existing tenant base. Developers
in the past have been successful by targeting hazardous related
users whose buildings cannot support the current fire codes
and ever-changing regulations. The majority of activity seen
within the development community in east Houston has been
with in McCord Developments’ Generation Park, a 3,635 acre
mixed use project along the Beltway just north of the Houston
Ship Channel. The project is hoping to take advantage of the
shovel-ready nature that is in a Foreign Trade Zone and offers
significant infrastructure such as rail and power needs. They
recently announced a transaction with FMC Technologies, who
purchased 173 acres and is in the planning phases of a future
corporate campus. McCord Development is rumored to be in
negotiations with a few other users looking to call Generation
Park home, but at the time of this publication, no additional
transactions have been announced.
NORTH LOOP EAST
41

ATLANTA . AUSTIN . CHARLOTTE . DALLAS / FT.WORTH . DENVER . HOUSTON . LOS ANGELES .
ORANGE COUNTY . SAN ANTONIO . WASHINGTON, DC
515 POST OAK BLVD. . SUITE 1100 . HOUSTON, TEXAS 77027 . 713.300.0300 . WWW.STREAMREALTY.COM