Houston Real Estate Market Takes a Healthy Pause

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According to a PR Newswire story, the Houston commercial real estate market is taking a healthy break from its previous growth while the industrial and retail sectors make strong gains, explained BoyarMiller Real Estate Forum in Houston, TX.

Of course attendees of this forum expected to hear about the impact of low oil prices in the region they pleased to learn there is some good news out there too:

“Commercial real estate is such a dynamic market in Houston and a reflection of our local economy to the rest of the nation,” said Chris Hanslik, chairman of BoyarMiller. “Our panelists shared their insights and told us that it is okay to take a deep breath and let the rest of the country catch up. We are at a good place and 2016 will be just fine for Houston real estate.”

In fact, the industrial real estate sector is extremely healthy, said Odom. “There are two main drivers of industrial activity—the petrochemical industry and the expansion of the Panama Canal,” he said.

With more than $100 billion expansion projects on the books or in the works at chemical plants along the Golf Coast this is a great time for Houston construction which supports industrial real estate.

“As the Port of Houston expands to increase its container ship capacity by 37.5 percent, it leads to stronger demand for industrial space,” said Odom.

In other good news Houston is leading the way in retail center market with an occupancy rate of 94.6% with the highest rental rate since 2008. Retail growth is booming in the suburban areas due to the Grand Parkway expansion.

It looks good on the office space front, too with buyers now considering office space an investment instead of a cost. Currently there is 9.6 million square feet of space available through 2017. Lease terms are becoming more flexible allowing people who may have been priced out of the market to enter it.

Jimmy Hinton of HFF told the audience that today’s real estate environment in Houston is a good scenario.

“Capital appreciation of our local real estate assets has been on par with San Francisco over the past several years and we need to cool off,” said Hinton. “We are in a reasonably healthy environment.”

Hinton said there are more manufacturing jobs in Houston than anywhere in the country. “These jobs are predominantly in the petrochemical industry and in the manufacturing of steel drill pipe. Houston is not losing jobs in petrochemical, job growth is merely shifting from the west side of the city where they are engineering based to the east side where the jobs are more blue collar.”

Hinton said the pause in the market removes risk-taking and will result in a healthy approach to building within the city going forward.

“We have not scared off investors in Houston either,” said Hinton. “Foreign capital is flowing into Houston from Canada and new investors from Israel and South Korea are engaging Houston with fervor. We expect that will continue.”

To view the presentations from the BoyarMiller Real Estate Forum visit www.boyarmiller.com.

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