Commercial Expo: Developing Houston 2013
Four local developers cited many positives of Houston’s business climate along with time frames for the current boom of commercial activity during a panel discussion April 2 at the 30th annual Commercial Expo. The keynote session, “Developing Houston 2013,” served as the intro to an exhibition of local commercial projects by leading developers hosted by the Houston/Gulf Coast Chapter of the Society of Industrial and Office Realtors®. The developers on the panel represented local, national and international firms and included: David W. Hightower of Wolff Companies, Paul H. Layne of The Howard Hughes Corporation, Michael Mair of Skanska, and Keith Simon of CDS Houston, Inc. The former two have experienced the Houston area’s last 30 years of real estate cycles first hand while the latter two moved to the area recently and are currently developing major projects.
Jim Kollaer, longtime Houston resident/business leader and former head of the Greater Houston Partnership, served as the panel’s moderator. He first noted, with an audience’s show of hands, those in business since 1983, pointing out the large number of people still in the business after experiencing the area’s real estate cycle’s ups and downs. This year’s panel is a reminder of the first event billed as “Developer Day,” keeping that name for many years.
So how long did the developers predict Houston’s boom cycle to last? Anywhere from three years (Layne) to four years (Hightower) to seven years (Mair and Simon). Simon also noted after the boom years, the area would still see a lot of activity for another seven to eight years. Consensus: locals predicted shorter terms, possibly due to remembering previous boom cycles and the aftermath, while the two representing international companies projected longer growth.
Layne, who is currently heading up development projects in The Woodlands, noted that Houston -- and the state -- is booming because the tax environment is favorable to business, the area has a great workforce and is an easy place to do business. He said 72% of all recent new office tenants in The Woodlands are moving from out of state. He suggested to the broker audience that out-of-state tenants should be high on their cold-calling lists.
All panelists agreed with Layne on the business-friendly part, while Hightower, who has developed major business parks in several areas of the city including the Energy Corridor, noted that energy is the local driver behind the continued growth in employment. Citing Houston’s entrepreneur mindset, Hightower noted that even though the area does not have zoning, “we have lots of controls. We are not under-regulated…We are recognized as a world-class city, and we have a lot going for us.”
Simon, who is currently developing Springwoods Village, an 1800-acre, mixed-use community just south of the ExxonMobil campus, said sustainability is very important for today’s development. He said his company sets stringent guidelines and pushes residential builders to follow them. Hightower agreed that sustainability is a challenge. Layne agreed, specifically noting the use of water, or water efficiency, as a challenge, citing extremely high costs for landscaping and keeping his Bridgelands development’s many lakes and waterways flowing.
Skanska’s Mair noted his 3009 Post Oak project is the first new building to be pre-certified LEED Platinum, explaining that in Europe, where Skanska does a lot of development, green standards are much higher than in the U.S. He pointed out the extra cost to attain the Platinum rating will pay off in the long run.
Simon also noted two other challenges the area faces: creating a larger skilled labor force by utilizing the many educational institutions here, and, of course, traffic, which other panelists and the audience acknowledged.