Houston Flooding and the Potential Impact on Commercial Real Estate

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Houston Flooding and the Potential Impact on Commercial Real Estate Houston Flooding and the Potential Impact on Commercial Real Estate • Houston ranks as the 6th largest MSA in the country by total SF of commercial real estate space, with more than 1.6 billion SF (or 232 SF/capita). Only Chicago, New York, Los Angeles, Dallas- Fort Worth, and Atlanta have more rentable building area (RBA). • About 27% of Houston’s GLA may be under water today, representing an estimated $55 billion in property value. There are more than 12,000 properties containing 433 million SF located in the floodplain. This includes 167,281 apartment units, 60 million SF of office, and 73 million SF of retail space. In addition, 11 hospital buildings, including a 1.1 million SF building at the Texas Medical Center fall within the 100-year floodplain. Figure 1: Buildings in the FEMA Designated Floodplain • Only 9 million SF of space, including 4,000 apartments are within a designated floodway, and probably inundated with floodwaters today. However, 175 million SF is located in the 100-year floodplain, including 72,000 apartment units and 20 million SF of office space, and are likely seeing some incursion of water today. Another 225 million SF sits in the 500-year floodplain and is also at some risk of flooding. CoStar Group | 1331 L Street, NW, Washington, DC 20005 | costargroup.com | 877-498-4425 | © 2017 CoStar Realty Information, Inc. Figure 2: Exposure by Floodplain RBA Exposure By Fema Floodplain Designation (Millions SF) 250 200 150 100 50 0 Floodway 100 Year Risk Reduced 500 Year Due to Levees Source: FEMA; CoStar Group • Of the $55 billion at risk, apartment assets account for $16 billion, including $6.8 billion in the 100-year floodplain. The most valuable of these assets are listed below. 1 7694484 ★★★★ 7 7631335 ★★★★ 13 7408022 ★★ AMLI 2121 Braeswood Place Luxor Park & Rancho Verde Apartments 2121 Allen Pky, Houston 3838 N Braeswood Blvd, Houston 5801 W Sunforest Dr, Houston 431 Units 340 Units 828 Units $106,955,200 Estimated value $77,626,250 Estimated value $69,155,024 Estimated value 2 8038031 ★★★★ 8 8037172 ★★ 14 7156867 ★★ Artesian on Westheimer Blue Bell Village Rancho Verde Apartments 13099 Westheimer Rd, Houston 9660 Veterans Memorial, Houston 6000 W Sunforest Dr, Houston 660 Units 592 Units 332 Units $101,961,412 Estimated value $77,376,140 Estimated value $67,917,700 Estimated value 3 8026329 ★★★★ 9 1565518 ★★★★ 15 8317675 ★★★★★ The Lanesborough Lakeside Place Archstone Toscano 1819 S Braeswood Blvd, Houston 201 Wilcrest Dr, Houston 2900 N Braeswood Blvd, Houston 733 Units 734 Units 474 Units $92,303,008 Estimated value $74,857,627 Estimated value $66,056,088 Estimated value 4 966705 ★★★ 10 1150683 ★★★ 16 9250199 ★★★★ Nob Hill Apartments Brompton Court Elan Med Center 5410 N Braeswood Blvd, Houston 7510 Brompton Rd, Houston 7010 Staffordshire St, Houston 1,326 Units 793 Units 281 Units $85,143,661 Estimated value $74,234,473 Estimated value $63,336,001 Estimated value 5 1589316 ★★★★ 11 966715 ★★★★ 17 7770555 ★★★★ Camden Vanderbilt Village at Piney Point Village on the Lake 7171 Buffalo Speedway, Houston 8600 Woodway Dr, Houston 19200 Space Center Blvd, Houston 894 Units 912 Units 612 Units $82,330,219 Estimated value $70,825,528 Estimated value $61,904,576 Estimated value 6 5881247 ★★★ 12 9395438 ★★★★ 18 6358268 ★★★★ Palm Beach Estates Market Square Tower The Ranch at Shadow Lake 16818 City View Pl, Houston 777 Preston St, Houston 2920 Shadowbriar Dr, Houston 881 Units 463 Units 624 Units $82,201,265 Estimated value $70,706,945 Estimated value $61,398,550 Estimated value • The submarket that will be most impacted is likely to be Southwest Houston. This highly dense section of Houston is home to more than 66,000 apartment units, of which, nearly 30% are estimated to be impacted. The inventory is mostly workforce housing and 1980s vintage garden style (2-3 story) construction. Within Southwest Houston, the Braeburn, Greater Fondren and Sharpstown neighborhoods have the highest number of units that are in the 100-year floodplain. Each of these neighborhoods borders Brays Bayou, one of the river ways that snakes through southwest Houston and has overflowed as a result of the torrential rain levels. CoStar Group | 1331 L Street, NW, Washington, DC 20005 | costargroup.com | 877-498-4425 | © 2017 CoStar Realty Information, Inc. Figure 3: Apartment Properties by Floodplain Figure 4: Count of Apartment Units in 100-Year Floodplain by Submarket Apartment Units Exposed to 100-Year Floodplain Southwest Houston Southeast Houston Medical Center/West University Alief South Galveston County Greenspoint/IAH Airport Brookhollow/Inwood Northwest Houston Briar Forest/West Memorial Bear Creek/Copperfield Westchase/Woodlake Lake Houston Area Inner Loop East Neartown/River Oaks Heights Baytown Woodlands Outlying Montgomery County Southeast Montgomery County Katy 0 5,000 10,000 15,000 20,000 Unit Count Source: CoStar • An additional 5 million SF of space is underway within the floodplain, including 3,144 apartment units. This represents about one-quarter of the 25 million SF of commercial real CoStar Group | 1331 L Street, NW, Washington, DC 20005 | costargroup.com | 877-498-4425 | © 2017 CoStar Realty Information, Inc. estate under construction in Houston (which includes more than 12,000 apartment units). Most of the apartment buildings (totaling 1,170 units) underway within the 100-year floodplain are concentrated near the Medical Center. • The most impacted office submarket is Greenspoint, which has elevated vacancies after the departure of ExxonMobil in late 2015. Here, some 3.5 million SF falls within the 100-Year floodplain. Figure 5: Office Inventory in 100-Year Floodplain Office Inventory Exposed to 100-Year Floodplain Greenspoint/N Belt West Bellaire Southeast Outlier Baytown Southwest Beltway 8 Greenway Plaza Northwest Far Northwest Outlier Midtown Liberty County Katy Freeway West Northwest Near Gulf Freeway/Pasadena San Felipe/Voss North Loop West South South Main/Medical Center Greenspoint/IAH Westchase NASA/Clear Lake Conroe Riverway West Belt Southwest Outlier Northeast Near Northeast Outlier FM 1960/Hwy 249 Post Oak Park CBD I-10 East Woodlands Woodlands I-10 East CBD FM 1960/I-45 North Post Oak Park Southwest/Hillcroft FM 1960/Hwy 249 Kingwood/Humble Northeast Near Riverway 0 1,000,000 2,000,000 3,000,000 4,000,000 SF Source: CoStar • The Addicks and Barker Reservoirs remain at high risk of breaching, with reports that water is seeping over the top of the Addicks dam. The army corps of engineers has been releasing water to prevent the earthen dams supporting these reservoirs from failing, sending increased water flows through the Buffalo Bayou. The Bayou runs west to east and crosses through Woodlake, River Oaks, the Energy Corridor, Memorial Park, Briarforest, and Uptown Park. There are some 117 buildings that are within a quarter of a mile from the bayou, totaling 17 million SF. More than 2.5 million SF is at high risk, located within the 100-year floodplain and is made up of mostly office properties in the Energy corridor and Post Oak neighborhoods. CoStar Group | 1331 L Street, NW, Washington, DC 20005 | costargroup.com | 877-498-4425 | © 2017 CoStar Realty Information, Inc. Figure 6: Properties within One-Quarter Mile of the Buffalo Bayou CoStar Group | 1331 L Street, NW, Washington, DC 20005 | costargroup.com | 877-498-4425 | © 2017 CoStar Realty Information, Inc. .
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