Houston developers and forecasters are burning the midnight oil trying to figure out ways to fill nearly 10 million square feet of commercial space, which might be the only positive impact for the real estate market in Houston given crude oil’s current $40-per-barrel price tag.
Industry leaders gathered to discuss the current state and future of commercial real estate in the Bayou City at the March 29 RealShare Houston conference.
While the long-term outlook for Houston’s commercial landscape was generally good, panelists did acknowledge that it’s currently in a depressed state. This, despite what some may say about Houston relying on oil so strongly, could be a direct reflection of the current crude price.
A CBRE Group market report issued in March revealed “almost 6.8 million square feet of new product will deliver in 2016, adding another 3.3 million square feet of vacant space.” It went on to say that Houston’s office space availability will be 21.3 percent, a number not reached since the mid-1990s.
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Having more than 10 million square feet of available sublease property will be the highest ever recorded.
The commercial markets that are succeeding, though, are in the healthcare, retail and industrial. There are strong indicators for growth in these sectors.
The health care industry alone brought more than 13,000 jobs to Houston in 2015. It is expected to add another 9,000 jobs this year.
Houston has seen more than half-a-million people move to the city since 2010, which is higher than any other state in the U.S. In the same time, the city has brought more than 400,000 jobs.
The increase in population and jobs has positively affected the local commercial market by increasing demand on smaller properties suited for distribution and retail.
Since 1980, Houston was adding approximately 37 million square feet of new construction every ten years. But in the past six years, it has only added 10 million square feet.
Because of the population and job growth, retail space occupancy reached a record-high 93.9 percent.
