You may find that office expansion and leasing activity is stalled in many major cities. Yet, in the Houston real estate market, things are buzzing, and Houston commercial real estate is looking great.
Why is Houston so different from other large cities? And why is the Houston commercial real estate market a hot commodity these days? Well, the answer is quite simple: it’s all about oil.
Major Job Gains Realized
A rise in oil prices, coupled with a shale exploration boom, has made Houston the first major city in the region to see jobs regain the losses experienced during the recession. In fact, Houston added nearly 76,000 jobs in 2011, and it is expected, according to the Texas Workforce Commission, that new jobs may total in the tens of thousands this year, as well.
Oil and gas companies in Houston are in the works to expand in some way or another, including the big companies like Exxon Mobile. And that spells success for the Houston commercial real estate market. Last year alone energy companies gobbled up nearly two million square feet of commercial real estate, and many real estate experts are anticipating the same this year.
Deep-Water Drilling Up and Running
It is likely that the government moratorium on deep-water drilling in the Gulf of Mexico that was lifted in fall 2010 has had a large impact on the increase in energy activity, as it is expected that the largest percentage of drilling profits comes from these offshore waters. With shale drilling adding to the mix, it is clear why energy has become a boom for the Houston economy and the Houston commercial real estate market.
For example, Nexen, a Canadian company, recently moved its headquarters from Plano to Houston after the moratorium was lifted on deep-water drilling. Joint venture partners are up and running, and deep-water operations are booming, thereby creating energy excitement in Houston.
In addition to speculation that the commercial real estate market will experience plenty of leasing activity, speculative construction has also gotten new life, with more than a million square feet expected to be constructed by year’s end.With Houston, it’s all about job growth, and with talent coming from far and wide to explore deep-water drilling and shale exploration, everything is responding to this action – including the commercial real estate market.