COLLIERS INTERNATIONAL | HOUSTON MEDICAL OFFICE | 2ND QUARTER 2010

2011 | HOUSTON ECONOMIC OUTLOOK

www.colliers.com/houston

Economic Outlook

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Houston Ranked Among Top U.S. Metros for BusinessHouston ranked among the top-performing U.S. metros at the start of 2011, even as the effects of theeconomic recession that began in late 2007 continued to be felt globally. Although 2009 was undeniablychallenging with local job losses totaling 95,200, it should be noted that this was the first year of job lossesfor Houston, following a stellar period of expansion and job growth from 2005 to 2008. And while the localmetro still has economic hurdles to overcome, Houston is once again making headlines as one of the leastaffected markets in the nation. In its March 2011 issue, Site Selection awarded Texas the Governor’s Cupfor new project activity, with 424 projects of which 152 are located in the Houston MSA. Houston ranked #2for Tier One New and Expanded Facilities in 2010 of MSA’s with population over 1 million. In addition, ChiefExecutive Magazine (for the seventh straight year) named Texas as the number one state for BestBusiness, in which Houston’s Energy Industry played a huge part. In May, Modis, the second largest NorthAmerican IT staffing service provider, named Houston as one of the top cities for IT jobs andFastcompany.com named Houston as “2011 Fast City of the Year”.

EXECUTIVE SUMMARY

JOB GROWTH & UNEMPLOYMENT

Houston’s economic base comprises varied matureindustries led by the energy sector accounting for just over50 percent of the local economy. Following the energy pricepeaks at midyear 2008, with crude oil trading at $133 perbarrel and natural gas over $8 per MMBtu, the industryexperienced increased volatility due in large part toprevailing uncertainty regarding the worst global economicrecession in recent history. Continued volatilitynotwithstanding, energy prices at mid-year were higher thanone year ago, with crude oil near $102 per barrel andnatural gas approaching $4 per thousand btu’s. The U.S.Energy Information Administration’s Short-Term Outlookprojected this upward trend in energy prices will continuethrough 2011. Increased demand, particularly fromemerging markets led by China and India with mass-scaleindustrialization projects underway, is the primary reasonmany industry experts are convinced the era of low energyprices is over. According to the International EnergyAgency’s estimates, U.S. energy demand is expected toincrease 23 percent by 2030, while global energy demandwill increase an even more significant 55 percent during thesame period.

Houston’s strategic location and core strengths, including an expanding energy sector, strongimport/export trade activity, cutting-edge medical advancements, and technological breakthroughs acrossindustries, uniquely position it to play a vital role in meeting national and global market demands. At atime of unprecedented geopolitical demographic shifts affecting markets worldwide, Houston stands as aleader among U.S. metros of the 21st century.

EMPLOYMENT

2010: 13,100 jobs gained

2009: (95,200) jobs lost

2008: 22,500 jobs gained

2007: 103,500 jobs gained

POPULATION

2010: 5.9M

2000-2013: 37% growth

1990-2000: 25.2% growth

ENERGY

WTI Crude Oil: $101.93/barrel (6/2011)$75.35/barrel (6/2010)$69.68/barrel (6/2009)

$133.93/barrel (6/2008)Natural Gas: $3.98/MMBtu (6/2011)

$3.92/MMBtu (62010)$3.18/MMBtu (6/2009)$8.87/MMBtu (6/2008)

IMPORT/EXPORT TRADE

HAS Air Freight: 882.5M lbs. (2010)766.3M lbs. (2009)

Port Total Tonnage: 220M tons (2010) 211M tons ( 2009)

UNEMPLOYMENT 4/10 4/11HOUSTON 8.2% 8.0%

TEXAS 7.9% 7.7%

U.S. 9.8% 9.0%

JOB GROWTHANNUAL CHANGE 4/11

HOUSTON 2.0% 13.6k

TEXAS 2.5% 64.6k

U.S. 1.1% 232k

RESEARCH & FORECAST REPORT | 2011 | HOUSTON ECONOMIC OUTLOOK

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Houston MSA Ranks 1st in U.S. Population Growth

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Houston ranks among the leading metropolitan areas in the U.S., and is the fourth largest city and the fifth largest MetropolitanStatistical Area (MSA) in the nation. In March 2011, the U.S. Census Bureau announced the Houston MSA, which consists of 10counties, ranked first among the nation in population growth. Between 2000 and 2010, the Houston MSA increased animpressive 26.1 percent, from 4.7M to 5.9M residents. Further, the Houston metro area is expected to increase 5.8 percent overthe next five years to 6.2M. On a more long-term basis, demographers project strong population growth for the area over thenext thirty years as domestic and international migration trends favor Houston’s geographical, cultural, and economic strengths.

The 2000 U.S. Census also showed a dramatic increase of 22.5 percent in Houston metro area households to 1.7 million from1.4 million in 1990. From the most recent estimate of 2.0 million households in 2009, (2010 Census Data for Households has notyet been released), demographers are projecting an additional 8.9 percent increase to 2.1 million households within the next fiveyears (from 2009 to 2014). The average household income for the metro area was estimated at $76,301 in 2009, with a11.9pecent projected increase to $85,409 by 2014. The median household income was estimated at $58,581 in 2009 andprojected to increase to $63,857 by 2014. By comparison, the national income levels fell below the Houston market with the2009 U.S. household average income estimated at $69,330 and the median income at $53,679.

Sources: U.S. Census Bureau, March 2011; SRC, LLC, March 2011; Greater Houston Partnership

DEMOGRAPHIC COMPONENTS OF POPULATION

This high level of educational achievement is not surprising given Houston’s numerous nationally recognized colleges anduniversities, as well as technical and trade schools, including Rice University, University of Houston, University of St. Thomas,Texas Southern University, Houston Baptist University, Baylor College of Medicine, San Jacinto College, and HoustonCommunity College.

Bolstered by above-average demographic trends and a strong base of diverse industries, Houston is well-positioned to competein today’s global markets. Long recognized as the energy capital of the world, with every major energy company representedlocally, Houston now stands as a global example of economic diversity. The area is home to a thriving base of industriesincluding medical/biomedical technology, global trade (particularly airborne and waterborne domestic/international cargo),aeronautics, plastics manufacturing, electronics, computers, software design and integrated power.

Houston’s strong economic base continues to be a keyfactor driving both domestic and internationalmigration trends. Houston ranked 3rd among U.S.cities with the most Fortune 500 headquarters withtwenty-three (23) companies on the 2011 list, followingNew York, with a total of seventy-four (74) andChicago, with a total of twenty-seven (27) Fortune 500companies headquartered locally, and many othercompanies maintaining U.S. administrativeheadquarters in the metro area. Notably, Houstonsurpassed other major metros on the Fortune 500 list,including Los Angeles with twenty-one, Dallas withtwenty (20), and Minneapolis-St. Paul with nineteen(19). Houston has also been recognized for having atotal of twelve (12) companies on the 2011 ‘Fortune’s‘100 Best Companies to Work For’ list.

Houston area residents are well-educated with themajority of the population over 25 years of age holdinga high school diploma and residents withcollege/graduate educational studies outnumberingthose with less than a high school education.

U.S. COMPARATIVE POPULATION GROWTH

1990-2000 2000-2014

25.2% 31.1%

22.8% 28.0%

13.2% 12.7%

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Houston Employment Sector Houston’s employment sector has weathered the recession better than most major metro areas.The downturn here was short-lived and the Houston MSA began recovering jobs sooner thanmost, recovering more than two-thirds of the jobs it lost in the recession. Between April 2010 andApril 2011, Houston posted the second most job gains out of the 12 most populous U.S. majormetros, and had stronger job growth than the U.S. as a whole as seen in the graph below.

SELECT MAJOR AREA EMPLOYERS

Sources: U.S. Bureau of Labor Statistics, April 2011; Greater Houston Partnership

HOUSTON AMONG 12 MOST POPULOUS U.S. MAJOR METROS

Percent Change in Employment April 2010 – April 2011

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If job growth continues at the current rate, it will take almost three years to replace the 7.1 millionjobs lost in the U.S. since January 2008. In contrast, the Houston economy is down less than40,000 jobs from the peak, which at the current growth rate would be achieved in the next two tothree months.

A local economist recently predicted oil prices over the long-term (in 2 to 3 years) will rise to $120to $140 per barrel ($5 at the pump) which will bump back the overall U.S. economic growth rate,but due to increasing demands on natural gas, Houston will fare better. Natural gas prices haveremained relatively static due in part to the development and perfection of hydraulic fracturing ofshale formations for natural gas production. As natural gas is the primary material used in thepetrochemical industry, the region looks to gain new capital investment, plants and jobs as one-half of the petrochemical industry jobs in Texas are in the Houston region. This type of job growthis evident as Houston’s Mining and Logging industry sector had the largest annual change inemployment at 9.4 percent.

Additional Houston employment industry sectors that reported annual growth include OtherServices (which includes equipment and machinery repairing), and Professional and BusinessServices (which includes wholesale trade and warehousing), which grew by 3.7 percent and 3.0percent, respectively.

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Houston Airport System

Ranked #4 Airport System U.S.Ranked #6 Airport System Globally

49.5 M Passengers in 2010882.5 M lbs of Air Freight in 2010

Economic Impact: $24.2B

Texas Medical Center

World’s Largest Medical Complex (1,000 Acres)

49 Member Institutions6.0M Patients in 2010

18K International Patients in 2010

Economic Impact: $14B

NASA/Johnson Space Center1,620-acre Complex

Major EmployersBoeing CompanyLockheed Martin

KBRJohnson Engineering

Economic Impact: $3.5B

Port of Houston

Ranked #1 in US Int’l CommerceRanked #1 in US Foreign Tonnage

Ranked #1 in US for ImportsRanked #2 in US Total Tonnage

Ranked #7 largest US Container port

Economic Impact: $118B

Houston Energy Industry

Global Energy CapitalOver 5,000 firms in the region

57.1% of total U.S. capacity for natural gasComprises 50% of total Houston employment

Sources: Federal Reserve Bank of Dallas; Port of Houston Authority; The Campbell-Hill Aviation Group, Inc.

Houston’s Diverse Base of Future-Growth Industries

Houston’s Strong Business Climate

HOUSTON

Houston has long been recognized among the most competitive U.S. cities for corporate relocation and expansion activity. In its March2011 issue, Site Selection ranked Houston #2 for Tier One New and Expanded Facilities in 2010 of MSA’s with population over 1 million.In addition, Chief Executive Magazine for the seventh straight year named Texas as the number one state for Best Business, whichHouston’s Energy Industry played a huge part in. In May, Modis, the second largest North American IT staffing service provider, namedHouston as one of the top cities for IT jobs and Fastcompany.com named Houston as “2011 Fast City of the Year”. In addition to itsdiverse growth industries and educated/skilled workforce, a key factor underscoring Houston’s business appeal is the fact thatit is one of the least expensive major U.S. cities in which to conduct business. Significant benefits include the absence of stateor city income taxes, no state property tax, as well as an exceptionally low cost of living index.

As a major transportation hub with two major airports, a world-renowned port, and superior rail and road infrastructure, Houston facilitatesthe interconnection of global business locations. Business alliances with major U.S. and international markets is further enhanced by thepresence of 94 foreign consulate offices in Houston. In 2010, Houston ranked third in the U.S. – following New York and Los Angeles – inforeign consulate representation.

Houston’s ability to foster continued expansion in future-growth industries responsible for generating high quality, well-paid jobs across allbusiness sectors has placed it in the top tier among U.S. cities. With its numerous business advantages, Houston is well-positioned tosuccessfully compete in today’s global marketplace.

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Houston is internationally recognized as the global energy capital, with virtually every segment of the energy industryrepresented by over 5,000 firms in the region. It is also known as the global center for integrated power, a fast-growing newsector of the energy industry, and accounts for 57.1 percent of the total U.S. capacity for natural gas transmission. In justover a decade, the number of Houston-based energy trading companies has tripled, with petrochemical capacity in the areanearly four times larger than the nearest competing U.S. site. All major oil and gas companies have extensive operations inthe area, including Shell Oil Company, ExxonMobil, ChevronTexaco, BP America, Citgo, ConocoPhillips, Devon Energy,Lyondell-Citgo Refining, Marathon Oil, Anadarko Petroleum, Unocal, Harvest Natural Resources, Amerada Hess, AdamsResources & Energy, Burlington Resources, Newfield Exploration, Plains All American, and TotalFina.

According to a June 2011 British Petroleum statistical review of world energy, globalenergy consumption rates rose 5.6 percent in 2010, the highest rate since 1973 asdemand for all energy forms grew strongly, boosted largely by increasedconsumption of fossil fuels. The report states that China surpassed the US as theworld’s largest energy consumer as consumption in China grew by 11.2 percent in2010, consuming 20.3 percent of global energy consumption. Although oil continuedto lose market share for the 11th consecutive year, it remains the world’s leading fuel,at 33.6 percent of global energy consumption. The U.S. total natural gasconsumption grew by 5.7 percent in 2010 and is expected to grow another 1.4percent in 2011.

HISTORICAL CRUDE OIL PRICES

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U.S. ROTARY RIG COUNTS

Jun 2011: 1,350Jun 2008: 1,877.5

Source: Energy Information Administration; West Texas Intermediate; Baker Hughes; Greater Houston Partnership

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The U.S. Energy Information Administration’s (EIA) Short-TermEnergy Outlook released in June 2011 indicates crude oil priceswill likely continue to climb over the next six to twelve months.EIA projects spot crude oil prices will average $102 per barrelby the end of 2011, and $107 per barrel by the end of 2012.Natural gas prices are projected to average $4.25 per MMBtu atthe end of 2011, a decline of $0.13 per MMBtu from the 2010average. The EIA expects that the slowing growth in productionwill contribute to a tightening domestic market next year withthe Henry Hub price averaging $4.58 per MMBtu.

HISTORICAL NATURAL GAS PRICES

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Houston – Global Energy Capital

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Jun 2011: $101.93/bblJun 2008: $133.93/bbl

RESEARCH & FORECAST REPORT | 2011 | HOUSTON ECONOMIC OUTLOOK

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Houston is a global leader in manufacturing petrochemicals, with the $15 billion Houston Ship Channel recognized as thelargest petrochemical complex in the U.S. The area is home to a significant number of chemical plants from diverseinternational companies located in the region’s largest petrochemical plants including Bayport Industrial District, BattlegroundIndustrial Complex, Bayport Shipping Terminal, and the Houston Ship Channel.

ENERGY INDUSTRY – EXPANSIONS, ACQUISITIONS & NEW INVESTMENTS

Jun 2011: Exxon Mobil Corp discovers an estimated 700 million barrels of oil equivalent at a deepwater well offthe Louisiana coast, being one of the largest discoveries in the Gulf of Mexico in the last decade

Jun 2011: Exxon Mobil Corp announces the development of their new 385-acre corporate campus near theWoodlands, Tx.

Jun 2010: ExxonMobil acquires Phillips Resources Inc. for $1.69 billion.

Jun 2010: British Petroleum (BP) expands presence in Houston, with Exploration and Production unit and thenewly created BP Centralized Developments Organization to be based in Houston

Jun 2010: ExxonMobil acquires XTO Energy Inc. for $34.9 billion.

Feb 2010: Schlumberger (the world’s largest oilfield services provider with U.S. headquarters in Houston)acquires Smith International for $11 billion

Today, the chemical industry employs 70,000 people in Texas, nearly a tenth of theindustry's total U.S. workforce, according to Labor Department figures. About half of thosejobs are in the Houston region, spread across more than 430 chemical plants andrefineries.

The discovery of shale rock formations, rich with natural gas and natural gas liquids, willhave a huge impact on the regions economy as many of the major energy companiesheadquartered in Houston expand into natural gas production.

Exxon Mobil Corp. just paid $1.69 billion for two closely held energy explorers to gain shale-gas reserves in Pennsylvania andneighboring states. Oil companies are moving quickly to tap shale oilfields in Texas that could increase domestic oilproduction by 25 percent over the next decade. A New York Times report stated that more than a dozen companies will drillup to 3,000 wells in the next 12 months at Eagle Ford and other sites. The fields were thought to be worthless just five yearsago. According to the International Energy Agency’s estimates, U.S. energy demand will increase 23 percent by 2030,while global energy demand will increase an even more significant 55 percent during the same period.

While the global economic recession has frozen much of the dramatic industrial expansion that highlighted the past decadeprimarily in key emerging markets worldwide, global trends suggest growth will resume following the easing of currenteconomic constraints. The long-term outlook is strong for Houston’s energy, petrochemical and plastics industries to maintaina key role in meeting the global demand for energy and energy-related products.

Houston’s Petrochemical & Plastics Industry

HOUSTON REGION PLASTICS MANUFACTURING

Industry Establishments Shipment ValueFilm, Sheets and Bags 38 $ 393,500,000 Pipes, Fittings & Shapes 24 $ 197,004,000 Polystyrene Foam 6 $ 42,561,000 Bottles 7 $ 201,706,000 Misc. Plastics Products 112 $ 769,174,000 Rubber Products 35 $ 93,609,000 Balance 15 $ 59,578,000 Total 237 $1,757,132,000

MAJOR HOUSTON REGION CHEMICAL PLANTSAir Liquide USA Huntsman Petrochemical Corp.Air Products INEOS Olefins & PolymersBASF Corporation LyondellBasell IndustriesBayer Material Science Lubrizol CorporationBP Texas City OxyVinyls, LPChevron Phillips Chemical Rohm and Haas TexasDow Chemical Company Shell ChemicalE.I. du Pont de Nemours Co. Solutia Inc.Equistar Chemicals LP Solvay America Inc.Goodyear Tire & Rubber Co. Union Carbide Corporation

Source: Energy Information Administration; Greater Houston Partnership

Source: Houston Business Journal; Houston Chronicle; Dallas Business Journal

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The Port of Houston’s market strength and strategic location represents a winning combination for business growth andincreased industrial development in the area. The economic impact of the Port of Houston is significant, accounting for $118Bof total economic activity in Texas, including $39.3B of total personal income, and $3.7B in state and local taxes. Total valueof foreign trade through the Port of Houston in 2010 was $195.5 billion. Among the largest developments is the $1.2BBayport Container and Terminal Project estimated to generate $1B of annual business revenue, with an additional $40M inannual tax revenue, as well as 12,000 new jobs created. The most recent phase completed added 1,330 feet of additionalwharf, 18 Rubber Tire Gantry (RTG) yard cranes, six post Panamax cranes, a total of 7,000 feet of berthing space at finalbuild-out and 2.3M TEU (twenty-foot equivalent unit) capacity. The significant increase in demand for waterborne cargo hasbeen driven by several factors, including new trade agreements with Asia, Europe and Latin America, as well as the overallexpansion of global industrialization. In the U.S., the West Coast Longshoremen strike of 2002 – a ten-day shut down of 29west coast ports with an estimated cost of $19B – was a significant factor increasing demand at the Port of Houston, asbusiness leaders continue to seek new shipping patterns to maximize their logistics operations transporting goods to marketsworldwide.

Container and Warehouse TrendsContainer imports received at the Port of Houston Authority (PHA) rose by 11 percent in 2010 and the port expects a 13 to 14percent in 2011. The PHA handled 17 million tons of cargo containers in 2010, a 6.4 percent increase from the previous year.The Port Authority handled 249,000 tons of steel in December 2010 reflecting an increase of 174 percent over December2009. Ship arrivals at the Port Authority facilities are up over 5.6 percent for 2010 versus 2009. Barge traffic has also shownsignificant growth, up 17 percent from the previous year. Imports from Northern Europe and Northeast Asia accounted foralmost half of all imports received in 2010, while South America and Northern Europe received half of the exports from PHA.

An immense network of interstate highways and railways connect the port with an inland market of approximately 100 millioncustomers. Over 25 million square feet of distribution centers near the port and other centers are growing around theHouston metro area in response to the ports’ global trade and commerce.

The Port of Houston

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PORT OF HOUSTON AUTHORITY TOTAL TONNAGE HANDLED 2001-2010

Port of Houston Rankings in 20101st in U.S. for Foreign Tonnage1st in U.S. for Imports2nd in U.S. for Total Tonnage7th Largest U.S. Container Port220 million tons of cargo handled in 20101.8 Million TEUs**twenty-foot equivalent unit, a measure for containers used in intermodal transportation via ships, rail, planes and trucks

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NASA’s Johnson Space Center (JSC) is a $1.5B complex occupying 1,620 acres, firstestablished in 1961, and later renamed in 1973 in honor of the late President Lyndon B.Johnson, a native Texan. JSC is one of NASA’s largest research and development facilitiesand mission control for all U.S. manned space flight communications, including theInternational Space Station and Exploration Programs. From the early space explorationprojects Gemini, Apollo and Skylab, came the historic moment when the first word from themoon was “Houston”, and deservedly so, as it took a 15,000-member team in Houston todevelop, test and put into action what millions around the world watched on television in 1969.Since its inception, JSC continues to make significant advances in science, aeronautics,technology, engineering and medicine.

Houston’s location in the south central U.S. strategically places it equidistantfrom the nation’s major population centers – New York (1,631 miles) and LosAngeles (1,550 miles). Connection to major national and internationallocations is facilitated through Houston’s excellent transportationinfrastructure which includes the George Bush Intercontinental Airport,William P. Hobby Airport, Ellington Field, the Port of Houston, and the well-integrated mainline railroads and trucking system serving the area.

In the Houston MSA, extensive freeway system spans 575.5 miles and isone of only two major U.S. cities where traffic congestion has declined in thepast ten years. This improvement is due to a massive road constructionprogram that averaged more than $1B annually.

Houston’s Mobility Infrastructure

In 2010 JSC’s workforce represented over 15,000 jobs, including approximately 3,000 civil servants and 12,000 contractorpersonnel employed onsite or in facilities in the area. JSC’s top contractors include Boeing, United Space Alliance,Lockheed/Martin, Anadarko Industries, Jacobs Engineering, Honeywell, Brown & Root, SAIC, Raytheon, Northrop Grumman,and Wylie Laboratories, among many others. According to the Greater Houston Partnership, Houston’s total trade in aircraft,spacecraft, and parts increased 53.2 percent in value to $1.5 billion in 2010 from $1.4 billion in 2009.

The future of NASA’s JSC is an uncertain one as the 30-year old space shuttle program comes to an end in July. Thousandsof space contractors are facing layoffs in the short-term due to the program ending. Boeing just announced it will layoff about260 employees in Houston and local economists have predicted that up to 7000 jobs may be lost at JSC once the programcomes to an end. However, Bill H.R. 286: Johnson Space Center Workforce Stability Act of 2011, was introduced tocongress in January. The bill if passed, would create a two-year job training program to assist the transition to new jobs ofworkers and employees of contractors in the JSC region whose job stability is impacted by programmatic changes to theNASA space exploration program. The bill is intended to help stabilize the workforce and to promote economic growth in theJSC region. Until the bill is passed, the future economic impact the JSC has on Houston is uncertain.

Between 2003 and 2008, a boom in new construction projects for Houston’s major freeways and tollways significantlyimproved mobility and accessibility for the region. Expansion of the Katy Freeway (Interstate 10) was one of the mostsignificant projects completed in October 2008, with other key improvement projects including Loop 610/West Loop,Southwest Freeway (U.S. Highway 59 South), Grand Parkway (State Highway 99), North Freeway (Interstate 45 North),Eastex Freeway (U.S. Highway 59 North); Crosby Freeway (U.S. Highway 90), Sam Houston Tollway (Beltway 8), andWestpark Tollway. New projects for 2011 include work to begin on the first phase of the Hwy 290 expansion, IH 610 and USHwy 290 interchange, as well as Segment E of the Grand Parkway. The Texas Department of Transportation (TXDOT) willlet to contract Segment E from I-10 to US Hwy 290 in fourth quarter 2011.

NASA/Johnson Space Center

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RESEARCH & FORECAST REPORT | 2011 | HOUSTON ECONOMIC OUTLOOK

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George Bush Intercontinental Airport/Houston (IAH),situated 35 miles north of downtown Houston, is the nation’s 8th

busiest airport serving 40.4 million passengers in 2010 andoffering 185 domestic and international destinations, with nearly700 daily departures including non-stop direct flights to majorcities in Europe, Mexico, Latin America and Asia. IAH is servedby 17 passenger airlines and 12 all-cargo airlines handling morethan 857.7 million pounds in cargo in 2010. Currently, IAH hasfive runways and five terminals, no takeoff and landing curfews,and ample land to expand its facilities as requirements demand.The scope and quality of IAH facilities make it one of the topU.S. airports for international air cargo traffic.

William P. Hobby Airport is located seven miles southeast of downtown Houston and is the nation’s 43rd busiest commercialairport, handling over 9 M passengers in 2010. Hobby Airport also serves as a major regional center for corporate and privateaviation with five passenger airlines offering scheduled service to approximately 65 U.S. destinations, including direct or non-stop service to 31 destinations. There are 255 private aircraft based at Hobby, including 91 corporate jets and five fixed-base-operators serving the airport.

Air CargoA strong increase in domestic and international trade – with air freight cargo up 42 percent between 2000 and 2010 –continues to drive activity at IAH and was the impetus behind the recently completed AirCargo Center, a $180 million 165-acre complex. The new cargo complex features a state-of-the-art 500,000 SF warehouse distribution center and ramp for 20wide-body aircraft designed to increase IAH’s cargo surface capacity by 75 percent. With over 900 air freight-relatedbusinesses in the area, IAH is among the leading distribution hubs in the nation with a solid track record of growth andcontinued future expansion.

The Houston Airport System (HAS) is one of the world’s leading multi-airport facilities and includes George BushIntercontinental Airport, William P. Hobby Airport, and Ellington Field. HAS ranked fourth nationally and sixth globally inpassenger volume in 2010, carrying an impressive 49.5 million passengers and 882.5 million pounds of air freight. This is a15.2 percent increase from 2009, when the economic recession hampered both business and personal travel.

IAH Air Freight Statistics & Trends

• IAH ranked 16th largest air cargo hub in the U.S.

• IAH is one of the fastest growing distribution hubs in the U.S.

• Between 2000-2010, air freight cargo via IAH increased 42 percent to 857.7M pounds

• IAH has state-of-the-art facilities to globally transport time-sensitive products

• Houston’s role as a major gateway for import-export trade is expected to continue expanding

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AIR FREIGHT IN POUNDS(DOMESTIC & INTERNATIONAL CARGO)

Houston Airport System

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The Texas Medical Center (TMC) – the world’s largest medical center – represents one of Houston’s major economic drivers and coreindustries with an estimated regional annual economic impact of $14 billion. TMC is also one of Houston’s largest employers with 92,500employees, including physicians, scientists, researchers and other advanced degree professionals in the life sciences.

The internationally-renowned, 1,000-acre TMC is the world’s largest medical complex with 48 member institutions, including leading medical,academic and research institutions, all of which are non-profit and dedicated to the highest standards of research, education and patient andpreventive care. Member institutions include 13 hospitals and two specialized patient facilities, as well as 19 renowned academic andresearch institutions virtually covering all health-related careers – including two medical schools, four nursing schools, as well as schools ofdentistry, public health, and pharmacy – and 15 support services organizations. Over 69,000 students – including more than 5,000international students – are affiliated with TMC, including high school, college and health profession graduate programs. More than 5.5million patients visited in 2009, including approximately 18,000 international patient visits.

The University of Texas M.D. Anderson Cancer Center Texas Children’s Hospital Memorial Hermann Hospital SystemThe Methodist HospitalSt. Luke’s Episcopal HospitalLyndon B. Johnson General HospitalQuentin Mease Community HospitalBen Taub General HospitalThe Institute for Rehabilitation and ResearchThe Hospice at the Texas Medical Center Texas Heart Institute Shriners Hospitals for Children – Houston Veterans Affairs Medical Center in Houston

In addition to the medical facilities and institutions of higherlearning, TMC is also home to more than 100 professional officebuildings. Overall, the complex covers over 18 miles of publicand private streets and roadways, with 31 million square feet ofexisting patient, education, and research space.

TMC has continued to grow and expand over the past severaldecades with the majority of growth occurring in the past tenyears. In 2006, TMC completed a 50-year Master Plan whichincludes nine major initiatives for future institutional growth andphysical improvements designed to further strengthen thecampus. In 2007, the University of Texas M. D. AndersonCancer Center began construction of the Center for AdvancedBiomedical Imaging

TMC Patient Care InstitutionsTexas Children’s Hospital Neurological Research InstituteBaylor College of MedicineThe University of Texas Health Science Center at HoustonThe University of Texas M.D. Anderson Cancer CenterUniversity of Houston College of PharmacyRice UniversityTexas A&M University Health Science CenterPrairie View A&M University College of NursingTexas Woman’s University Institute of Health SciencesTexas Southern University College of Pharmacy and

Health Sciences Harris County Psychiatric CenterHouston Academy of Medicine

TMC Academic and Research Institutions

Research. The Center is located in the 110-acre University of Texas Research Park, a joint effort between the University of Texas HealthScience Center, M.D. Anderson and General Electric Healthcare. In terms of future growth, TMC has approved $7.1 billion in building andinfrastructure investments between 2008 and 2012, with annual research expenditures estimated at $1 billion.

TEXAS MEDICAL CENTER

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The University of Texas M.D. Anderson Cancer Center ranked #1 by U.S. News in Best Hospitals 2010-11

RESEARCH & FORECAST REPORT | 2011 | HOUSTON ECONOMIC OUTLOOK

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Biotechnology and the life science industry continue expanding in the Houston region with more than 100 institutions andcompanies attracting over $1.5B in research and development funding annually. Between 2003 and 2008, the number of lifesciences jobs in the region increased 14.4 percent to 22,000, according to a study conducted in 2009 by the TexasHealthcare and Bioscience Institute. Leading research efforts in the area represent established and emerging industries,including nanotechnology, pharmaceuticals, nutraceuticals, genetics/genomics, biodefense and infectious diseases, stem cellresearch, and oncology.

Long known for its research-centric Texas Medical Center (TMC), the Houston region is gaining momentum in thedevelopment and commercialization of products ensuring its place as a major biotechnology and life sciences cluster. Publicand private sector support, including investments by entrepreneurs and venture capitalists, will continue to be crucial increating the necessary infrastructure to facilitate the entrance of both established and start-up private companies committedto biotechnology.

Houston Area Biotechnology Business Parks

Biosciences in 2010-2011Oct 2010 The Methodist Hospital Research Institute opens 440,000 square foot research building in Houston.

Mar 2011 National Science Foundation host Nanotech Conference at The Methodist Hospital Research Institute in Houston.

Mar 2011 Houston scientists continue to lead cancer research…receiving $64 million from the Cancer Prevention & Research Institute of Texas.

May 2011 University of Texas System regents chose internationally renowned Harvard cancer geneticist, as the next president of M.D. Anderson Cancer Center.

May 2011 Rice University BioScience Research Collaborative (BRC) recruits three leading researchers who will bring the core of the Center for Theoretical Biological Physics. The team will collaborate with cancer specialists in the Texas Medical Center to apply new concepts from physics to cancer research and treatment.

May 2011 Houston’s Nanospectra Biosciences, Inc. co-founders named Inventors of the Year by the State Bar of Texas for patent of Optically-Active Nanoparticles for Use in Therapeutic and Diagnostic Methods.

Outside of the TMC, the 1,000-acre Research Forest located in The Woodlands (30 miles north of downtown Houston) is a long-standing major research center designed specifically for scientific, research and biotechnology companies. More recentlyestablished business parks/organizations geared towards biotechnology commercialization in the Houston region include theGenesis Biotechnology Park and BioHouston, Inc. Genesis Biotechnology Park comprises 16 innovative life science companiesand researchers located just south of the TMC. The Park was developed to increase venture capital interests in Houston and iscommitted to supporting start-up companies by providing tenant options for shared office, wet laboratory space (includingequipment), and flexible leases.

BioHouston, Inc., a non-profit corporation founded by Houston area academic/research institutions, is actively leading a broad-based effort to strengthen Houston’s position as a global competitor in life science and biotechnology. BioHouston’s ResourceCenter, the first incubator facility serving the Houston life sciences community, is housed at the Genesis Biotechnology Parkadding a key component to ongoing commercialization efforts. The Center is specifically designed to serve start-up biotech andlife sciences companies by offering access to shared laboratory space, research resources, and networking opportunities with acommunity of biotech entrepreneurs.

From its base of cutting-edge research, Houston has taken the next step in its evolution as a primary life science cluster bycreating an environment conducive for private companies to develop and market life science products. With key initiatives inplace to bring together the public and private sectors, as well significant improvements to the scope of services and incentivesavailable to private companies, the infrastructure is in place to capitalize on Houston’s strong research base and convert it intocommercialized product. With this process now in motion, the biotech future in Houston looks bright.

Biosciences & Biotechnology

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