February 11, 2020
Connect Media’s recent Connect Houston conference wrapped up with five panelists and one moderator (Pat Duffy of Colliers International), all of whom shared positives and challenges of the region’s economics and real estate arenas in the session that was appropriately titled, “Industry Experts.”
First, the positives. Port of Houston Authority’s Shane Williams indicated a double-digit increase in containers, as well as an uptick in TEU containers. The Port, in the meantime, is expanding; “as oil ships are becoming larger, the channel needs to be wider,” Williams commented.
Jeff Stringer with Davis Commercial Development added on to Williams’ commentary with a nod to industrial. “Those containers need a place to live,” he commented. “It’s no big mystery that industrial follows rooftops.” In clarifying, he pointed out that, while “nobody is piling into an industrial center” to buy goods, computer is now the new retail, with “everything you order coming out of a warehouse.” Getting goods to the consumer in a very timely fashion has meant more demand for Houston industrial product, he added.
However, even with increasing imports and more industrial demand, the panelists acknowledged that working with Houston can be a challenge. Clint Duncan with CBRE pointed out that Houston is a highly diversified city which attracts capital, but “can be a difficult place to invest in, because of no zoning. It’s a challenging market to figure out, and not for everyone.” Darrell L. Betts with Avison Young agreed, explaining that, while he, himself, is a very big proponent of Texas, people call him regularly to ask whey they should invest in Houston. “My feeling is that if you just sit here, and keep things steady, you’re going to be fine,” he commented.
David W. Hightower with Midway Cos., who was also bullish on Houston, acknowledged that job growth might be a little off due to issues with oil, “but it’s not the 1980s again.” In fact, he went on to say, energy companies are spending money on solar battery and wind research development. “Any technology leap forward in those industries will come from one of those companies, which are in Houston,” he said.
When Duffy asked about the strongest versus weakest sector, the panelists indicated that multifamily is soft, while office could use some improvement, even as sublease space is less of a factor than it was several years ago. The issue, however, is that much of the office space is functionally obsolete. “I’ve been having this conversation since the start of the year. When people look at Houston’s office, they see 20% vacancy,” Hightower said. “But when you peel back the numbers and see what makes it up, a lot of those buildings should be scrapped; they’ll never lease.”
Overall, the panelists agreed that Houston has more positives than negatives. Noted Duncan: “We have the deepest pool of capital I’ve ever seen. We’re in an extraordinary time right now.”
Pictured (l-r) Pat Duffy (Colliers International), Shane Williams (Port of Houston Authority), Jeff Stringer (Davis Commercial Development), David Hightower (Midway Cos.), Clint Duncan (CBRE), Darrell Betts (Avison Young)
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