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Houston's 7 Defining Trends of 2015

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2015 was a mixed bag for Houston commercial real estate, with some parts of the industry falling off the map while others took off at breakneck speed. We broke down the biggest trends that drove real estate this year. (If you missed our top deals of the year, be sure to check that out, too!)

Oil record lows

This is Houston. Oil impacts everything. West Texas Intermediate crude fell as low as $34.73 a barrel, and those plummeting oil prices have claimed more than 200,000 jobs worldwide. Major Houston players like Schlumberger, Halliburton, Weatherford, Baker Hughes, ConocoPhillips and Shell all announced massive layoffs. The workforce cuts have halted several major office deals, spurred rising availability and contributed to declining rent rates.

Condo construction ramps up

Condos are just 5% of Houston’s housing market, and there’s been no real activity the past five years. But now more than a dozen new projects are on the boards or under construction. ARA managing director Adam Allen says the inactivity has created the largest supply/demand imbalance of any product type. Look for new properties like Arabella, The Wilshire at River Oaks, and 3615 Montrose in 2016.

International investors hot on Houston

It was a year of major foreign investment in the Bayou City. Japanese HVAC manufacturer Daikin is building a 4M SF manufacturing Comfortplex, the largest industrial project in the US, in Waller County. Spanish private investment firm Corporacin Masaveu paid $172M for 2200 Post Oak Blvd, setting Houston’s new cost-per-SF record. And Strategic Capital, the US investment arm of Chinese real estate and construction behemoth CSCEC (China State Construction Engineering Corp), made its first Texas purchase with the acquisition of the Broadstone Post Oak Apartments. Even the Swiss are coming. (More below.)

The show goes on

Performing arts enthusiasts rejoiced with major theater openings this year. Houston’s grand dame, The Alley Theatre, opened in September after a $47M renovation. The anticipated new Midtown Arts and Theater Center Houston (MATCH) and updated Main Street Theater in Rice Village delivered in the fall, providing accessible neighborhood theaters. The Queensbury Theatre in City Centre demolished its old facility and went vertical to double the size of the new theater. A.D. Players broke ground on a new building to house a main stage, children’s theater and black box theater, and Sugar Land's huge Smart Financial Centre is churning through construction.

Hot hotel market

Call it the Super Bowl effect, or a gross supply imbalance. Houston had 17,500 hotel rooms in various stages of development this year. New properties like the Marriott Marquis and Hotel Alessandra are adding keys downtown, along with redevelopment of aging properties like the Savoy Hotel into a Holiday Inn. In The Woodlands, a new Westin at Waterway Square and an Embassy Suites in Hughes Landing will bolster the already hot market.

Pearland growth spurt

With proximity to major employment centers and ample available land, it’s no wonder Pearland was recently ranked the 15th-fastest-growing city in America. Retail development like The Center at Pearland Parkway and Costco will serve the exploding population, which has doubled in the past seven years thanks to massive master planned communities like Meridiana, Pomona and Sedona Lakes. New office space at Pearland Town Center is underway along with a just-announced 100k SF biotech facility for Swiss pharmaceutical giant Lonza Group. And as it's urbanizing, Pearland's getting some sweet new multifamily880 units are underway.

Grand Parkway drives northwest Houston

Every time we turned around this year, there was a new project announced along the Grand Parkway. Much of that activity was along the 38 miles in northwest Houston, especially at I-10 in Katy. That includes major mixed-use plays like Grand Crossing, Verde Parc and LaCenterra at Cinco Ranch Phase 3. Oden Hughes just started another multifamily development along the route, and NewQuest and Read King in particular have been breaking ground on Grand Parkway-fronting retail properties left and right, including Grand Morton Town Center and Waterview Town Center.

North Houston has also gotten a boost, although new segments connecting Hwy 290 to I-69 in New Caney were delayed by heavy rains. Still, the impending delivery (plus Exxon nearby) is spurring significant activity. The 692-acre Woodson’s Reserve master planned community will open in Spring, just east of I-45. Bohannon is starting a luxury multifamily project at Kuykendahl, and Halberdier announced a couple of developments including the MOB/mixed-use Grand Hardy Riley Crossings.