Houston Takes The Spotlight For Corporate Relocations, Offsetting Expectations Of Slow Job Growth In 2021
It’s been a rough year for Houston’s economy. The city lost 350,000 jobs between March and April, and in the following months it has still only regained about half. Delayed economic stimulus from the federal government and expiring eviction moratoriums have compounded the pain.
However, business leaders say that despite the coronavirus pandemic and energy downturn, many firms have continued to move their operations to Houston. That trend is expected to continue in 2021, which may help stimulate job growth and benefit the commercial real estate sector.
Susan Davenport, chief economic development officer at the Greater Houston Partnership, said the organization closed 18 projects in Houston during 2020, creating 1,800 new jobs and about $587M in new capital investments.
“Year to date, we've closed 18 of the 20 projected projects that we thought we would see this year. So we've kept pace on the new project closings, and our portfolio of prospects is as high today as it was in January,” Davenport said during a Bisnow webinar Dec. 9.
Last week, Hewlett Packard Enterprise announced plans to move its corporate headquarters from San Jose, California, to Houston. As a result, the Greater Houston Partnership has experienced an uptick in interest from outside the city.
“I know we saw a flurry of new project activity come rolling in last week from site selectors around the country. We had a lot of inquiries [about] the HPE announcement,” Davenport said. “So again, that positive momentum can help us as we were already undertaking a strategy to further diversify our economy.”
A new forecast this week from the Greater Houston Partnership anticipates between 35,000 and 52,000 new jobs created in Houston in 2021, down from 60,000 to 70,000 in a typical year. Much of that growth is expected to occur in the second half of the year and will largely depend on how quickly the U.S. — and Houston — can get the coronavirus pandemic under control.
“That range is going to be, I think, dependent on the virus,” Davenport said. “If we don't get this under control, there could be more shutdowns that could lead to a much more concerning number on those jobs.”
The commercial real estate sector will benefit from new economic development projects, but Houston’s struggling office market is unlikely to bounce back soon. Moody Rambin Managing Director Bob Cromwell said the economic uncertainty created by the pandemic has led to fewer long-term leases being signed.
“We did more one-year leases this year than ever in my career,” Cromwell said.
Cromwell doesn’t expect to see many new office starts in 2021, and he said record home sales indicate a recent flight to the suburbs — a trend that office developers should take note of.
“A lot of the home sales have been north and west. I would tell a developer to go to where the people are going. Unfortunately, people are not comfortable with Houston [Independent School District] so they'd rather be in Montgomery, Cy-Fair, Katy, Fort Bend County. And I think that's where you would want to be,” Cromwell said.