The following article originally appeared in the October newsletter to clients of Kiley Advisors, LLC for the purpose of providing the latest leading indicators and industry issues to those clients. Reprinted with permission.
The market continues to prosper in Houston. New projects are being announced each week and the market shows no signs of slowing. The Architecture Billings Index (ABI), a national leading indicator for construction still shows growth across the nation, and even stronger growth in the southern region, which includes Texas. The ABI’s project inquiries index is even higher, which suggests that the architect’s telephone is still ringing as more owners want to pursue projects across the nation.
The City of Houston permits set a record pace for the sixth month in a row in August. Residential permits are up 38.1% year over year and non-residential permits are up 46.1% in the same time frame, possibly insuring a record year for Houston permits.
CBRE offered a preview of their third quarter report. In the office and retail markets, asking rates continue to climb while absorption and vacancy are both down, which indicates that a number of projects were delivered in the third quarter. The light industrial market is still very busy with vacancy down and net absorption up. Multi-family rental rates are up to $1.03 overall with approximately 37,000 acres of land under contract along the Grand Parkway targeted for multi-family developments. On the land side, the Ninfa’s at the corner of San Felipe and Post Oak sold for $315 per square foot, a sign of the demand for companies wanting to be closer in. And while BP has announced layoffs, the official number of those in Houston remains to be seen. Some estimate the number around 4,000, though many feel that these employees would be quickly absorbed by other companies in Houston, so the cooling off of the markets may not be seen.
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