HOUSTON—Growth in the industrial market continues to increase as the backbone of the Houston economy. Indeed, global companies such as Dräger and Bauer Manufacturing are relocating to the metro in greater numbers.

In this exclusive, Robert McGee, principal at Lee & Associates–Houston, who specializes in industrial, land and investment brokerage, recently discussed why Houston is attracting these industrial giants. In the process, he provided three reasons to support that claim.

GlobeSt.com: What are some of the reasons that Houston is a draw for tenants?

McGee: There are many reasons why Houston is attractive to new businesses. 1) Cost of living and business-friendly environment: The city of Houston still has a lower cost of living when compared to other major markets like New York, Los Angeles and Chicago. Houston also no state income tax, which is favorable to employers and employees alike. The state ranks as one of the best places to work, raise a family and keep a little more in your pocket. When you couple this with business-friendly regulations, like no zoning, Freeport Tax Exemptions and Foreign Trade Zones (Texas currently leads the nation with 32), you create a tremendous amount of opportunity for businesses to relocate, expand or start up in Houston.

Businesses in Houston are also easily connected to the global markets for trade. We have the sixth busiest international airport in the nation and, I believe, rank second busiest for cargo in the Northern Hemisphere. We're also a leader in exports year after year. There are plenty of imports too, with raw materials such as steel and iron that supply local manufacturing companies.

Did I mention no zoning? At the end of the day, land prices do dictate, to a degree, where you can build certain product types; however, unlike other major markets, our land prices are still attractive and we tend to have a wider variety of options when it comes to site selection. Our market always gives us the option to evaluate multiple sites to find the best one, and for the most part, our permitting process on new construction is attractive too. Generally speaking, most projects can be completed within 60 to 90 days. With Houston's moderate year-round weather, construction delays due to inclement weather are few and far between. It's not uncommon to see a warehouse get completed in less than eight months.

2) Large global presence and diversity: Houston has established a huge international presence with an increasing stream of international investments from major global companies. The presence of these larger international firms also attracts smaller foreign companies to invest and move here as well. The Greater Houston Partnership reported that there are over 5,000 Houston-area firms that are engaged in global commerce. I think most still refer to Houston as the energy capital of the world.

Global companies from all sectors of oil and gas have been the common denominator in diversity for Houston. In fact, Houston has the most diverse workforce in the US, and according to the US Census bureau, one in four residents (1.6 million people) are foreign born. Foreign-born citizens migrate to Houston for various reasons, but mainly due to Houston's resilient economy. Not only do they positively contribute to the labor force growth, but they also facilitate the flow of international trade by maintaining ties with their homeland. With Houston's various established diverse communities, global companies are more inclined to relocate because it makes it easier for its employees to transition to a familiar environment.

3) Access to all sectors of the oil and gas market: Even though Houston has an extremely diverse economy, the city is still dependent on all sectors of the oil and gas industry. Houston houses one-fifth of the world's major oil and gas companies, including seven of the 10 largest majors and more than half of the world's top 100 companies.

While the downturn in oil and gas in the last two years wasn't a proverbial nail in the coffin, it didn't go without notice. The upstream sector has been affected from deflated oil prices and oversupply, but is slowly starting to pick back up. The downstream sector has remained steady, due to low feedstock prices, especially with Houston's large presence of refineries, demand for plastics and the construction of liquefied natural gas export facilities. These new export facilities have driven up the demand for construction jobs, pipeline construction and many other businesses that service the major refineries along the Gulf Coast.

Instant Insights /

Why Does Industrial Gravitate to Houston?

Related Stories

Recommended For You