Four 2015 Predictions
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Houston’s real estate experts agree—don’t freak out about oil prices. We rounded up some of the industry’s biggest names, who say the market will slow, but Houston’s not headed into a new recession.
1. Chip Colvill: Shelved developments will maintain strong office market.
Colvill Office Properties president Chip Colvill (fishing with his dad and uncle) thinks our office market will maintain steady growth in 2015, and he’s very optimistic that our strong economy will resiliently carry us through any inconsistencies in the energy market. He thinks many proposed office projects will be shelved (some already have been), which will allow the market to catch its breath and balance supply and demand. (Only the best projects with proven pre-leasing demand will happen.)
2. Chip Clarke: Retailers will flock to Houston, and we'll keep adding jobs.
Transwestern president of the Americas Chip Clarke thinks Houston will continue to be the focal and entry point for new retailers coming into the state. He says things will be choppy in the short-term, but mid- and long-term fundamentals are strong, and job growth will still exceed historical averages. The Greater Houston Partnership agrees—its 2015 forecast predicts 125,000 new residents and about 63,000 new jobs in 2015. Last year ended up better than anyone ever imagined—we created almost 121,000 new jobs in the 12 months ending in October.
3. Rand Stephens: Office leasing will slow, but rents will hold steady.
Avison Young managing director Rand Stephens thinks leasing volume and occupancy rates in office and industrial will decline, but not enough to significantly impact rents. Rand suspects concessions like rent abatement and TI allowances will pick up, and sublease space will increase significantly as energy companies that tied up space anticipating future growth look to right-size in the short-term. And while many investors will move to the sidelines, he thinks the smartest ones will take advantage of less competition to find better buying opportunities. Most importantly, Rand’s crystal ball shows the Rockets winning the NBA championships and the Texans making it to the playoffs.
4. Randy McCaslin: Hotels are in the sweet spot.
PKF Consulting SVP Randy McCaslin says the hotel market is in its sweet spot with occupancies and rates at record highs. Although 2015 may see slower growth, he thinks it’ll remain above long-term averages. Randy forecasts approximately 6,000 new hotel rooms will be delivered to the Houston market through 2017, while numerous demand drivers will help normalize the markets.