Few Trading Floor Calls Despite Energy Action

Although energy companies and financial institutions are flocking to Greater Houston and energy and power trading is active, there is little demand for trading floors. "We haven't seen any kind of resurgence in trading floors. Based on feedback from insiders, we wouldn't necessarily expect to see any type of resurgence in the next couple of years," Carleton Riser, managing director of Transwestern's Houston office, tells GlobeSt.com.

Andrew Spence, director with Cushman & Wakefield of Texas Inc., says demand is minimal, but he does have one request from tenant--a large utility company in the US--that wants to open a power and energy trading floor and wants it up and running before the end of the year. However, he says "that's the only request I've had in the past six months for that type of real estate."

Less than 10 years ago, things were different. Power companies coming into the area required trading floors. The open office areas were generally 40,000 sf to 60,000 sf, a hub where traders bought and sold millions of oil and gas commodities.

Spence tells GlobeSt.com one reason there isn't as much of a demand for trading floors is because there are tighter restrictions when it comes to getting into the energy business due to the Enron debacle. "People are lot more cautious getting into it," he adds. "And when they do, they're doing everything to comply with specific sanctions."

[IMGCAP(2)]Riser says trading is more a byproduct of the business rather than the core business for those energy companies now coming to Houston. Much of the core business is centered on exploration and production, meaning a different type of setup and employee.

"The energy companies are hiring, but if you talk to them about the sorts of people they want it's office, it's engineers, it's finance people. The aspect of trading rarely, if ever, comes up," Riser says.

Louis Cushman, vice chairman for Cushman & Wakefield Inc., says he sees more of a trend in that East Coast companies are setting up Houston trading operations by piggy backing on existing trading centers rather than developing their own. Building one from scratch can be time-consuming and somewhat costly, he points out. "There's lack of space, particularly Downtown," he says. "By definition, the only way you'll get an existing trading floor is if someone moves."