Houston Economic Update: November 2010

by CoyDavidson on November 2, 2010

Houston MSA records first year-over-year jobs gain since January 2009

The Greater Houston Partnership released its November 2010 Economic Report and once again the employment data reported is relatively good news for Houston. Highlights on the employment front include:

  • For the 12 months ending September ’10, the Houston-Sugar Land-Baytown metro area added 3,300 jobs, a 0.1 percent increase in employment, the Texas Workforce Commission (TWC) reported. This marks the first year – over- year gain since January ’09.
  • TWC also reported that the Houston metro area added 4,800 jobs from August ’10 to September ’10, the first September gain since ’07. The gain represents a 0.2 percent increase in employment.
  • Houston’s unemployment rate dropped half a percentage point to 8.2 percent in September, the first month since April ’08 that the month’s unemployment rate was lower than the same month the previous year.

The 3,300 annual jobs gain is anemic for Houston compared to healthier economic times.  Houston added 105,000 jobs in 2007 and 87,000 jobs in 2007.  However, at this time last year, Houston reported a loss for 104,300 jobs for the previous 12 months period.

Who is Adding Jobs?

Compared to September ’09, employment is up in:

  • Mining – 3,700 jobs
  • Manufacturing – 2,600 jobs
  • Retail Trade – 500 jobs
  • Educational Services – 900 jobs
  • Healthcare and Social Assistance – 8,300 jobs
  • Arts, Entertainment and Recreation – 500 jobs
  • Accommodation and Food Services – 2,000 jobs
  • Personal Services – 600 jobs
  • Total Government – 700 jobs

Employment is below last year’s level in:

  • Construction – (9,100 jobs)
  • Wholesale Trade – (1,500 jobs)
  • Transportation, Warehousing and Utilities – (1,200 jobs)
  • Information – (1,700 jobs)
  • Finance – (1,000 jobs)
  • Professional and Business Services (1,800 jobs)

Trade Continues to Grow

The Houston-Galveston Customs District handled $137.1 billion in trade during the first eight months of this year, up 29.9 percent from $105.6 billion during the same period last year. Exports totaled $60.2 billion, up 26.9 percent from ’09, and imports totaled $76.9 billion, up 32.3 percent from the same period last year.

The Real Estate Market

Housing Market Remains Soft: The Houston Association of Realtors® Multiple Listing Service tallied closings on 4,648 properties in September, down 18 percent from September ’09. Sales of single-family homes fell 18.6 percent to 3,903. The decline in total closings follows the artificial gains in the early months of ’10 induced by the first-time buyer tax credit.

Although housing demand has weakened, prices have strengthened. The average single-family home price rose 5 percent from September ’09 to $215,250. Luxury home ($500,000+) sales continue to do well, up 6.6 percent from September ’09.

A rise in the housing market isn’t expected soon. The buying season is over and the foreclosures halt called by the Texas Attorney General may cause prospective homebuyers to postpone their decision to buy. The region’s unemployment and wages must grow before a rise in the housing market is seen.

Industrial Market Strengthening: Houston’s industrial market fundamentals continue to strengthen, with 1.8M SF of positive net absorption in the third quarter bringing the year-to-date total to 4.4M SF, an improvement from the positive net absorption of 1.6M SF recorded through the third quarter last year.

Occupancy also posted a slight gain with the citywide average at 93.9% in the third quarter, up from 93.2% at this time last year. While quoted rental rates for industrial space fell below levels for the same period last year, rental rates remained stable from the previous quarter.

Read More: 3Q 2010 Houston Industrial Market Report.

Anemic Office Market: Houston’s office market at the close of 3Q 2010 showed a slight improvement from the previous quarter, with a stronger performing suburban sector, compared to the Central Business District (CBD). Although leasing activity picked up, vacancy increased slightly.

Year-over-year change in office occupancy citywide was moderate with 83.3 percent occupancy at the end of the third quarter compared to 83.8 percent in the same quarter last year. Quoted rental rates citywide for Class A space decreased 0.4 percent, with the CBD Class A decreasing 2.0 percent to $35.16 per square foot, while suburban Class A space decreased a minimal 0.2 percent to $27.30 per square foot.

Read More: 3Q 2010 Houston Office Market Report.

Houston Economic Update: November 2010

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