NASA: One Big Question Mark

by CoyDavidson on July 12, 2010

NASA / Clear Lake Office Submarket Update

In Houston, there has been a lot of focus on the B.P. disaster lately and uncertainty regarding its impact on jobs and the Houston economy as the offshore drilling industry is heavily concentrated in Houston.

However, the B.P oil spill is not the only event creating uncertainty for the Houston economy. Last February, the Obama Administration unveiled a controversial new plan for human space exploration, which has business leaders in Houston and property owners in the Clear Lake area deeply concerned.

Thus far, Obama’s new vision for NASA has been vigorously opposed by congressional representatives from Texas and other states that are most affected by the cancellation of Constellation including Florida, Alabama and Utah. All though the President seems to have made some assurance to Florida leaders regarding his plans impact on their state, the other states are feeling somewhat slighted. Most opponents of Obama’s plan are fighting to save the Constellation program, and a few are seeking to extend the Shuttle Program. According to many industry insiders, both of these outcomes are highly unlikely since they would take a lot more money than is likely to be approved.

The Impact of NASA on the Clear Lake Office Market

The NASA / Clear Lake office submarket is small in comparison to the major submarkets in Houston as the area has slightly less than six 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.

Thus far, Obama’s new vision for NASA has been vigorously opposed by congressional representatives from Texas and other that are most affected by the cancellation of Constellation including Florida, Alabama and Utah. All though the President seems to have made some assurance to Florida leaders regarding his plans impact on their state, the other states are feeling somewhat slighted.  Some opponents of Obama’s plan are fighting to save the Constellation program, and a few are seeking additional shuttle flights. According to many industry experts, both of these outcomes are highly unlikely since they would take a lot more money than is likely to be approved.<br /> <h3>The Impact of Johnson Space Center</h3> <p>The NASA / Clear Lake office submarket is small in comparison to the major submarkets in Houston as the area has slightly less than six 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.</p> <p><a href=”>

NASA Contractors such as United Space Alliance, Boeing, Lockheed Martin and others account for approximately 39% of the total office market in Clear Lake and approximately 47% of the currently occupied space. So far all the uncertainty around NASA has had little impact on the submarket’s office inventory and leasing fundamentals in 2010 but this could be about to change.

Boeing has recently placed 135,000 square feet of office space on the market in buildings they own in the Clear Lake area and United Space Alliance (USA); the prime contractor for the Space Shuttle Program has over 800,000 square feet of leases expiring in 2010 and 2011. Last week USA  announced job layoffs of 400 in the Houston area to align the company’s workforce with NASA’s requirements for the remaining assembly and supply shuttle missions to the International Space Station.

Congress is now considering the Obama plan for human space exploration.  The estimates for potential job losses in the Clear Lake area based on the President’s initial plan for NASA were as much as 5,000 jobs. The conventional wisdom or perhaps optimistic view among Texas congressional leaders and business leaders in Houston is a compromise plan that will mitigate job losses at Johnson Space Center, as well as the various aerospace contractors. The only thing that is clear at this point is that there is a lot uncertainty around what the new vision of NASA will look like and its impact on the Clear Lake area.

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