HOUSTON–During the Development panel at the RealShare Houston conference on May 1st, panelists agreed that things are looking up in every property type, with a number of projects coming online recently and more in the works.
“With the exception of northern California, Texas is the shining star,” said Carleton Riser, president of Transwestern Development Co. “There is an upswing of development in Dallas, but it does not compare to Houston.”
Retail is doing really well at the moment. Moderator Rusty Tamlyn, senior managing director of HFF, commented that there are about 4 million square feet of retail projects under development, and a vast majority of the projects are 70% pre-leased even before they complete.
The strength of the retail market can be seen in the number of grocers looking to make their mark here. “Houston is the most competitive grocer market next to Phoenix,” Tamlyn said.
For example, The Woodlands will welcome Whole Foods to its roster. Paul Layne, executive vice president of The Howard Hughes Corp., said they had more than eight grocers interested in the Woodlands space and each grocer has a different explanation for why they were unique and perfect for the spot.
Development in the industrial market is a little trickier due to a lack of space.
“You have to basically create industrial space,” said Aaron Thielhorn, managing director of Trammel Crow Co. “Sites that were passed over years ago now have play,” if the developer is willing to work at creating roads and infrastructure around available land.
If retail is excelling, the office sector is leading the pack. Tamlyn said there are more than 18 million square feet of office space under development. As in the first panel on Institutional Capital Markets, panelists agreed that companies are in the midst of a flight to quality.
“There is a large amount of space in this market that to the top tier companies is obsolete,” Thielhorn said.
Companies are often willing to pay more for class A office space that provides amenities and infrastructure that an older, class B facility does not.