The worst Thanksgiving for the Texas energy industry — November 27, 2014 — is becoming a more distant memory. On that day, OPEC chose not to cut oil production, sparking a sharp drop in oil prices, a halt in drilling activity and thousands of layoffs across the region.
Houston is still working its way back. Some sectors have recovered, while others have not yet reached their previous levels. Still, as we approach another Thanksgiving week, there are several trends and major developments that offer reasons to be grateful. Commentary and photos by Realty News Report Editor Ralph Bivins.
Be grateful that office construction is tapering off
In 2014 Houston led the nation with roughly 17 million square feet of office construction underway. Most of those projects are now complete, and only about 2 million square feet remain under construction. A large portion of that total is the 609 Main at Texas Tower, a roughly 1 million square-foot project Hines is expected to finish in January.
Given current market conditions, Houston does not need a new wave of office supply. Vacancy sits above 21 percent, and approximately 12 million square feet is on the sublease market. With new construction largely paused, the market can absorb existing vacancy and used space more effectively. That slowdown in deliveries is a welcome change for landlords and tenants alike.
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Home sales are stronger than ever
Mortgage rates have inched up since the election, which is never ideal for buyers. Nevertheless, existing single-family home sales in Houston were on track in 2016 to set a new annual record. Some upper-end neighborhoods showed softness—partly blamed on the energy downturn—but overall activity remained robust.
One persistent challenge in recent years was low inventory. Many new listings drew multiple offers, and frustrated buyers often lost out on homes they wanted. In 2016 the available inventory improved and buyers returned to the market. The result: a likely record year for Houston home sales, which is encouraging for the city’s real estate and services sectors.
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Opening spaces: tearing down fences
One positive move has been Third Palm Capital’s decision to remove the barrier surrounding the 35-acre former Exxon Chemical campus in Houston’s Energy Corridor. The site—more accurately described as a perimeter fence rather than a wall—had been locked down for years despite being a large, wooded property with a lake. The new owners have chosen to open the grounds to the public.
The property stretches west of Eldridge Parkway from I-10 to Memorial Drive. Third Palm envisions a long-term mixed-use project called Republic Square. In the near term, existing office buildings on the site are being leased to smaller tenants. Opening the grounds is a welcome gesture that reconnects the land with the surrounding community.
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The Super Bowl is coming to Houston
Civic leadership helped bring the NFL’s Super Bowl to Houston on February 5, 2017. Ric Campo, CEO of Camden Property Trust and an active local leader, played a key role in pitching the city to the league. With the game as a deadline, downtown has seen new hotel development in recent years to prepare for the influx of visitors.
The Super Bowl provides a significant economic boost—benefiting hoteliers, restaurant and bar staff, transportation providers and many other service workers—offering a welcome lift for the local economy.
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Thanks to visionaries like Larry Johnson
Larry Johnson recognized early that the Highway 288 corridor south of Houston, in Pearland, could become a major development area. The area’s first significant attempt at growth began in the 1980s with Southwyck, but that effort stalled during Houston’s mid-1980s downturn.
In 1994 Johnson’s group acquired the remaining 1,100 acres of Southwyck for $6 million, rebranding it as Silverlake and promoting its convenient access to the Texas Medical Center, which employs roughly 100,000 people. Today Pearland is among the fastest-growing communities in the nation, and recent work to expand Highway 288 will support continued growth. Johnson’s long-term vision helped change perceptions about the south side of Houston.
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Thanks to Ed Emmett for saving the Astrodome
Harris County Judge Ed Emmett led the effort to preserve the Astrodome, a defining symbol of Houston’s ambition. The world’s first domed stadium opened in the 1960s as an engineering marvel, and after sitting vacant for years the county moved forward with plans to reuse it.
The county’s plan calls for raising the Astrodome’s floor, creating two levels of underground parking and converting roughly 550,000 square feet into usable public space. Repurposing the Dome preserves a piece of Houston’s history and gives the city a versatile venue for future events and public uses.
Nov. 21, 2016 Realty News Report Copyright 2016
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A Word of Thanksgiving from Realty News Report
Realty News Report thanks its sponsors: Arch-Construction, Avera, Bernstein Realty, CBRE, Clay Development and Construction, Colliers International, Colvill Office Properties, Cresa, Davis Commercial, Hines, NHMC Optech, NAI Partners, Transwestern, Vista Companies, Ziegler Cooper Architects, 500 Crawford Luxury Apartments and 811 Louisiana.
Happy Thanksgiving to all.
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