More than 350 guests attended BisNow’s “The Future of the Energy Corridor” session held at the new Class-A office building Eldridge Oaks. Moderated by Kent Newsome of Greenberg Traurig, panelists shared their insights on the long-term effects of the Gulf oil spill on the Houston job market, short- and long-term impact of the absorption in the Energy Corridor and potential areas of growth.
- David Hightower, Executive Vice President and Chief Development Officer, Wolff Companies
- David Baker, Executive Vice President – Office Services, Transwestern
- Sanford Criner, Executive Vice President, CBRE
- Brad Freels, Partner, Chairman and CEO, Midway Holdings
- W. Aaron Thielhorn, Principal and Director – Houston, Trammell Crow Company
- Joe Wanninger, Investment Director – Asset Management, PrinREI
- Jason Whittington, Principal, NAI Houston
David Baker said we’re at a high point of vacancy now (nearly 13 percent according to Transwestern’s mid-year report), but in 2011 and 2012 Houston is projected to add between 50,000 and 75,000 jobs per year. David added that the past 15 quarters have seen positive absorption in the submarket and reminded that blocks often go in large chunks. Aaron Thielhorn mentioned that the vacancy is impressive considering that’s through a recession, oil spill, and delivery of 4.8 million square feet of new construction. If you take out Eldridge Oaks and 3 Eldridge, and the percentage is more in line with 7 percent.
Brad Freels commented that the lack of new product means there’s no real reason to drop rates—deals will come. If you're hoping to develop an office building, Joe Wanninger commented most lenders and investors will want you to be at least 50 percent preleased. On a more optimistic note, he shared that he’s active in the market for acquisitions and knows several national retailers are looking at space in good centers. Aaron and Kent Newsome agreed that land loans are in danger of falling behind the market. Baker added that if companies signed a lease before 2006, it’s probably pointless because the old lease may be lower.
Sanford Criner concluded with tenants like being in the Energy Corridor because of the infrastructure, and it’s where people live. Keith added, it has significantly more space for large users than The Woodlands or Sugar Land.