Energy Leads the Way as Houston Surges into 2012
Today in the Colliers Houston office we were treated to a visit from James Cook, U.S. Director of Research for Colliers International. James was giving us one of his recent economic update presentations and the Q & A turned to the Houston economy with a focus on the Energy industry. The twist was that we were not asking James the questions, he was quizzing us on the drivers of the Houston economy and elaborating on the perception of Houston he typically hears as he travels the economy. While James understood that the Houston economy is likely the best performing of any metro in the nation recently, he seemed a little surprised to hear how much activity was occurring in the Houston commercial real estate market.
For example, he learned that our number one producer last month was a land broker and that we recently leased 8 floors of office space in a speculative building that is not even out of the ground yet. These are market examples that are not typically occurring in other cities around the country. James said, “I feel like I am in a different country” then about 15 people responded in chorus simultaneously, “you are!”
Yes Texans have always had a lot of swagger, but the fact remains the Houston commercial real estate market is hot right now. In fact, Houston contributed 8.1 percent of total U.S. office space absorption in 2011, more than any other market— despite the fact that Houston only accounts for 3.4 percent of the national office inventory. The “tenant-friendly” office market has ended in Houston as for the most part, much of our job growth has been in office using employment. Activity is strong in all sectors, even in retail as Houston is one market that is on most retailers’ radar for expansion.
The Houston economy is more diverse than many people outside the region realize but there is no question that Oil & Gas has been the primary driver of Houston’s economic resurgence. The Federal Reserve Bank of Dallas just released this report which provides some perspective on the Houston economic story.