High Tech and Energy Markets—Peaking?

 As the leading gateway markets become much too pricey, more yield-deprived capital edges into other places in search of better returns. Pickings remain slim given compromised demand except in the apartment sector. It’s basically the same old story. Some investors get excited about energy and high tech markets where some modicum of high paying jobs get generated. They like the Texas cities—Houston, Austin and the Dallas Fort Worth Metroplex for energy and San Francisco-San Jose, Seattle, the aforementioned Austin, Boston and the North Carolina Research Triangle for high tech.

Investors need to be careful when relying on either the energy or tech sectors, both of which prove volatile in the stock market with similar impacts on real estate. It’s taken Houston almost 20 years to regain some luster after the early 1980s oil industry meltdown. Both Dallas and Houston have been reasonably good development markets, but investors struggle with low barriers to entry. Austin has 24-hour characteristics, the University of Texas, and a state capital to buttress energy and high tech businesses. That’s quite a powerful tenant demand-driver combination, but the city is relatively small and lies one step removed from global pathways (DFW Airport). No matter all the calls for U.S. energy independence, domestic oil prices remain beholden to global markets and the combustibility of Middle East hot spots as well as market speculators. The ups and downs are baked in, and the property markets follow along.