Houston Economy And Real Estate To See Good Times Ahead


The good news is we have turned the corner in the Houston area. Momentum has been strong with 680,000 jobs created here from 2004 to 2014. That’s the same number of jobs there are in Oklahoma City.

We needed to build a new metropolitan area literally inside Houston, and just because the price of oil fell at the end of 2014 did not mean that the catch-up period was complete.

The most ambitious scenario of economic growth shows a solid recovery and the return of energy jobs already under way. The most skeptical scenario shows a rebound that might not start until next year.

In commercial real estate, brokers are reporting mixed outlooks for different sectors of the market.

Energy companies, which typically account for more than half of the space leased in Houston-area offices, shrank to 18 percent of the 7.6 million square feet worth of deals in 2016. Office availability, which factors in sublease space, reached a 20-year high of 20.9 percent.

Sublease space has fallen since peaking at 12.5 million square feet in November, but for the next three years, it’s going to be pretty bumpy. It’s pretty much going to be a tenant’s market.

Owners of commercial real estate aren’t out of the woods either.

The need to spend money on updates could contribute to an increase in buildings with non-recourse loans being returned to their lenders as owners assess their options.

You’re a business person, you have an obsolete building. Now you have an empty, obsolete building that needs $50 per square foot in tenant improvements and leasing commissions, plus the building probably needs capital items.

The industrial market has remained healthy with a 5 percent vacancy rate.

Houston will gain more new warehouse space as retailers position themselves to be close to their customers to compete with Amazon.com, which is expanding in Houston.

All consumer names are looking to plant the flag in Houston.

On the retail side, Houston had the highest demand on record of 4 million square feet, compared with 3.9 million square feet of new space completed in 2016.

Occupancy is highest inside Loop 610, where it stands at nearly 98 percent, compared with about 94 percent for the market overall.

Expanding retailers include Lidl, a German grocer, Total Wine & More and PGA Tour Superstore. Entertainment concepts such as Pinstripes and Bowl & Barrel are also gaining traction.

Burgers remain a hot concept, with recent expansions by Hopdoddy Burger Bar, Shake Shack, Bugerim and FM Burger.

In-N-Out Burger is finalizing the purchase of its first site for a Houston location after considering the market several times

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