Could the future look different for Houston?
December 20th, 2020
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Could the future look different for Houston?
Houston is the energy capital of the world, that has meant oil and gas. But with renewable energy sources on the rise and climate change being a growing concern, could the future look different for Houston?
Houston’s high concentration of energy expertise and experience has led to a large number of relocations to the city in recent decades. Now major oil companies are looking into low-carbon energy sources as Houston continues to leverage its unique strengths with expertise, talent, and the ability to scale the region, creating an environment that naturally fosters emerging digital technology companies and their R&D work.
As Houston is transitioning from a city that is heavily dependent on the oil and gas industry to technology, Houston’s industrial market posted 1.2M SF of positive net absorption in the Q3 2020, a decrease of 68.4% over the quarter. Some of the tenants that contributed to absorption by relocating or expanding in Q3 2020 include:
- Amazon moving into 443,500 SF land building out a robotic distribution center in Fort Bend County facility will open 2021.
- Google will open its first office in Houston that is focused on cloud technology sales. The company will house the regional Cloud Enterprise Sales team at the One Buffalo Heights building at 3663 Washington Ave. The 37,000-square-foot office is scheduled to open in early 2021.
- Houston is currently Hewlett-Packard Enterprises largest US employment hub, and the company is constructing a new campus in the city. HPE will also consolidate a number of its Bay Area sites to its San Jose campus. The move won't result in any layoffs. HPE's (HPE) move to Texas is hardly a new concept in the tech world. It's the largest — but just the latest — tech company to make the trip south: SignEasy, QuestionPro and DZS (formerly known as Dasan Zhone Solutions) also moved from California to Texas.
- Tesla CEO Elon Musk decided move the company's headquarters from Fremont, California, which is just across the bay from Palo Alto, to Texas. The company did announce in July that it would build its new auto plant in a suburb of Austin.
- Dell's headquarters is in Round Rock, Texas, near Austin, and many other tech companies are considering moving to Texas for tax reasons. In fact, a patch of Austin not far away from Houston has been nicknamed "Silicon Hills" because of its cluster of tech companies in the metro Austin area.
- From food trucks to breweries, businesses in the Tomball-Magnolia area continue to announce opening plans and relocate during the ongoing coronavirus pandemic.
- The Ion, a 288,000-square-foot facility being developed at 4201 Main St., will feature rentable co working space for startups, dedicated office space for corporate partners and larger startups, retail space and more.
- Houston-based DC Partners is nearing completion of major construction work on the retail component of its nearly $500 million The Allen mixed-use development.
- Houston-based developer Satya Inc. has broken ground on a 350,000-square-foot hotel near the Texas Medical Center. The project, at 7329 Fannin St. near the corner of Fannin and Old Spanish Trail, is slated to be branded as a dual Hyatt hotel and extended stay facility.
- American Furniture Warehouse moving into its 498,700 SF warehouse in the Northwest Corridor.
- Goodman Air Conditioning and Heating moving into 312,640 SF in the Northwest Corridor.
- 15.2M SF of industrial space is under construction in Houston, with 38% of this space pre-leased. The largest project under construction is a 2,165,000-SF distribution warehouse for Ross Stores Inc., located in Brookshire, TX. The majority of projects under construction are located in the Southwest, North and Southeast Corridor submarkets.
- Texas Medical Center is eager to move forward with a bold, imaginative and dynamic new design vision the TMC3 Master Plan campus for Human health and research development the biggest project will be ground breaking in 2021 which is the Third Coast, translational research campus signals to the world that Houston is the next emerging destination for global health research and hope for a healthier future is geographically positioned as the city center of the Texas Medical Center bridging the clinical and research campuses. TMC3 will drive $5.2 billion into the Houston economy and create nearly 110,000 jobs driving 10 million patient visits on an annual basis.
Houston offers a well-developed suite of key global industries – including energy, life science, manufacturing, logistics and aerospace. While these industries digitize, the city of Houston is becoming a hotbed of rapid technological development with increasing industrial leasing activity over the quarter from 5.4M SF in Q2 2020 to 5.9M SF in Q3 2020. The majority of third quarter transactions consisted of leases for 50,000 SF or less.
Houston has been one of the hottest real estate markets in the country for years. It is also one of the hottest real estate markets for investing in rental properties. The Houston metro area offers great opportunities for investors who are looking for a stable market that offers both cash flow and equity growth at a price that is STILL well below their replacement value. Oil prices have a big impact on Houston's housing market. Keeping aside the oil prices, the Houston Real Estate Market forecast for 2021 is still on the positive side.
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Disclaimer : The views and opinions expressed in this blog are those of the author and do not necessarily reflect the official policy or position of the Houston Association of REALTORS®