Houston Adds 128,700 Jobs in Record Economic Surge
Realty News Report Editor Ralph Bivins is the 2018 Winner of the National Association of Real Estate Editors’ Gold Award for Best Column.
HOUSTON – (By Ralph Bivins, Realty News Report) – Over the past 12 months, Houston added approximately 128,700 jobs, one of the largest annual gains on record, according to the Texas Workforce Commission.
That total is the highest 12-month increase recorded since the Labor Department began tracking job growth this way in 1990, as reported by the Houston Chronicle.
A gain of more than 100,000 jobs in a single year is considered excellent for Houston’s labor market, and the region has consistently maintained that strong pace in recent months.
Patrick Jankowski of the Greater Houston Partnership attributes part of the growth to a post-hurricane rebound. Hurricane Harvey made landfall on August 25, 2017, and lingered over southeast Texas for days, causing extensive flooding. Many restaurants and retailers were temporarily closed during recovery.
While the storm led to some job losses, it also created substantial demand for construction and repair workers. Recovery efforts filled thousands of apartment units and hotel rooms, supporting jobs in construction, hospitality and related services.
Regardless of the precise economic effects of the hurricane, the bottom line is clear: since the end of September 2017, Houston has added 128,700 jobs, a remarkable achievement. The unemployment rate fell to 4.1 percent in September, down from 4.8 percent a year earlier.
Other positive trends include:
First: Residential real estate in Houston surged in 2018, with single-family home sales running more than 5 percent ahead of the previous year.
Second: Houston ranks second in the nation for housing starts, reflecting strong new construction activity.
Third: Apartment occupancy has reached its highest level in almost three years, signaling healthier demand in the rental market.
Fourth: Industrial real estate is booming. Construction activity is strong and newly built space is being absorbed quickly. Colliers International reported a 5.7 percent vacancy rate in the third quarter, with 10.3 million square feet under construction.
Fifth: Office leasing shows signs of improvement. Even the Energy Corridor, which suffered during the energy downturn, has seen a recent rebound with large transactions such as the 300,000-square-foot lease at Enclave Place, which had never been occupied. “There have been several sizable leases announced in the last two weeks. And Occidental is purchasing the former ConocoPhillips campus at the northeast corner of I-10 and Eldridge. That is a major indication that the future of The Corridor is very positive,” says David Hightower of Midway, a leader in the West Houston Association.
That said, it is still premature to declare the Houston office market fully recovered. Some commercial real estate firms report positive net absorption in the third quarter; others report negative absorption. The amount of sublease space is gradually declining, but part of that reduction reflects space reverting back to landlords. Building owners remain under pressure to lower asking rents and offer greater concessions.
Office vacancy remains elevated, approaching 20 percent in many studies, and is even higher when sublease availability is included. Colliers notes a striking figure: 83 buildings in Houston currently offer at least 100,000 square feet of contiguous space for lease or sublease.
Filling that level of vacant office space will take time—even with oil trading above $70 per barrel.
