Rent prices in Houston are growing the slowest among major Texas cities, according to new data. At midyear, the average rent in Greater Houston climbed just 0.7% year-over-year to $1,045, according to ApartmentData.com. That compares to an increase of 2.4% in Dallas/Fort Worth, 3.3% in San Antonio and 3.4% in Austin. Bruce McClenny with ApartmentData.com said it still goes back to Harvey, which pushed up rents across Houston and ended an apartment glut. “So developers and investors said, wow, maybe it’s time to go back to Houston,” McClenny said. “And it was probably a little earlier than they should have come back because it was not normal market conditions that got their attention.” Click to read more at www.houstonpublicmedia.org.
Fueled by the rapidly growing e-commerce sector, increased activity at the Port of Houston, and the city’s continued high population growth, demand for industrial real estate product in Houston has kept vacancy rates low and pushed the construction pipeline to an all-time high of 21.2 million square feet across the metro. While industrial construction activity has been dominated by build-to-suit activity over the past few years, developers are modifying their strategy to get ahead of requirements with a wave of speculative construction. As a result, the current industrial construction pipeline is 74% speculative space, totaling 15.7 million square feet set to deliver over the next 18 months – an increase of 268% year over year. Click to read more at www.transwestern.com.
During Q1 2019, top leasing transactions totaled 36% more square feet than Q1 2018. This activity was concentrated in the CBD (31%), Energy Corridor (30%), North Houston (22%), and West Loop / Galleria (14%). 87% of tenants leased Class A properties. While no office space was delivered during Q1 2019, the construction pipeline added Park Place River Oaks, a 207,000 sq. ft. office tower in the West Loop / Galleria submarket. Total space under construction increased to 2.4 million sq. ft. Click to read more at www.cbre.us.
Houston has been making headway following the economic slowdown, and—while the metro’s office market is far from healthy—signs point toward a strengthening economy. As an economy deeply rooted in energy, Houston is taking steps toward diversifying. As the fourth-largest metro in the U.S., Houston has a business-friendly climate and affordable cost of living that continue to be significant draws for companies and residents alike. The metro had 716,000 office-using jobs as of October, with professional and business services leading growth, having added 30,600 jobs in the 12 months ending in October. Click to read more at www.cpexecutive.com.
Market Highlights Record-High Asking Rents. Houston has maintained a steady, high occupancy rate in the retail sector at or above 94.0% during the last five years, registering at 94.4% midway through the first quarter of 2019. Tenancy of the 4.7 million sq. ft. delivered to the market in 2018 stands at 74.6%, and of the 3.7 million sq. ft. currently under construction, 35.2% of that space is available for lease. The mounting average asking rate of renting retail space is at a record high for Houston at $17.68 per sq. ft. on a triple net basis, up 5.7% from this time last year at $16.73 per sq. ft. Click here to read more at www.naipartners.com.
Takeaway: With some mildly qualifying caveats in selected commercial real estate segments, the
overall light is green in Houston’s economy for 2019.
• Economic growth in Houston was very weak 2014-17 but the economy was sustained by fracking momentum, a Ship Channel chemical boom, and post-Harvey retail and construction
• Job losses matched the ‘80s here during recent oil downturn, but
have stabilized without a big upward bounce
• Nine service sectors carried our economy post-slump: retail, health
care, finance, bars & restaurants, local gov’t, private education, state
gov’t, arts and entertainment, lodging
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