Brokerage Picks for the Hottest Houston Product Types

HOUSTON—Across all property types, the Houston market continues to hum along with positive growth and demand, say the experts at NAI Partners. The firm held a first quarter breakfast this week, attended by Jon Silberman, partners Dan Boyles and Clay Pritchett, senior vice president Jason Gaines, partner/managing director Jim Tainter and senior vice president/partner Andrew Pappas, who provided insights on a variety of trends and topics across the company’s office, industrial, retail, landlord services and investment fund service offerings.

As for the office market, Boyles says there is physical evidence to buck the stats.

“While from a statistical standpoint activity is still down, anecdotally Houston office activity is starting to feel like it’s picking back up; though it remains a tenant’s market,” Boyles said.

For industrial, Pritchett says the time has come for a spec build of more than 1 million square feet.

“Industrial vacancy has been below 6% for 30 consecutive quarters, and distribution product has been the big winner, seeing the lion’s share of new development,” Pritchett said. “Spec buildings are being constructed at larger sizes than ever before, and I expect it’s only a matter of time until we’ll see an industrial spec building cross the 1 million-square-foot threshold.”

Gaines said for the most part, developers are staying true to the conventional wisdom of holding back on the reins.

“Similar to industrial, the retail market in Houston continues to hum right along, as occupancy has remained remarkably consistent,” Gaines observed. “Developers have learned to police themselves with regards to overbuilding, and few if any are delivering huge amounts of spec space. Among national brands, Houston almost seems to be sliding under the radar a bit in favor of Dallas and Austin, but those paying closer attention are taking advantage of the unique opportunities afforded by the Houston retail market.”

For landlord services, Tainter says he’s seeing clientele who are optimistic about Houston.

“We continue to be a market that is incredibly diversified and our clients remain bullish on Houston,” Tainter says. “It’s important to be opportunistic, but those that can do so while also having the resources to be thoughtful, patient and strategic will continue to reap the rewards.”

Regarding the NAI investment fund, Pappas said there are several attractive product types in at least three Texas metros on the radar.

“We’re actively shopping for opportunities in our Fund III now, looking particularly closely at office, industrial and retail product in San Antonio, Dallas and Austin,” Pappas said. “We pride ourselves on identifying deals that align perfectly with our investment ethos, and being picky, patient and robotic in our underwriting has helped us generate attractive risk-adjusted returns for our investors.”

As a company, the growth level has mirrored the market activity level in many respects, said Jon Silberman, managing partner of NAI Partners.

“NAI Partners has literally doubled in size since 2014, both in our number of brokers and revenue,” says Silberman. “The company is having another very strong year in 2019, and one of our key strategic moves has been bringing Travis Rodgers in to help increase the executive management infrastructure of the company overall and manage our significant growth more effectively.”