|AUSTIN (Texas Realtors) – May 7, 2019 – Texas home sales continued to |
rise, and median price moderately increased during first quarter 2019, according to the 2019-Q1 Texas Quarterly Housing Report from Texas
Last quarter, 70,827 homes were sold statewide, a 0.7 percent increase over the year. The median price increased 2.7 percent to $230,000.
Of all the homes sold in the first quarter in 2019, 32 percent were priced from $200,000 to $299,999, the highest share of sales among all
price-class distributions. Homes priced from $100,000 to $199,999
represented the second-highest share of sales with 30.5 percent.
Real Estate Center Chief Economist Dr. Jim Gaines said sales increased by around 1 percent across the state during the first quarter with notable gains in sales volume in March in the major markets.
“The median price also continued to rise but at a substantially slower
rate,” he said. “Furthermore, listings finally showed signs of growth with a corresponding rise in months inventory, but it’s still a tight market
Active listings jumped 14 percent from a year ago to 104,620. Texas
homes spent an average of 68 days on the market.
Housing inventory in Texas also increased 0.4 months over the year from first quarter 2018 to 3.6 months of inventory. According to the Real Estate Center, a balanced market has between six and 6.5 months of inventory.
COLLEGE STATION – (The Real Estate Center Texas A & M) – April 29, 2019 – The Texas economy continues to grow faster than the U.S., but it has been cooling off the past six months.
According to the Real Estate Center’s latest Monthly Review of the Texas Economy, the state gained 271,000 nonagricultural jobs from March 2018 to March 2019, an annual growth rate of 2.2 percent, higher than the nation’s employment growth rate of 1.7 percent.
The nongovernment sector added 262,300 jobs, an annual growth rate of 2.5 percent, also more than the nation’s employment growth rate of 1.9 percent in the private sector.
Texas’ seasonally adjusted unemployment rate in March was 3.8 percent, lower than the 4 percent rate a year ago. The nation’s rate decreased from 4 to 3.8 percent.
All Texas industries except the information industry had more jobs in March 2019 than in March 2018. The mining and logging industry ranked first in job creation followed by construction; other services; manufacturing; leisure and hospitality; transportation, warehousing, and utilities; and education and health services.
All Texas metro areas except Longview had more jobs. Midland ranked first in job creation followed by Odessa, Dallas-Plano-Irving, Sherman-Denison, College Station-Bryan, Houston-The Woodlands-Sugar Land, and McAllen-Edinburg-Mission.
The state’s actual unemployment rate was 3.5 percent. Midland had the lowest unemployment rate followed by Odessa, Amarillo, Austin-Round Rock, College Station-Bryan, and Sherman-Denison.
HOUSTON (REBusiness Online) – January 10, 2020 – At the end of the year, a record-high 19.1 million sf of industrial space across 112 buildings was under construction in the metro, according to Avison Young. Year-end vacancy stood at 6 percent, and two million sf was absorbed in the fourth quarter.
Four of the five largest projects are build-to-suit developments totaling almost 3.9 million sf.
The largest of those, Medline’s 1.3 million-sf project off I-10 in Katy, broke ground during the fourth quarter.
HOUSTON (CoStar-Justin Boyar) – December 23, 2019 – In Houston’s Galleria-Uptown submarket, more than 80% of office net absorption since 2010 occurred in five-star product, the highest classification of building. The area’s four five-star rated buildings were 7% vacant as of last quarter, versus 19% vacancy for the submarket’s 31 four-star buildings.
This signifies potentially pent-up demand for five-star space in the submarket, although developers could face lower rent growth than in other major markets in the near future, owing to the nation’s highest vacancy rate throughout Houston.
This should come as no surprise, as the Galleria-Uptown area, which is located at the crossroads of the River Oaks, Tanglewood and Memorial residential areas, boasts of some of the strongest demographics and highest grossing retail stores in the country. The Neiman Marcus and Saks Fifth Avenue department stores, for example, each rank second in terms of revenue after their flagship stores in Dallas and New York, respectively.
The mentality of office tenants here is that they want to be located in the highest quality space that the submarket can provide while fitting within their budget. And if the Galleria-Uptown submarket becomes too pricey for them, or the highest-end options are too few, they leave.
Air Liquide, for example, decided to relocate to brand-new office space slightly west in MetroNational’s Memorial City development in the Katy Freeway East submarket. And Marathon Oil recently decided to move out of its namesake legacy building at 5555 San Felipe to a new build-to-suit campus at CityCentre in Katy Freeway East.
Today, high-end four-star office space in Houston and in several major U.S. markets faces an existential issue of renovating and adding new amenities to compete with newer space.
Among older generation four-star space in the Galleria-Uptown submarket, Four Oaks Place, owned by Allianz and managed by Transwestern, and Post Oak Central, both owned and managed by CPPIB subsidiary Parkway, have recently undergone major renovations. Four Oaks Place, however, has recently seen some large subleases in former BHP space, occasionally at the expense of Post Oak Central.
Additionally, the Galleria’s main promenade, Post Oak Boulevard, is undergoing a nearly $200 million renovation to add a bus rapid transit line and improve its walkable appeal, which should deliver in phases over the next few years.
HOUSTON (Greater Houston Partnership via Jeff Morgan-Wells Fargo) – December 16, 2019 – The Partnership’s forecast calls for the region to create 42,300 jobs in ’20. Growth in ’20 in Houston will occur out-side of energy, especially in sectors tied to population growth, the U.S. economy, and global trade.
- Health care, government, accommodation and food services, construction and administrative support services will turn in the strongest performances.
- Professional scientific and technical services and transportation and warehousing will see moderate gains.
- Other services, education services, finance and insurance real estate and arts, entertainment and recreation will log marginal growth.
- Manufacturing and wholesale trade will be flat to slightly up.
- Energy, retail and information will contract.
With unemployment at 3.6 percent, the U.S. labor market is the tightest it’s been in 50 years. The tight labor market has finally begun to affect wages and consumer optimism. The U.S. Bureau of Labor Statistics reports that the average hourly wage was 3.0 percent higher in October ’19 than a year prior. That’s affected consumer behavior
The outlook for global growth looks better today than it did a year ago. The Organisation for Economic Co-operation and Development (OECD) expects the global economy to grow 3.0 percent in ’20, marginally above the 2.9 percent this year, and decidedly not the crash many economists predicted earlier this year.
Over the past 10 years, more than $150 billion in construction contracts have been awarded in the Houston region. This activity has added 43.8 million square feet (msf) of office space, 88.4 msf of warehouse/distribution space, 43.4 msf of retail space, about 300,000 single-family homes, nearly 125,000 multi-family units, and more than $60 billion in new chemical plants and refinery upgrades to Houston’s property inventory.
Weakness in oil and gas continues to weigh on Houston’s manufacturing sector. The Partnership estimates that 25 to 33 percent of the region’s manufacturing jobs are tied to oil and gas extraction.That’s down from the height of the fracking boom, when as many as 40 percent supported upstream energy.
Exploration activity, already down in ’19, will continue to contract in ’20. Though few firms have finalized their exploration budgets for next year, cuts of 10 to 20 percent should be expected. EIA expects oil prices to slip in ’20, putting an even tighter squeeze on the cash flows of many firms. The industry will continue to see a high number of bankruptcy filings.
HOUSTON – (Texas A&M Real Estate Center) – November 22, 2019 -The growing average asking rate of renting local retail space persists at a record high of $18.67 per sf on a triple net basis, up 7.3 percent from last year, according to NAI Partners.
Local retail occupancy is at 94.4 percent year to date through October, down ten basis points from this time last year.
The market has recorded 5.7 million sf of leasing activity, slightly outpacing the year-to-date activity from one year ago.
Net absorption stood at 4.3 million sf, with new supply delivering 4.4 million sf to the market this year, of which 72 percent is occupied.
HOUSTON (BISNOW Houston Kyle Hagerty) – October 22, 2019 – As the Houston Astros kick off the World Series at Minute Maid Park and the Houston Rockets prepare for the first game of the 2019-20 season just blocks away at Toyota Center, a new neighbor is entering the area with a $55M purchase of 3.5 acres.
Skanska purchased four parcels, including one full city block, altogether totaling roughly 152K SF adjacent to the award-winning Discovery Green park, boarded by the Houston Rockets’ Toyota Center, the George R. Brown Convention Center and the Houston Astros’ Minute Maid Park. Skanska’s plan is to develop a mix of office, multifamily and retail for the surrounding community. Skanska opened Bank of America Tower in Downtown early this year, where the bank houses 600 employees in a 205K SF space.
Skanska confirmed that the city block it purchased was the surface parking lot bordered by Dallas, Lamar, La Branch and Austin streets, between the Four Seasons and Embassy Suites, with three other adjacent surface parking lots included in the deal. Those four properties were all owned by MIPS Investments and MIPS Parking, according to the Harris County Appraisal District, which values the combined parcels at $30.6M. Skanska hasn’t announced any specific plans or a development timeline for the site yet.
“We are excited about this next endeavor for Skanska Commercial Development in Houston. For this project, Skanska will tap our global expertise in multi-family, office and retail development as we consider the best uses for these sites advantageously located in the city’s front yard at Discovery Green,” Skanska Executive Vice President Matt Damorsky said in a statement to Bisnow. “These prime acquisitions include a full city block, which will be transformed into sustainable, high-quality space in the urban core. We look forward to advancing the master planning process so we can begin creating this dynamic community reflecting the vibrant cultural fabric of Houston.”
Skanska paid $55M, which comes out to approximately $361 per SF, a hefty price for downtown real estate. Just five years ago, land in Downtown Houston was topping out at $275 per SF, according to CBRE research. “When Hess Tower sold, it sold for the highest square foot price of any building in the city of Houston at the time, and we took complete credit for that,” Discovery Green President and Park Director Barry Mandel joked at Bisnow Houston’s Future of Downtown event earlier this month.
When it sold in 2011, the 844K SF Hess Tower garnered a reported $523.81 per SF. The costly real estate is likely one of the best undeveloped locations in the entire city. Sports are a major draw for the area and a major factor in the land’s value. Skanska’s deal is a continuation of more than two decades of concentrated efforts to turn the area into the buzzing heart of Houston. “You can really feel the difference in where we are in Downtown right now,” Houston First President Bob Eury said at the event. “It’s all about living, eating and drinking, including going to playoffs, championships and World Series in Downtown.”
That’s no accident. In the 1990s, city officials made monumental efforts to bring the city’s beloved sports franchises into the central business district. It started with the Astros. In 1996 Harris County voters narrowly approved a bond to fund a new ballpark at the historic Union Station, bringing the Astros from the world-famous Astrodome southwest of the city. With the help of a new Sports Authority to finance the project, signed into law by then-Gov. George W. Bush, work began on what would eventually be known as Minute Maid Park.
HOUSTON (Greater Houston Partnership) – October 10, 2019 -Metro Houston added nearly 1.3 million residents between ’08 and ’18, a 22.3 percent increase. A little more than half the growth came from migration, a bit less than half from natural increase.
- Metro Houston created 81,900 jobs, a 2.7 percent increase, in the 12 months ending August ’19, according to the Texas Workforce Commission (TWC). Nonfarm payroll employment was 3,166,900 in August, flat from July, and down from 3,185,200 in June. The drop reflects the temporary loss of jobs associated with education.
- Sectors adding the most jobs over the past 12 months were professional, scientific, and technical services (21,100); manufacturing (11,500); other services (9,700); transportation, warehousing, and utilities (8,600); and health care and social assistance (8,200).
- Employment in oil field services peaked in May and has declined steadily since. This is not surprising given the loss of more than 200 working rigs since the first of the year. The jobs gained in manufacturing are likely an overestimate given that three-fourths of the gains have been in equipment manufacturing and fabricated metals, sectors closely tied to upstream energy.
- Houston’s unemployment rate was 3.9 percent in August, down from 4.0 percent in July and 4.4 percent in August of last year. The Texas rate in August was 3.6 percent; the U.S. rate, 3.8 percent. The rates are not seasonally adjusted.
- City of Houston building permits totaled $7.2 billion for the 12 months ending August ’19, up 16.3 percent from $6.2 billion for the same period a year earlier. Commercial permit values rose 31.8 percent to $4.4 billion, while residential permit values decreased 1.8 percent to $2.8 billion.
- The closing spot price for a barrel of West Texas Intermediate (WTI), the U.S. benchmark for light, sweet crude, averaged $56.67 per barrel in September, down 18.7 percent from $70.15 for September last year.
- From Economy at a Glance – Houston (The October publication of the Greater Houston Partnership).
HOUSTON (BISNOW) – September 24, 2019 – Houston ranked 42nd in the nation in a new survey of the markets with the best real estate prospects. But Houston is one of the few markets where real estate investors’ perception may not be reality. Houston fell from last year when it ranked 37th in The Emerging Trends in Real Estate report by PwC and Urban Land Institute.
Meanwhile, sister Texas cities Austin and Dallas ranked No. 1 and No. 6, respectively, in overall real estate prospects. The report suggests Houston’s overall real estate investment potential as judged by investors and developers is underwhelming and perhaps the result of misconceived notions about how the energy crash a few years ago impacted the city. “I am actually bullish on Houston,” PwC U.S. Real Estate practice leader Byron Carlock said.
Carlock said the notion that Houston lives and dies by its energy sector is highly inaccurate. Yet, this belief may have dampened real estate investors and developers’ perception of the market in recent years with an energy crash occurring not so long ago. “It’s a much more diverse economy than that, and it continues to grow in the healthcare sector and in prospective quality of life,” Carlock said. For starters, Houston is one of the most, if not, the diversely populated cities in America, edging out New Jersey and New York City for this distinction, the study said.
Carlock also points to the area’s food scene, culture and its focus on healthcare-related business development. The report said Houston’s economy is pushing the needle when it comes to life sciences and technology. And in 2019, the metro added roughly 80,000 jobs on a year-over-year basis. “Houston remains a powerful growth market, with its 10.7% population gain since 2010. This accounts for the multifamily sector’s leading role in 2018 and early 2019 investment — $10.8B, or about half of Houston’s recent acquisitions,” the report said. In addition, Houston’s office, retail and industrial sectors saw transactions exceed $3B apiece over the last 18 months, which is giving investors much more confidence in the area, the PwC and Urban Land Institute report concluded.
|DALLAS (Federal Reserve Bank of Dallas) – August 20, 2019 – Texas employment will grow 2.6 percent this year, according to the Texas Employment Forecast by the Federal Reserve Bank of Dallas. Based on the forecast, the state will add 331,100 jobs this year. Employment in December 2019 will reach 12.9 million.
This prediction comes after incorporating June 2019’s annualized employment growth of 3.4 percent and a slight increase in the leading index.
“Despite continued declines in the energy sector, the Texas economy continues to grow at a strong pace,” said Keith R. Phillips, Dallas Fed assistant vice president and senior economist. “Growth in the construction, financial services, and leisure and hospitality sectors has been particularly robust, while the manufacturing sector has picked up from modest growth in the first five months of the year.”
For more Texas employment data, head to the Real Estate Center’s website.
HOUSTON (BISNOW & JLL) – August 12, 2019 -Mixed-use is taking hold in Houston. The success of CityCentre, and more recently Kirby Collection and the River Oaks District, has increased the demand for projects that embrace the live-work-play mantra. More than 20 mixed-use projects are under construction, planned or recently delivered within the Inner Loop alone, according to JLL. Office is becoming a heavier focus in these projects — this wave of mixed-use includes 1.8M SF of offices within mixed-use proposed in the long term pipeline, 1.1M SF in the short term and 340K SF under construction. There is 5M SF of existing office space in Houston’s mixed-use projects. Using data provided by JLL, Bisnow has compiled a list of some of the mixed-use projects coming soon to Houston.
Residential: None Retail: 100K SF Office: 100K SF Other: None Status: Under construction The developer of Heights Mercantile is cooking up another industrial flip, this time stretching beyond retail to include a heavy office component. Radom Capital and Triten Real Estate Partners are redeveloping a 12-acre lot near North Shepherd and Sixth Street into a mixed-use project dubbed M-K-T. The project will equally divide the office and retail offerings and include a 2,000-foot urban boardwalk with several acres of park space. The development is slated to be completed in Q1 2020. Michael Hsu Office of Architecture and SWA Group are the designers. Boston-based Long Wharf Capital LLC provided the financing. Method Architecture is also involved.
2. The Ion Innovation Hub
Residential: None Retail: TBD Office: 280K SF Other: TBD Status: Under construction Breaking ground in July, The Ion is aiming to be the game-changer the innovation community has been waiting for. The 270K SF facility will feature office space, restaurants, meeting space and entertainment amenities. It will serve as the center point of the Houston Innovation District, a 4-mile stretch from Downtown to the Texas Medical Center. Houston-based Hines is managing the development of The Ion. SHoP Architects, James Carpenter Design Associates, James Corner Field Operations and Gensler will be responsible for the redesign of the building, constructed in 1939. The project is expected to be completed in late 2020.
3. Regent Square
Regent Square Residential: 600 Units Retail: 50K SF Office: None Other: Hotel Status: Short-term proposed GID Development Group is constructing Regent Square, a 600-unit multifamily complex on 24 acres near the border of River Oaks and Montrose. Floor plans will range from studios to large two-bedroom units. The project will include 50K SF of street-level retail and an 8-acre site for green space near Buffalo Bayou Park. This is Phase 2 of Regent Square, after the 21-story Sovereign at Regent Square residential project delivered in 2015.
4. The Driscoll at River Oaks
The Driscoll at River Oaks Residential: 318 Units Retail: 10K SF Office: None Status: Under construction Weingarten Realty and The Hanover Co. are developing The Driscoll at River Oaks, a 30-story luxury high-rise, according to Weingarten’s website. Situated at West Gray Street, the residential complex features 318 units with views of Downtown Houston’s skyline. Residents are within walking distance of River Oaks Shopping Center, and the complex will tout 10K SF of its own retail space. Ziegler Cooper is the architect. Construction began in June 2018 and delivery of units is expected to start in summer 2020.
5. Buffalo Heights
Buffalo Heights Residential: 230 Units Retail: TBD Office: 35K SF Other: 96K SF (urban H-E-B) Status: Under construction Touting an urban H-E-B prototype on the ground level, Buffalo Heights is the future home of residents, shoppers and office workers alike. The seven-story development includes One Buffalo Heights, the 35K SF office portion, and St. Andie, the upscale multifamily component. On-site amenities include workout and yoga rooms, a glass-enclosed conference room, a clubhouse, multiple seating areas and bicycle storage. The Gordy family (BKR Memorial) owns the property, which was designed by Ziegler Cooper Architects. Located at Washington Avenue and South Heights Boulevard, Buffalo Heights is scheduled to deliver this fall.
6. The Interpose
The Interpose Residential: 168 Units Retail: 25K SF Office: None Status: Short-term proposed The Interpose is a mixed-use project slated for the Washington Heights District. Developed by Hunington Properties, the micro-unit mid-rise features 168 apartments and 25K SF of street-level retail with outdoor patio seating, according to the developer’s website. On-site amenities will include Uber pick up and drop off stations, valet parking and a retail-only parking garage. The project is at 1111 Shepherd Drive.
7. The Allen
The Allen Residential: 99 Condos Retail: TBD Office: 333K SF Other: Hotel Status: Short-term proposed With views of Downtown and Buffalo Bayou Park, The Allen is bringing luxury to the forefront. The $500M mixed-use project will include a high-end hotel by Thompson Hotels, condominiums, retail and office. Houston-based DC Partners and Tianqing Real Estate Development LLC, the U.S. subsidiary of China-based Tianqing Group Real Estate Co. Ltd., are the developers behind the project at 1711 Allen Parkway.
8. Park Place River Oaks
Park Place River Oaks Residential: None Retail: TBD Office: 207K SF Other: 1-acre park, Hotel Status: Under construction Stonelake Capital Partners is developing Park Place River Oaks, a 15-story Class-A office building at Westheimer Road and Mid Lane. This is the third phase of Park Place | River Oaks, an 11.5-acre mixed-use development in the River Oaks/Highland Village submarket. The floor plates average 26K SF and the design features a landscaped terrace on the ninth floor available to all tenants. Colvill Office Properties is responsible for office leasing. Dallas-based Beck Architecture designed the building while Harvey Builders serves as the general contractor.
HOUSTON (BISNOW) – August 8, 2019 – Absorption came in strong for the second quarter at 684K SF; however, it was counteracted by the delivery of 754K SF of office space in the Bank of America Tower in Downtown Houston, according to Transwestern.
“The recovery has been a lot slower than we thought it would have been,” Avison Young principal Charlie Neuhaus said. “At the beginning of the year, we were optimistic that we would have positive absorption for the year, but I don’t think we are going to have that this year.”
The Houston office market is a long way from the heyday before oil prices dropped in 2014. There is 58M SF of vacant space citywide and availability is at 25%. “The high availability in the market is not likely to change over the next year,” said Transwestern Executive Vice President Eric Anderson, who will be a panelist at the Houston State of Office event Aug. 28. Not all things are bad. Most property types, from industrial, retail and multifamily, are on fire with new developments. The local economy is strong with low unemployment and positive job and population growth. Texas’ unemployment rate dropped to 3.5% in May, the lowest since December 1969, according to the Texas Workforce Commission. Job growth is expected to eventually improve overall absorption, though it is critical to monitor the ongoing discussion of a global recession, Anderson said.
Tenants are the winners of this cycle, and are taking advantage of the soft market. Companies are often taking less space, but have been willing to pay more for the new space, Neuhaus said. They have improved their efficiency from productivity to space requirements. Energy companies, the bread-and-butter of the Houston office market, have mastered profitability with oil prices near $50. However, those companies are not making long-term decisions, Neuhaus said. “Limited activity from the energy sector has kept Houston’s office absorption low despite generally strong job growth