February 27, 2019
By Melissa Baer
More than 200 commercial real estate leaders gathered at Connect Houston on Feb. 26 to hear industry experts discuss the city’s market conditions, drivers, trends, opportunities and forecasts.
The afternoon kicked off with a keynote conversation between Connect Media’s president, Daniel Ceniceros, and Larry Heard, president and CEO at Transwestern and continued with four deep-dive sessions highlighting capital placement, downtown development, mixed-use megaprojects and an economic outlook of Houston’s dominant markets: oil, gas, energy and industrial. An awards presentation honoring Connect Media’s Next Generation and Women in Real Estate winners wrapped up the conference.
During his keynote, Heard candidly discussed his early years at the company, remarking on his decision to join the then-smaller firm, and explained how he maneuvered the growth of Transwestern to where it is today. The aggressive economic downturn in the mid-1980s forced Transwestern to change its strategy beyond development.
“Because of the downturn, we knew we needed to react,” he told the Connect Houston audience. “We recognized that the services business was really the way to get knee-deep into the assets.”
The company continued evolving and is now a diversified real estate enterprise with three separate divisions acting as their own companies and consisting of development, commercial services and investment management.
Additionally, Heard is very proud of the culture of the company. “Culture is key at Transwestern,” he said and further explained the importance of fostering an environment that is dynamic and team-oriented. “This is a challenge when your company is growing. You must hire people who value each other as professionals. This is critical.”
The panel “Money Keeps Rolling In: Capital Markets at Work,” was true to its moniker as investors discussed their strategies for capital deployment in Houston. Moderator Steve Pumper, executive managing partner at Transwestern, began the conversation with the declaration that there is definitely transactional volume and activity occurring in Houston and much of it is coming from institutional investors, including those from overseas and high-net-worth individuals.
Carrington Brown, executive director of Investments at USAA Real Estate, concurred, saying he believes in the Houston market long-term and “there’s really no tapping the brakes in Houston.”
Bruce Rutherford, international director at JLL, began the session “Economic Outlook: Converging Forces—Oil, Gas, Energy and Industrials” by stating, “The US economy is the most robust and the most resilient in the world and Houston is benefitting from it.” Rutherford went on to say that Houston is not only the global energy capital but also the global plastics capital. Additionally, Houston’s ports in the Gulf of Mexico have become critically important to world trade and a gateway to international trade for the entire U.S.
A standout in Houston real estate is the aggressive activity in downtown Houston. The “Rebirth & Renewal of Downtown Houston” panel addressed the significant increase in the office market. Moderator Chip Colvill, president and CEO at Colvill Office Properties, attributed this mostly to major law firms and international companies entering the Houston market.
“Capital is very bullish on Houston,” he said, “and there is over $300 million of renovation activity going into downtown that has recently been announced in a number of new developments.”
Concluding the conference was “In The Mix—Multifamily, Mixed-Use and Megaprojects.” All panelists agreed that large, mixed-use developments are still very much in demand. David Hightower, EVP at developer Midway Companies, said Midway wants its clients to enjoy the space where they are working or living. He also believes that amenities, including retail, should be a high priority, adding, “We don’t just build retail; we curate it and we look for retail centers for our developments that complement each other.”
Paul Layne, president—Central region at The Howard Hughes Corporation, said that even in the suburbs, the demand for Live, Work, Play, Walk developments remains at an all-time high. “We own, run and manage our developments, which is more challenging, but we’ve been very successful,” he said. Layne also believes in “doing what they have to do” to create the environment where people want to be.
This Connect Houston recap will be expanded with stories containing deeper dives of each panel in the coming days.
For comments, questions or concerns, please contact Melissa Baer