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The FAA grants license to make Ellington Airport the 10th commercial spaceport in the U.S

The Federal Aviation Administration granted a launch site license for Ellington Airport making it the 10th commercial spaceport in the United States the Houston Airport System announced June 30.

spaceport rendering

A Boost for the NASA / Clear Lake Office Market?

The Houston office market has been one of the most robust in the country over the last several years coming out of the most recent recession, but the one office submarket in the Houston area that didn’t catch the economic wave driven primarily by the energy boom was the NASA / Clear Lake office market.

This isn’t to say the Clear Lake area hasn’t experienced economic growth over the last several years. As a long-time resident of the area, I have been one of only a handful of Houston commercial real estate professionals consistently active in the NASA – Clear Lake office market over the last 20 plus years. As a result, people are always asking me about the economy and the commercial real estate market in Bay Area Houston.

My response over the past couple of years has been; ” it is very healthy with the exception of the office market which has been stagnant.” The housing, retail and healthcare sectors have expanded with significant new development, but with the area’s primary driver of office using employment (NASA/Aerospace) in retrench mode, the office market while stable has not seen any significant improvement in market fundamentals.

It Doesn’t Take Much for a Small Submarket

The NASA / Clear Lake office submarket is small in comparison to the major submarkets in Houston as the area with approximately 5.6 million square feet of office space. This submarket approximately 18 miles southeast of Houston’s central business district is highly dependent on Johnson Space Center. The Petrochemical industry and the Port of Houston are other key economic drivers for the Bay Area Houston region but in terms of office space users they pale in comparison to the NASA contractors. I have seen over the last 24 years, NASA budget battles depending on which party was in control in Washington and Space Shuttle tragedies send shock waves through the NASA – Clear Lake office market.

jsc nasa sign

Conversely, if Houston truly becomes a major center of commercial space operations it could be the boost the NASA – Clear Lake office market needs to spur office using employment and new office development. NASA’s Johnson Space Center is expected to play a significant role in the future of commercial spaceflight and given the concentration of Aerospace engineering talent  already in the area there is no reason it shouldn’t.

A significant portion of the one million plus square feet vacated by NASA Contractors such as United Space Alliance, Boeing and Lockheed Martin over the last several years has been absorbed by non-aerospace office tenants. Only a couple of significant large blocks of office space remain.  At the end of the first quarter of 2015, there was approximately 1.1 million square feet of available office space in the NASA-Clear Lake submarket with the bulk of the vacancy (944,580 sF) being Class B  product. Class A office inventory is tight with a 2.3% vacancy rate.

Houston Spaceport and commercial space operations might be just the driver the Bay Area Houston office market needs to spur growth and signals the return of the office developer to the NASA-Clear Lake area.

  • Stay tuned for the upcoming 2Q Houston Office Market report from Colliers International – Houston

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This Week in the Economy

June 26, 2015

Stocks Down in Value for the Week All three major stock indexes posted losses for the week. The Dow was down 0.38% for the week and the S&P lost 0.40%. The tech heavy Nasdaq dipped 0.71% in value for the week. Below are links to the top economic stories of the week for the United States, Texas and Houston […]

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This Week’s Recommended Reading

June 26, 2015

5 Articles to Read this Weekend Commercial real estate playing catch-up with technology Technology in commercial real estate is sorely lacking, but not for long. Brandon Weber, a former vice president at CBRE, left his job there to address the problem of what he called “woefully inadequate” technology in the industry… Houston Business Journal Better […]

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Supreme Court Ruling will Intensify Healthcare Real Estate Activity

June 26, 2015

Real Estate Strategy and Market Intelligence for Healthcare Providers The Supreme Court on Thursday in a 6-3 decision upheld the Affordable Care Act’s subsidies designed to help U.S. residents purchase coverage through the federal exchange. The Supreme Court ruling brings some additional clarity to the future of the healthcare market and is expected to intensify […]

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This Week in Healthcare Real Estate

June 20, 2015

Healthcare Real Estate News from Across the Web Ventas – Ardent Deal – Premium Price for a Premier Portfolio? The recently announced Ventas (NYSE: VTR) acquisition of Ardent Health services caught many healthcare real estate investors by surprise. Questions have arisen such as what are they buying, is the price right… Revista Atlantic Health System purchased […]

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