2018 Houston Commercial Real Estate Market Trends

by CoyDavidson on January 31, 2018

Houston Office Market Report Q4-2017

Positive Signs for the Houston Economy Bodes Well for CRE

Colliers International Houston held its Trends 2018 event at the Houston Country Club Tuesday evening. Overall, the outlook for commercial real estate in Houston is good said Pat Duffy Colliers’ Houston President before hundreds of guests at the annual event.

Current Houston economic indicators are mostly positive indicative of healthy economic output and future growth . In 2017, employment rebounded from a slight decline in 2016 to 1.4 percent growth. West Texas Intermediate has settled in the $65 a barrel range in recent weeks and this combined with a strong national economy is expected to translate into better job growth in Houston in 2018. Houston is projected to gain 45,500 new jobs in 2018.

Key Points from the Presentation:

  • Office: The office market is the weakest of the three major commercial real estate sectors which has recently shown signs of bottoming out and beginning a slow gradual recovery. No big shifts in the office market are anticipated for 18 months.
  • Industrial: The industrial market is arguably Houston’s strongest commercial real estate sector. Industrial is the new retail and Houston is now beginning to experience the impact of unprecedented  growth in e-commerce logistics. Vacancy is low at 5.4% at year-end 2017.
  • Retail: The retail market remains healthy with less than 6% vacancy despite one of the most transformative shifts in retail in decades and a record number of store closings nationally approximately (7,000) in 2017.  New development is primarily concentrated around the Grand Parkway.
  • Healthcare: The medical real estate market continues to experience growth as hospital continue to expand hospitals and place outpatient clinics in the suburbs to serve Houston’s strong population growth. Houston is projected to add 8,000 healthcare jobs in 2018.
  • Multi-Family: Hurricane Harvey provided an unfortunate but quick fix to an oversupply of apartment units, as the epic storm damaged or destroyed 97,212 Houston area homes. As residents return to their repaired homes, Houston’s population growth is projected to absorb those new multi-family vacancies.
  • Housing: Residential sales are strong as single-family home sales for the full year 2017 rose 3.5 percent compared to 2016. Inventory is tight at approximately 3.6 months in December of 2017.

2018 Houston TRENDS by Coy Davidson on Scribd

Download the presentation slides in PDF format 

Houston Office Market Report | Q4 2017

After six straight quarters of negative net absorption, Houston’s office market posts 673,000 SF of positive net absorption in Q4 2017. Although positive, Houston’s office market 2017 year-end absorption total is still well within the red, at negative 1.7M SF. After three years in an economic energy slump, Houston’s office market is ready for a boost. Even though oil prices have recently increased, the increase is not enough to spur hiring sprees in the energy industry. With the recent increase in oil prices… read the full report

Houston Industrial Market Report | Q4 2017

The resiliency of Houston’s industrial real estate market is truly astounding. Outsiders have always considered Houston to be an “oil town” with our economic success tied to the geopolitical intricacies of the international oil and gas markets. Three years into the oil and gas downturn, Houston has proven yet again that we have a truly diversified economic base. As a result, Houston’s industrial real estate market has enjoyed a disproportionate benefit of that concerted effort to have a truly balanced economy… read the full report

Houston Retail Market Report | Q4 2017

Houston Shopping CenterHouston’s retail market has shown resiliency amid an energy downturn, retailer bankruptcies and store closings, as well as a category 4 Hurricane which flooded Houston in August. Despite these events, Houston’s average retail vacancy has remained under 6% over the past few years and the average retail vacancy rate remained steady between quarters, holding at 5.6%. Absorption slowed during the fourth quarter, but this was mostly due to decreased construction deliveries… read the full report

Houston Healthcare Real Estate Report | Year-End 2017

Houston has been long recognized as the energy capital of the world and the energy downturn certainly made its impact felt on the Houston economy and commercial real estate market. Houston’s economy slowed significantly and grew at a lesser pace in 2015, 2016 and 2017, however one of the sectors of the Houston economy that never really tapped on the brakes from expansion was healthcare. Recent economic indicators indicate the Houston economy is getting back on track and despite the constant… read the full report

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