The consensus on Houston, from Houston chapter members:
The Price of Oil
Yes, they are worried about the price of oil. How can they not be? They note that Houston’s real estate market moves inversely to the rest of the U.S. economy. When the rest of the economy is struggling, Houston is often doing thriving.
Now that the rest of the economy is humming along, Houston is taking a break. The price of oil is clearly a leading cause.
However, I spoke with many people who said — over and over — that this is not the ’80s. There isn’t the overbuilding that happened in the ’80s and the economy is much more diversified now than it was then.
So, are they worried about Houston real estate? In the near term, it will be slower than it has been. The mid- to long-term prospects for the city are excellent. Most people seemed to think that oil would be back in more normal territory by the end of 2015.
But even a slow-down in Houston isn’t bad. Local economists are cutting their new jobs forecasts to 20-30,000 new jobs added in 2015. Many pointed out that would be a banner year for many cities.
This was one of the main topics of conversation. We may wish to consider addressing oil prices and their impact on commercial real estate as a whole, and in Houston specifically, as a part of the O.CON ’15 conference. It will be a topic of conversation, anyway. We may as well address the elephant in the room.
Come for the Work, Stay for the Quality of Life
One common refrain was people moved here for work and once they saw the great quality of life, they wanted to stay. Wages are good, cost of living low, no winter to speak of, schools are good, etc.
A Boom Town Anywhere Else
Another common line of thought is that if any other real estate market had the fundamentals that Houston has, there would be dozens more active developers in the market. There would be more contractors, service providers, etc. And there likely would be more overbuilding. But because Houston flies somewhat under the national radar, they have a smaller commercial real estate community than you might expect.
Medical Office Hub
If we ever launch a medical office conference, we should seriously consider Houston. According to some I spoke with, it’s the largest medical office market in the U.S. They have new medical centers coming online and they are excited about this area of growth for their market.
Chris Ware is Vice President, Business Development at NAIOP.