What’s Next for Houston’s Commercial Real Estate Landscape?
Houston’s economy has historically been strongly tied to the state of oil prices, and commercial real estate was certainly affected by the 2014 downturn, yet its overall breadth and increasing diversity have kept the city resilient. The Houston metro area ranks #2 on Site Selection magazine’ list of the top U.S. metropolitan areas for new and expanded corporate facilities. Bob Harvey, president and CEO of the Greater Houston Partnership, noted that Houston’s diversity and skilled talent base, “coupled with a low-cost of doing business, offer global companies vast opportunities for growth and investment.”
One area that’s been driving Houston commercial real estate activity has been international trade. According to the Greater Houston Partnership, foreign investment in local commercial real estate totaled $3.3 billion in 2017. Given Houston’s strong and growing reputation as the most diverse city in the U.S., the rise of foreign investment should come as no surprise. In addition to vast shipping traffic handled by Houston’s ports, 41 foreign-owned firms opened or expanded operations in the area in 2017, while “Houston companies operate more than 3,000 subsidiaries in 116 foreign countries, and more than 1,000 firms in Houston are the subsidiaries of foreign parent companies.” Those businesses will certainly be paying attention as the U.S. looks to renegotiate trade deals with Canada, Mexico and the European Union over the next several months, amidst the imposition of tariffs on imports such as steel and aluminum.
Houston’s emergence as a technological and innovation center is also driving commercial real estate development. As noted in an earlier Belvoir blog, Houston recently entered into an Internet of Things alliance with Microsoft. That, coupled with the transforming of the former Midtown Sears building into the hub of an innovation district, promises to reshape and accelerate commercial real estate development and investment in the area for years to come.
Belvoir continues to closely monitor activities impacting the local commercial real estate landscape to offer guidance and keep its clients going places.