Houston’s Industrial Market Closes 2018 At 10-Quarter Vacancy Low

HOUSTON (BISNOW) January 8, 2019 – Houston’s industrial market closed 2018 strong, with overall vacancy at a 10-quarter low of 5%, decreasing by 10 basis points quarter-over-quarter. Industry leaders expect the market to keep that same energy into the new year. Demand for industrial space remained healthy as 3.4M SF was absorbed in Q4, pushing the year-end total to 10.6M SF, according to CBRE’s industrial market quarterly report.

The Northwest and Southeast submarkets were particularly busy in the fourth quarter and consequently logged strong year-end totals. Northwest noted positive absorption of 2.7M SF in Q4, bringing year-end total net absorption to 5.4M SF. Southeast saw year-end net absorption of 3.2M SF with 750K SF coming in the fourth quarter.  Four of the five biggest deals last quarter were in the Southeast market.

Valvoline inked a 473K SF lease at Port Crossing Commerce Center at 1302 Wharton Weens Blvd. in La Porte. Unis signed a 248K SF lease at Bayport South Business Park at 10565 Red Bluff Road in Pasadena. NT Logistics Inc. agreed on a 226K SF lease at Ameriport Industrial Park in Houston. Smart Warehousing signed a 150K SF lease at Energy Commerce Business Park in Pasadena.  The only major non-Southeast deal in the top five was Palmer Distribution inking a 168K SF lease at Railwood Industrial Park in the Northwest submarket.

Industrial construction activity also hit a record-breaking milestone. The market saw 16.3M SF of new product break ground in 2018, which is 3.7M SF higher than the 2014 record high, CBRE reported. It was boosted by an active Q4, when 5.9M SF of industrial space was launched.

North Houston has been the major benefactor of the new activity as 5.1M SF of the 14M SF of industrial space underway is within the submarket. Vacancy in the North Houston submarket, bounded by Interstate 45, Highway 59, Highway 249 and the George Bush Intercontinental Airport, stands at 7%.

USGS Found Largest Oil&Gas Assessment Ever

​​​​WASHINGTON (U.S. Department of the Interior) – December 7, 2018 – According to the U.S. Department of the Interior, an assessment by U.S. Geological​ Survey (USGS) has found a portion of the Permian Basin contains an estimated mean of 46.3 billion barrels of oil, 281 trillion cubic feet of natural gas, and 20 billion barrels of natural gas liquids.

This is the largest ​continuous oil and gas resource potential ever assessed.​

The Wolfcamp Shale and overlying Bone Spring Formation are in the Delaware Basin portion of Texas ​​​and​ New Mexico’s Permian Basin province.

Although the USGS has previously assessed conventional oil and gas resources in the Permian, this is the first assessment of continuous resources in the Wolfcamp Shale and Bone Spring Formation. Oil and gas companies are currently producing oil here using both traditional vertical well technology and horizontal drilling and hydraulic fracturing. ​

​According to U.S. Secretary of the Interior Ryan Zinke, “Christmas came a few weeks early this year.”​

HP Does Largest Houston Office Deal of 2018

SPRING (Houston Business Journal) – November 2, 2018 – Hewlett Packard Enterprise will break ground on a two-building campus in the Springwoods Village community in fourth quarter 2019.  The company has preleased 568,000 sf for its new campus, representing the largest office deal in the Houston area this year. The project will be at the southwest corner of East Mossy Oaks Rd. and Lake Plaza Drive within ear shot of Exxon’s new massive campus. Plans include a fitness center, café, and an adjoined open courtyard space.

Houston Job Growth @ 3.9% in 2018

DALLAS (Federal Reserve Bank of Dallas) – October 23, 2018 –  “Monthly job growth has been volatile over the past few months with a weakening in July, a sharp bounceback in August,​ and then a slowing in September,” said Keith R. Phillips, Dallas Fed assistant vice president and senior economist. “Looking at the past three months, job growth was 2.4 percent—moderately slower than the 3.1 percent in the first half of the year. Jo​​​​b growth has been broad-based across metro areas with particular strength in Houston, which has grown at an annual rate of 3.9 percent over the past three months and 3.6 percent so far this year.”​​​​

Houston: Space 2.0-City Council Approves Utilities for Houston Spaceport

Houston (Houston Chronicle by Andrea Leinfelder) – October 18, 2018 – City Council on Wednesday approved more than $18.8 million for the Houston Spaceport to begin developing streets, water, wastewater, electrical power distribution facilities and other basic infrastructure.

These are necessary to attract future development to Phase 1 of the Houston Spaceport, which is located at Ellington Airport. Officials are hoping to attract a cluster of aerospace companies that can invent, develop and manufacture space technologies.

“We have been talking about this project for now over two years,” said Arturo Machuca, the general manager of Ellington Airport and the Houston Spaceport. “This type of development requires a lot of work. … Now we are ready to move into a more finite offering to potential partners.”

He said the money reaffirms Houston’s commitment to developing a spaceport.

In 2016, the Houston Spaceport opened a 53,000-square-foot Houston Aerospace Support Center. Clear Lake-based Intuitive Machines was the first — and so far only — business to open a location there in August 2016. The Houston Spaceport almost landed a Blue Origin rocket engine manufacturing facility, but it ultimately lost out to Huntsville, Ala.

One reason for Houston being runner-up was that Huntsville already had an experienced rocket engine workforce. To fix this problem, Machuca said the Houston Spaceport is in talks with San Jacinto College to open a location at the spaceport and help create a pipeline of talent for future companies.

Construction in Phase 1 will also eventually include a co-working space near the Houston Aerospace Support Center.

The money approved for the project includes a $1 million federal grant. The remainder will be paid through Houston Airport System revenues.

USA Largest Loop: Grand Parkway Expansion Underway

HOUSTON (Houston Chronicle) October 9, 2018 -– Members from the Grand Parkway Infrastructure met this month to discuss the continued expansion of the $1.28 billion toll road project.

The next phase, an $894 million project, will be the largest highway loop in the United States when it is completed, according to the Texas Department of Transportation.

When completed in 2022, the highway will enable drivers to travel from Baytown to League City in a loop that passes through New Caney, Spring, Tomball, Cypress, and Sugar Land.

The construction will help the region prepare for continued population growth. This phase of the project will be broken into three segments.

The Grand Parkway spans more than 50 miles around the Greater Houston area and falls within Chambers, Harris, Liberty, and Montgomery Counties.

H-Town Industrial Market

HOUSTON (TA&M Real Estate Center) – September 18, 2018 – The Bayou City had its eighth consecutive year of positive absorption for the local industrial market.

Net-occupier demand was 1.2 million sf last quarter, bringing the year-to-date absorption total to 4.8 million sf.

The construction pipeline grew by 3.6 million sf in new starts over the quarter to reach 10.7 million sf of new industrial and flex product currently underway.

Vacancy rates decreased 5 basis points, and availability rates during the same period decreased 60 basis points.
The graph showing amount of vacancy, completions, under construction, ground broken, and net absorption industrial numbers in the area.

Texas Isn’t Just Oil & Gas: Also Tops in Wind Energy

AUSTIN (Houston Chronicle) – August 24, 2018 – Texas installed over 2,300 megawatts (MW) of wind power in 2017, more than any other state.

According to the Department of Energy, the additions push the state to nearly 22,600 MW of total installed wind power, the highest in the country.

The additions are lower than the 3,615 MW and 2,611 MW of wind installed​​ in 2015 and 2016, respectively.

The report said that 14.8 percent of the energy generated in Texas in 2017 came from wind, up from 12.6 percent in 2016.

Oklahoma had the second highest 2017 wind installations with 851 MW. The state is second to Texas for total wind capacity at 7,495 MW. Iowa and California rank third and fourth with 7,308 and 5,555 MW, respectively.

According to the Electric Reliability Council of Texas, a megawatt can power roughly 200 homes during periods of peak demand. ​

Trade War Greatest Challenge for Texas Economy

COLLEGE STATION (Real Estate Center) – August 7, 2018 – Texas’ economic expansion continued amid increased activity in the goods-producing industries, but rising input costs, resulting from domestic tariffs, could deflate the rate of growth.

According to the Real Estate Center’s latest Outlook for the Texas Economy report, employment growth moderated to more sustainable levels after explosive growth to start the year. The improved workforce environment pushed the labor force participation rate to a three-year high. Average earnings remained stagnant but extended to a broader base of workers. Upward inflationary pressure, however, weighed on Texans’ purchasing power.

Shortages of entry-level homes lifted shelter costs and hindered housing sales despite strong demand. A declining trade environment remains the greatest headwind to the Texas economy, challenging some of the state’s most productive industries.

Texas is a Job Creator

COLLEGE STATION (Real Estate Center) – July 27, 2018 – The Texas economy gained 359,500 nonagricultural jobs from June 2017 to June 2018, an annual growth rate of 2.9 percent, higher than the nation’s employment growth rate of 1.6 percent.

According to the Real Estate Center’s latest Monthly Review of the Texas Economy, the nongovernment sector added 351,700 jobs, an annual growth rate of 3.4 percent, also higher than the nation’s employment growth rate of 1.9 percent in the private sector.

Texas’ seasonally adjusted unemployment rate in June 2018 was 4 percent, lower than the 4.2 percent rate in June 2017. The nation’s rate decreased from 4.4 to 4 percent.

All Texas industries except the information industry had more jobs. The mining and logging industry ranked first in job creation followed by construction; professional and business services; leisure and hospitality; transportation, warehousing, and utilities; manufacturing; education and health services; and financial activities.

All Texas metro areas except Longview, Beaumont-Port Arthur, Corpus Christi, and Victoria had more jobs. Midland ranked first in job creation followed by College-Station-Bryan, Odessa, Dallas-Plano-Irving, Austin-Round Rock, and Houston-The Woodlands-Sugar Land.

The state’s actual unemployment rate last month was 4.2 percent. Midland had the lowest unemployment rate followed by Amarillo, Austin-Round Rock, Odessa, and College Station-Bryan.