To ensure delivery, please add email@example.com to your address book, learn how
May 29, 2014
Five Ways Houston is Rockin'
Hartman Income REIT is a sponsor of the annual "State of the Market" on June 12 (register here). Hartman has owned & managed commercial office properties in prime locations throughout Houston since 1984. Click here.
Let's take some time to celebrate this morning—in preparation of Bisnow's State of the Market June 12 (register here), we gathered up five of Houston's hottest draws. (If you're more of a glass half empty person, never fear—next week we'll share some of our biggest challenges.)
1. Room to Grow
We're just so darn cheap, says Stream managing partner Adam Jackson (right, with colleague Jeremy Lumbreras). Houston has had 59% office rent growth in the last 12 years but we're still a 32% discount to the other top five AFIRE cities (New York, Los Angeles, DC, and San Francisco). Industrial is even more dramatic, with 22% rent growth still pegging us 82% cheaper than the other markets.
2. Poised to Take Mexico
PMRG SVP/director of research Ariel Guerrero says Houston-area energy companies stand to gain from the opening up of Mexico's energy sector. State-owned E&P company Pemex will soon relinquish its monopoly position. Private bidding on Mexican oil and gas leases is expected to begin by mid-2015, if not sooner. Besides the opportunity for Houston-based O&G firms to increase revenues, foreign investment in Mexico will boost our exports. (It will also boost our ability to get to Spring Break.) According to a study by the GHP and HSBC Bank USA, the combined impact of Mexico's oil production to Houston and the massive investment into Gulf Coast plants could increase exports 15% and add 55,000 jobs to the regional economy. Ariel says this will further connect us to the rest of the world.
Economist Dr. Ray Perryman said “Houston is a three-legged economy, and all three legs are doing well.” (Above, the self-proclaimed BBQ enthusiast spoke for Stream last night.) He says Texas' steadiness through the recession was partially based on oil prices, saying that $130 oil and $12 gas can cover many sins (like a good rouge). Our port has been extending its lead as the No. 1 exporter, a good spot to be in as emerging markets demand more products. Healthcare's another great industry to excel in—Ray says for a while in the recession, it was the only sector gaining jobs. All in all, he doesn't see anything to knock Houston of its pedestal as the US's strongest growth city.
4. Mo' People and Mo' Jobs
It's undeniable that much of our success is linked to our job and population growth, and Colvill Office Properties prez Chip Colvill says we're actually fueling the national economy. Houston has added 80,000 net new jobs from March '13 to March '14, a 3% increase. And that's broad-based, with all employment sectors experiencing YOY increases. We weren't expecting this—leisure and hospitality led the way, with 10,000 jobs created in that time frame (a 4% jump). Meanwhile, our population growth is accelerating steadily—we added 1.8% in 2011, 2% in 2012, and 2.25% in 2013. (We're going to have some busy kindergarten teachers in a few years.) Chip's always got his mind on office and tells us all this will fuel increased rent growth in existing and new product.
5. BTS Mania
Stream VP Stewart Lyman (left, with Liberty Property Trust's Jay Kraft) says we've got 22M SF of office under construction in our major submarkets, and 40% is BTS and owner-occupied. In our last development cycle ('05 to '11), only 13% was BTS or owner-occupied. That shows that our demand is outpacing supply, and (combined with pre-leasing) means we've really only got 6M SF of development longing for a tenant.
Transwestern Goes Big on I-10
Transwestern Development purchased 74 acres in West Ten Business Park and is breaking ground in July on West Ten Distribution Center. (Above, a photo from the interchange groundbreaking—see below for more info.) Phase 1 is two spec industrial buildings totaling 415k SF, which will deliver in Q2 '15. 42 acres remains for future development, which can accommodate 800k SF more. With a potential to reach 1.2M SF, it's one of the largest projects Transwestern Development has ever built. SVP Pete Johnston says demand for industrial space continues to outstrip supply, and the I-10 corridor has been the most robust path of growth and the most important transportation artery in the region. (Not to be a stickler, fellas, but only one of you is wearing proper eye protection for a construction project.)
Pete tells us the project has the scale and flexibility to satisfy a variety of user types. (Phase 1 has both cross-dock and front-load facilities.) Here's the site on I-10 in Katy—the City is completing construction of Cane Island Parkway, which will link I-10 and US 90. TxDOT will launch a four-way interchange with I-10 this summer. Transwestern's site has 2,800 linear feet of I-10 frontage and direct access to that interchange. Transwestern's industrial team is handling leasing.
Teenagers Love Real Estate
34 members of CREW visited Barbara Jordan High School for the third year in a row as part of its CREW Careers program. 93 female students took part in this year's event, which teaches high school girls about options in the CRE world by having them work on a development from dream to design. (School projects are a lot cooler these days.) This year's project was Camden's McGowen Station (previously known as the Superblock) in Midtown.
The girls competed for the best design—here's the winning team, “Power in Pink Development.” It was led by Investment Property Exchange Services' Theresa Quartaro Smith, Camden's Amy Funk, and Automated Logic's Lindsay Miles. Judge (and CREW prez) Laurie Baker tells us these ladies impressed with their creative visual aids that included all relevant financial and property facts. They were also dynamic and sold the judges with their marketing by inviting them to the grand opening.
Learn the ABCs of CRE
Bisnow Education offers commercial real estate training videos for your staff, your class, or yourself. Hosted by the founding chairman of the Wharton School of Real Estate, Peter Linneman, the informal, informative videos cover complicated ground like finance and development in easy-to-understand explanations (watch a sample). Even if you're a world-weary real estate vet or investor, you'll find new angles that will invigorate your passion; newbies will be able to digest the info in bite-sized, five-minute increments that can be watched anytime. They're digital friendly too: Watch or listen on your smart phone whenever/wherever. They're great for teaching and understanding financial models and industry lingo, and they'll be a tremendous asset to your corporate training program. Group rates available. Find out more about our premiere videos (with more to come) here or reach out to Bisnow's Will Friend, firstname.lastname@example.org.
Yesterday we bought a lemonade and discovered it had 65g of sugar and 32% of our daily carbs. In a lemonade! What shocked you today? Tell Catie Dixon, email@example.com.