The worst is over. Greater Houston Partnership regional economist Patrick Jankowski says Houston is now in recovery, but how will it look? Rapid, like a checkmark? Slow and steady like a hockey stick? Or flat and long, like a bathtub?
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Patrick sees Houston’s recovery as a bathtub, which means we're in for a slow return to strength. Houston ranked last among major metros in both payroll job growth and job growth percentage for the third consecutive quarter. But Patrick is comforted that Houston’s net job growth never went negative during this downturn. Despite our struggles, Houston has managed to eke out positive numbers.
But the type of jobs being created doesn't exactly make up for those lost. Patrick says the jobs we're losing have much more purchasing power than the ones they’re being replaced with. Jobs in manufacturing have an average pay of $75k, according to Texas Workforce Commission data, while mining and logging has an average of $151k and engineering services nets $126k. They’re being replaced with hotels/food services jobs, with an average of $19k; healthcare jobs that average $52k; and building services, with an average of $27k. Without an influx of jobs that have more purchasing power, Houston will struggle to make it up the other side of the bathtub.
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Patrick was optimistic about Houston’s office market at Transwestern’s annual Trendlines event last night. There’s just 2.6M SF of product under construction. But he was not as keen on Houston's multifamily market, telling the room, “y'all need to stop.” In the last 12 months, Houston has delivered 26,000 units, with 15,000 more in the pipeline and 17,000 more in the planning stages. Patrick says the job growth numbers next to the unit deliveries just doesn’t add up. 14,000 jobs in the last 12 months and 26,000 units delivered? You can see the problem.
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Patrick described Houston’s situation as a "nascent recovery." The energy sector needs time, steady prices and additional earnings per share to start bringing back key jobs. The idle capacity in Houston’s industrial areas needs to be filled so we can get back on track. On the bright side, experts are forecasting over $700M in revenue for the city from hosting the Super Bowl in early 2017.
Hear more at Bisnow’s first-ever National Impact of Oil & Gas on CRE event on Dec. 15. With 40 industry bigwigs, you simply can’t afford to miss it. Limited early bird tickets for the full-day, premium event are on sale now.
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