NY Times covers the Houston boomThe NY Times has had two articles in rapid succession on the boom in Houston. The first one is specifically on the oil boom (thanks to Anthony and Tom for the link), and the second is on one spillover of the boom: a hot property market in Galveston, which they refer to as the "Hamptons of Texas." (also thanks to Tom for the link) On to excerpts:
HOUSTON — The good times are back.It's nice to see construction cranes over more than just stadiums and the med center for a change. Moving on to the Galveston article:
Galvanized by the record profits at energy companies, this city, the center of the country’s energy industry, has shaken off the effects of the Enron implosion six years ago and is enjoying its strongest resurgence in more than 20 years, business officials and real estate developers say.
Some energy companies are expanding and putting up new buildings. Others, like Citgo, Schlumberger and Halliburton, have moved their headquarters to Houston. Oil and natural gas companies have helped reduce office vacancy rates to 15 percent, a five-year low, according to Grubb & Ellis, a real estate company. Job growth is double the national average — 97,400 jobs were created in 2006. The National Association of Realtors says the housing market in Houston is one of the strongest in the country.
“The increase in the oil business has made Houston,” said Randall Davis, a Houston condominium developer. “It feels a touch like the 1980s — everyone is out, the restaurants are full, the bars are full. It’s like New York.”
The good news extends across the city. The port recently opened a $1.4 billion container terminal to tackle soaring traffic. In 2006, it handled 1.6 million 20-foot containers, up 29 percent from 2003. At the Texas Medical Center, hospitals and universities are investing billions in new facilities. Residential and mixed-use developments are going up downtown.
Over the last five years, sale prices for office buildings in Houston have climbed by 34 percent, to an average of $129 a square foot in 2006, according to Real Capital Analytics, a national research and consulting firm. Compared with other large cities nationwide, like Chicago and San Francisco, where prices average $191 and $338 a square foot, respectively, Houston is still a relative bargain.
...lowered the availability rate for Class A space downtown. In the fourth quarter, the rate dropped six percentage points, to 12 percent... Brookfield is banking that Houston will grow even more. It is considering putting up a new office tower downtown, Mr. Clark said, but is holding off until the availability rate for Class A office space drops below 10 percent. He said he expected it to reach that point within a year.
Speculative office buildings are also going up in places like the Galleria and downtown, which have less available space. Work on Houston Pavilions, a $170 million complex with retail space, restaurants and music clubs as well as a 13-story office tower, began downtown in February.
...East Beach, a lonely strip at the far eastern end of the island. A small trailer with a sign out front was advertising Beachtown, a New Urbanist community of pastel-colored shorefront homes. The sales team inside told them that eventually up to 2,000 shore area homes would be built around three town squares with shops, parks and a lagoon. Andrés Duany, a leading architect in the New Urbanism movement, had designed the project. The Wisemans liked what they saw.The article also has details on some of the condo and home construction projects. The island is definitely booming. I've been wondering for years when it would happen, and it finally has. What they didn't mention is one other key asset it has to lure retiring baby boomers: top-quality health care with UTMB's teaching hospital. I've been trying to convince my parents to invest in real estate down there, but they're worried some sort of weather-related event might happen and wipe out their investment. Sheesh. Wimps. What are the odds that could happen?... ;-) (And how do those odds compare to the risk of another oil crash?...)
Many fellow Texans feel the same way about Galveston. Houston residents, eager for a second home and flush with cash from the oil boom, have made Galveston Island an emerging Lone Star equivalent of the Hamptons.
Only 51 miles southeast of Houston, Galveston still has plenty of vacant land, low home prices and miles of wide-open beaches. Over the last four years, the average price of a home has risen 89 percent, to $232,800 in January, according to the Galveston Association of Realtors. Prices for water-view lots are now more than double what the Wisemans paid. A single water-view lot at Beachtown costs $300,000, though other lots without views could be as low as $80,000.
“The world has discovered the Gulf Coast,” said James Gaines, research economist at the Real Estate Center at Texas A&M University. “You want a second home on the East Coast at an affordable price, and you’re not going to find anything. Here, it’s still available and affordable.”
The turnaround has been significant in a town that as recently as 10 years ago didn’t have enough money to repave roads and install new water lines. Large-scale development had not happened since a hurricane destroyed much of the city in 1900, killing more than 6,000 people.
“Galveston is experiencing a renaissance it hasn’t seen in 100 years,” said Jeffrey G. Sjostrom, president of the Galveston Economic Development Partnership. “The beauty of the development is that it’s comprehensive and diversified. Our eggs are being spread across many baskets.”
The development seems to fly in the face of Galveston’s geography. As a barrier island, the city can flood during tropical storms. Sometimes, its beaches erode. In September 2005, the city was evacuated when Hurricane Rita threatened the island. But home buyers keep coming because a large-scale hurricane has not damaged the island in more than 20 years.
Developers are putting up condominium towers, resorts and acres of homes from one end of the 32-mile-long island to the other. More than 6,500 residential units are under construction; most of them are condos, according to the development partnership. At the western end of the island, Centex Homes is building one of the largest projects, a 1,000-acre development with 2,300 houses and condos.
More than $2.3 billion in commercial, public and residential projects are under way or planned. A new causeway linking the island to the mainland and one of the country’s two laboratories to research emerging diseases are under construction. In the last three years, a new city convention center opened, and Moody Gardens, a complex of museums, water parks and botanical gardens, added a 125-room hotel wing and expanded its exhibition space.
The Port of Galveston calls itself the busiest in the gulf for cruise-ship traffic, thanks to a steady pace of renovations and expansions. After Carnival Cruise Lines decided to use Galveston as a home base for one of its ships, the Celebration, traffic there shot up, said Steven M. Cernak, the port’s director. Last year, the port handled 616,198 disembarking passengers, up from 1,365 in 1999.
“What we’re able to offer the five million people one hour away is not necessarily emerald seas and salty sands, but convenience,” said Richard Anderson, the Falcon Group’s vice president for development. “You can pack the car with your kids or grandkids and be on the beach in an hour.”