Houston Strategies

The Rise of the Third Coast and Houston's Philanthropy with the TMC

Joel Kotkin has a great op-ed in the Wall Street Journal on the rise of the Third Coast (alternate link - hat tip to Stephen).  I wanted to just include it in the next post of smaller misc items, but there are too many good Houston excerpts, so here there are:

The country's next great megacity, Houston, is here... 

Together, Houston and Tampa have gained more than 1.5 million people over the course of the decade; in fact, in 2008 and 2009, net domestic migration to Houston was the highest of any major metropolitan area. An examination of migration flows to Houston, New Orleans, and Tampa by Praxis Strategy Group, where I work as a senior consultant, shows that many of their new citizens are coming from the East and West Coasts, especially New York and California. Also over the past decade, Houston has attracted as many foreign immigrants, relative to its population, as New York has—a considerably higher rate than in such historical immigration hubs as Chicago, Seattle, and Boston, though still lower than in San Francisco, Los Angeles, and Miami. 

What's more, the Third Coast is winning the battle of the brains. Over the past decade, according to the Census Bureau, 300,000 people with bachelor's degrees have relocated to Houston.
...
Many of the region's new arrivals are attracted by the low cost of living. The median home-price-to-income ratio in Houston, Tampa, and New Orleans is roughly one-half that of New York, Los Angeles, San Francisco, or San Jose. Over the last decade, Houston boasted the highest growth in personal income of any of the country's 75 largest metropolitan areas.
...
Thanks largely to expansion in energy, manufacturing, and engineering services, Houston now boasts a considerably higher per-capita concentration of STEM jobs—those relating to science, technology, engineering, or mathematics—than Chicago, Los Angeles, or New York, according to an analysis by EMSI.
...
When Garreau published Nine Nations 30-some years ago, he predicted that as growth kicked in, the Gulf region would "clot" into an archipelago of cities similar to the Boston–New York–Washington megalopolis, or to the band stretching from San Diego through Los Angeles and San Francisco to Portland and Seattle. If he proves right, Houston will be the hub of this new system, much as New York anchors the East Coast and Los Angeles the West. 

The greater Houston metropolitan area is one of the fastest-growing in the country; its population, now 6 million, is expected to double over the next 20 years. Houston is also the nation's third-largest manufacturing city, behind New York and Chicago. Over the past decade, the city and its surrounding communities have added almost 20,000 heavy-manufacturing jobs, the most of any metropolitan area in the United States. Further, Houston has the third-largest representation of consular offices, after Los Angeles and New York, and it hosts more Fortune 500 companies—22, as of 2011—than any city other than Gotham. Over the past half-century, says Federal Reserve economist Bill Gilmer, Houston has consolidated its position as the center of the global fossil-fuel industry. In 1960, Houston was home to just one of the nation's large energy firms, ranking well behind New York, Los Angeles, and even Tulsa; by 2007, 16 such companies were headquartered in Houston, more than in those three cities combined. 

The burgeoning health-care industry is also finding a home in Houston, especially at the Texas Medical Center—"the largest medical complex in the world," its website boasts. Like so many things in Houston, this cluster of 48 nonprofit hospitals, colleges, and universities owes its existence largely to the energy industry. According to its chief executive, Richard Wainerdi, the center benefits from "probably the biggest confluence of philanthropy in the world, and a lot of it is oil money." Every day, 160,000 people enter the vast campus, equal in size to Chicago's downtown Loop; its office space, now over 28.3 million square feet, exceeds not only that of downtown Houston but also that of downtown Los Angeles. The figure is expected to surpass 41 million square feet by the end of 2014, making the center the seventh-largest business district in the nation. 

Houston's solid business climate empowers entrepreneurs. Between 2008 and 2011, according to a study by EMSI, the number of self-employed workers grew more quickly in Houston than in any other large metropolitan area. Greater numbers of educated workers are coming, too: Houston's total increase in people with bachelor's degrees over the past decade bested Philadelphia's, was three times that of San Jose, and was twice that of San Diego. "I don't get the pushback I used to get" from potential recruits, says Chris Schoettelkotte, who founded Manhattan Resources, a Houston-based executive-recruiting firm, 13 years ago. "You try to find a city with a better economy and better job prospects than us!" 

Though Houston has always been a good place to do business, it continues to suffer from a bad cultural image. In 1946, journalist John Gunther described Houston as a place "where few people think about anything but money." It was, he added, "the noisiest city" in the nation, "with a residential section mostly ugly and barren, a city without a single good restaurant and of hotels with cockroaches." The miserable city that Gunther described no longer exists, but residents on the other two coasts have been slow to acknowledge that development, despite Houston's first-class museums and lively restaurant scene. "Let's face it, we have a bad reputation," says L. E. Simmons, a legendary Houston energy investor. "But the good news is, it keeps the stylish opportunists out. It makes us kind of an urban secret."

Amen to that!

While I'm on Joel Kotkin, he also has an excellent New Geography story on Houston's philanthropic nature and how it created the world's largest medical center.  One favorite excerpt of mine below, but definitely read the whole thing.

All of that oil money has fueled a massive experiment in private, voluntary initiative—a major healthcare system that is more private than public, more charitable than profitable. Its scale can only be described as Texan. The campus is equal in size to the Inner Loop of Chicago. It currently has over 28.3 million square feet of office space—more than downtown Houston, even more than all of downtown Los Angeles. (By the end of 2014, its square footage is expected to exceed 41 million square feet, which would make the medical campus the nation’s seventh-largest business district of any sort.) Every day, 160,000 people enter the area, which has grown into Houston’s largest employer. Every year, TMC hosts about 7.1 million patient visits, including 350,000 surgeries and 28,000 newborns delivered. 

Houston’s real philanthropic achievement, however, is not just the scale of the TMC. It’s the extraordinary quality of its institutions. In the 2013 U.S. News & World Report hospital rankings, TMC-affiliated institutions topped the charts. Methodist Hospital was a nationally ranked leader in 13 of 16 adult specialties. (Of the 4,793 hospitals included in the rankings, only 148 facilities—roughly 3 percent of the total—were considered a nationally ranked leader in even one of the 16 specialties.) St. Luke’s Episcopal Hospital, likewise on the TMC campus, earned national ranking in 10 adult specialties. The Texas Children’s Hospital was ranked fourth among all U.S. children’s hospitals. M. D. Anderson has been named the best cancer center in America for 9 of the past 11 years, including 2012.

Labels: affordability, economy, entrepreneurship, growth, headquarters, home affordability, identity, quality of place, talent

posted by Tory Gattis @ 3:56 PM