How Houston’s Population Growth Is Driving Economic Development
It’s an understatement to say Houston is a growing city. In the last 10 years, the greater Houston area's population has grown by 1.1 million people, as workers have flocked here in pursuit of job opportunities, an affordable cost of living and quality of life. In that time, the Houston economy has remained resilient, supported by the strength of the U.S. energy industry.
Houston’s population has now surpassed 7 million people, with no signs of slowing down, according to the Greater Houston Partnership. As the workforce expands, new developments will be necessary across all asset types to keep up.
Different cities and counties within the Houston area want a piece of the economic pie for their own communities. Enter the local economic development council.
These EDCs are all competing for the attention of investors, developers and companies looking for space to grow. But each has a slightly different approach in how they tackle the issue of growing their local economies.
Uptown Houston, which oversees the area best known for the Galleria mall, has made transportation and pedestrian access its major priorities. The Post Oak Boulevard project, which broke ground in early 2017, is approaching completion. That project has involved relocating buses to dedicated express lanes, expanding sidewalks and adding trees, while preserving all existing traffic lanes and protected left turns.
That project is in addition to the major construction work being done to build new transit capabilities for the west section of the 610 loop, which will ultimately improve the mobility of public transportation in and out of the Uptown area.
“We have to be able to provide an alternative means of movement besides single-occupancy vehicles. It’s just going to be a chokehold on the city if we don’t,” said Bob Ethington, director of research and economic development with Uptown Houston.
Now that the Post Oak Boulevard project is nearly finished, Uptown Houston is focusing most of its attention on the Memorial Park master plan. With origins as far back as 2011, the plan has several goals, including the construction of a land bridge to reconnect the north and south areas of the park, a wildlife observation lake and a sports complex.
“It is a significant project that is taking much of our focus and our revenue stream,” Ethington said.
Though traditional development is not permitted within Memorial Park, the end results of the master plan are expected to have a positive impact on the quality of life for people who live in the area, as they will have safer and easier access to all areas of the park.
“The focus was to take a park that was a gem of the city, that had been through significant drought and damage, and do what we could to help restore it. And then, with the master plan, improve it for all Houstonians and for visitors that come to the Houston area,” Ethington said.
While Uptown does not offer tax abatements or tax incentives for investors to develop there, other economic development councils within Houston do.
This can be seen in The Woodlands area, which has made tax abatements available to encourage companies to relocate or expand into the community. Various corporate entities have been incentivized to move there, including Huntsman, Baker Hughes, Chevron Phillips Chemical Co. and Maersk Line.
But the area went through some significant anxiety in the last year as Occidental Petroleum acquired Anadarko. Anadarko is the largest employer in not just The Woodlands area, but all of Montgomery County, according to The Woodlands Area Economic Development Partnership CEO Gil Staley.
“It was an anxious time for us, as a community, and certainly for economic development,” Staley said.
The Howard Hughes Corp. announced a deal in December with Occidental to purchase the company’s two Class-A office towers, warehouse space and land in The Woodlands. Howard Hughes said Occidental would maintain occupancy at The Woodlands Towers, formerly Anadarko’s HQ. Howard Hughes, which developed the master-planned The Woodlands community, also recently moved its corporate HQ to the area.
Now, the priority has shifted to backfilling empty office space within the Anadarko campus. While Occidental has agreed to lease back 100% of the Allison Tower, the neighboring Hackett Tower has about 1.4M SF, which is available to sublease to multiple tenants. The Woodlands area also has other office campuses that still have room for development, allowing for more job growth in the area.
The energy industry is most commonly celebrated as the dominant source of employment in Houston. But healthcare occupies a strong foothold in the city as a major employer and source of revenue — and a helpful buffer to fall upon when energy experiences a downturn. Both Memorial Hermann and Houston Methodist hospital systems are working to expand their campuses in The Woodlands.
“That, right there, is so encouraging for us because they only look at a market if it’s growing. And we certainly are, in that area, by population,” Staley said.
“I have said, over the last many years, certainly at least five, healthcare has saved us once again. And that’s what I’m looking for in the future.”
The Woodlands area is known for master-planned communities with mostly single-family homes. But Staley said the capacity for new single-family homes is almost at its limit. Instead, the growth area for new housing, going forward, will likely be multifamily developments. Millennial workers, drawn to jobs in the area, are likely going to be the prime cohort for that housing, he said.
The Uptown Houston and The Woodlands Economic Development Partnership oversee small, specific areas. But the Fort Bend Economic Development Council is tasked with overseeing development across a huge geographical area. The cities within its boundaries include Katy, Richmond, Rosenberg, Missouri City, Stafford and Sugar Land.
Fort Bend County offers a wide range of incentives to attract new, expanding and relocating businesses. These incentives include tax abatements, development funds, grant programs, credits and bonds. The county also focuses on prioritizing ease of business, with an emphasis on trying to make administrative permitting issues as smooth as possible.
“Time kills deals in our business and we understand just-in-time principles that business must react and deliver on,” Fort Bend Economic Development Council CEO Jeff Wiley said.
Many major projects are under development across the county, including the Katy Boardwalk and The GRID mixed-use developments, which are both building out additional phases of their projects. Wiley noted that nearly $1B worth of solar projects are in various phases of development across more than 10,000 acres in central and western Fort Bend County.
The Dollar Tree distribution and warehouse project is scheduled for completion near the end of the year in Rosenberg, and the county just closed on a new expansion of the Frito-Lay facility in Rosenberg’s extraterritorial jurisdiction.
With an eye on virtually every kind of development and potential business, Wiley said mixed-use projects are increasingly important for the different communities across the Fort Bend area.
“We recognize that you have to create places people want to be, to create work, live and play environments that will attract companies and employees in today’s market. As part of that we also recognize that the traditional big-box and retail environment is also transitioning to a warehouse and distribution model,” Wiley said.
Infrastructure remains a significant challenge to the region. Fort Bend EDC believes that over time, as traffic congestion and quality of life become bigger issues for the region and employee retention, the natural reaction of companies will be to move closer to where their essential workforce lives.
“Our challenges today continue to be the same challenges the rest of the region faces: infrastructure sufficient to sustain growth, safety and quality of life,” Wiley said.