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Posts from March 2014

County, Houston metro area top national list of population gains

Posted on March 28, 2014 in

By Allan Turner

With a booming oil industry greasing the wheels of economic growth, Harris County and the Houston metropolitan area are leading the nation in population increases, according to a U.S. Census Bureau report released Thursday.

During the year ending July 1, Harris County gained 83,000 residents, while the Houston-Woodlands-Sugar Land area added 137,692.

Harris County, with about 4.3 million residents, remains the nation’s third-largest county, and the Houston metro area, with 6.3 million residents, maintains its ranking as the fifth-largest, one place behind Dallas-Fort Worth-Arlington.

Thursday’s report comes just days after a Federal Reserve Bank study found that Texas has led the nation in creating jobs since 2000 and that more than half of the new positions garnered salaries in the top half of the pay scale.

The Census Bureau found that six of the top 10 fastest-growing metro areas are in oil-rich states. Three of those - Odessa, Midland and Austin-Round Rock - are in Texas.

Fort Bend County was listed as the nation’s ninth-fastest growing county, with a 4.2 percent population increase.

State Demographer Lloyd Potter attributed Texas’ steady growth to a robust economy.

“The fact is that Texas has outperformed the rest of the country in job growth,” Potter declared, saying that stands in stark contrast to economically moribund areas such as the Midwest.

Another factor, he said, is the relative youth of the Lone Star State’s population. About half of Texas’ population growth, he said, is the result of natural increase. About one-fourth comes from domestic migration, and the remaining fourth is attributable to international migration.

In Harris County, births accounted for 142,820 new residents; international migration for 62,599; and domestic migration for 40,006.

Where we live

Nationwide, the Census Bureau study shows the United States increasingly becoming metropolitan. Metro areas grew by only 0.1 percent during the year examined, but that seemingly paltry gain amounted to 2.3 million people.

Almost one-third of Americans live in the country’s 10 largest metro areas. The study found that smaller metro areas grew less dramatically and that communities with fewer than 10,000 residents typically lost population.

Economist Robert Gilmer, director of the University of Houston’s Bauer Institute for Regional Forecasting, said the Houston area’s economy is benefiting from “the greatest oil boom in American history.”

“Metro areas tend to grow no matter what their size, but the reason for job growth in Houston has three letters - O-I-L,” Gilmer said, adding that in the past decade the Houston area has added about 420,000 jobs.

“That’s how many jobs are in Tulsa, Okla.,” he noted.

In one year alone - 2012 - local employment grew by 4 percent, according to the Bauer Institute.

Earlier this month, the Federal Reserve Bank’s Dallas branch released a report saying that Texas topped the nation in creating jobs between 2000 and 2013. Of those new jobs, 55 percent paid salaries in the top half of the wage scale.

“Underestimate Texas at your own peril,” intoned the Washington Post in reporting the study.

While almost 25 percent of the new jobs fell into the lowest wage quartile, the study noted that Texas’ low cost of living “ensures that workers’ earnings will go further than in other large states.”

Potential downside

The Houston area’s growth does not come without potential costs, said Harris County Judge Ed Emmett.

“If we are going to continue to accommodate growth - and I think that’s a good thing - we are going to have to invest in the infrastructure to take care of it,” he said.

Emmett said the “vast majority” of Harris County’s growth is occurring in unincorporated areas.

“That is why we have to make the Legislature understand that Harris is an urban environment and the county is not geared to urban issues,” he said.

“It is important that Harris County and Houston and other jurisdictions find ways to cooperate and do things together,” the county judge said. “We need to look at things as a region, rather than at arbitrary county lines.”

Topping Emmett’s list of concerns is transportation, an issue that may necessitate new roads, enhanced bus service and commuter rail.

By the numbers

137,692: Residents gained by the Houston-Woodlands-Sugar Land metropolitan area.

83,000: Residents gained by Harris County.

26,512: Residents Fort Bend County gained to make it the ninth-fastest growing county in the nation.


Trophy towers command high-rising rents

Posted on March 26, 2014 in

By Katherine Feser

A strong energy economy is leading to higher rents at Houston’s downtown trophy towers and spurring construction to meet demand, a new report shows.

Rents here rose by 4.5 percent over the past year to an average of $44.50 per square foot per year at the top-rated downtown buildings, commercial real estate firm JLL reported in its spring 2014 Skyline Review of downtown office markets. The rental rate is full-service, meaning it includes expenses. That’s $10 higher than the Class A average across Houston.

“There’s a shortage of quality office space in this city,” said Rudy Hubbard, managing director of JLL in Houston. “I’ve never seen it this hot.”

The study looked at downtown buildings with top rental rates across 43 cities. In Houston, that included such iconic structures as Heritage Plaza, One Shell Plaza, BG Group Place, JPMorgan Chase Tower and Fulbright Tower.

With a vacancy of 6.1 percent, Houston also is among 11 cities where more than 90 percent of building space is occupied. The only cities with lower vacancy rates were Bellevue, Wash, at 3.9 percent and Pittsburgh at 5.2 percent. Richmond, Va., also had a 6.1 percent vacancy rate.

Houston’s downtown market is predicted to favor landlords through 2015 before shifting to neutral, JLL said. The reported noted that space will become available in several buildings, among them Pennzoil Place, Two Allen Center and Wells Fargo Plaza.

“All the stars seem to be aligned for Houston right now,” Hubbard said.

Houston added 91,000 jobs in the last year, and Hubbard said it’s expected to add another 60,000 to 75,000 this year. That’s driving developers such as Hines and Crescent Real Estate Holdings to build office towers even before securing tenants to fill them.

With 2.2 million square feet of office space under construction downtown, Houston came in just behind New York, where 5.2 million square feet is going up. San Francisco was third with 1.6 million square feet.

Hubbard said Houston has joined the ranks of “gateway cities” such as Boston, New York, Washington, D.C., San Francisco and Los Angeles that are particularly attractive to investors.

Global investors are buying buildings downtown and elsewhere across Houston, which moved up one spot to No. 4 in the Association of Foreign Investors in Real Estate’s 2014 survey of members. Houston ranked behind London, New York and San Francisco.

“We just had offers (to buy) due on a Galleria office building,” Hubbard said. “We had 11 offers. Six of the 11 had never been in Houston.”

Over the past three years, rents are up an average of 17.1 percent in the 43 markets. That compares with a broader market increase of 9.8 percent.

“It’s a perfect storm for landlords as space options in the Skyline are decreasing. This has fueled their confidence to raise rents,” Gregory Green, international director at JLL, said in announcing the study. “As such, tenants, especially large users, are advised to secure lease terms in the near future, rather than waiting for the tides to change. We predict rents in the Skyline will rise even higher with fewer concessions in this supply-constrained environment over the next 24 months.”

Some highlights of the study:

1 New York posted the highest rental rate at $78.56 per square foot.

1 Houston topped the list of cities for rent growth since 2005, with a 69.8 percent gain. It was followed by San Francisco with 69.1 percent and Austin with 53.9 percent.

1 Houston’s skyline rental rates rose by 17.7 percent in the past three years.

Major market rent

A comparison of 2013 asking rents per square foot for top-tier downtown commercial office space in nine major markets:

New York: $78.56 per square foot

Washington, D.C.: $75.41

San Francisco: $61.75

Boston: $53.90

Houston: $44.50

Bellevue, Wash.: $41.49

Los Angeles: $40.68

Chicago: $36.94

Seattle: $35.80

Source: JLL

What they’re asking for

A comparison of 2013 asking rents per square foot for top-tier downtown commercial office space in nine major markets:

Per square foot

New York $78.56

Washington, D.C. $75.41

San Francisco $61.75

Boston $53.90

Houston $44.50

Bellevue, Wash. $41.49

Los Angeles $40.68

Chicago $36.94

Seattle $35.80

Source: JLL