Monday, October 19, 2020

A new strategy for securing Houston's economic future

Talk has been growing in recent years about Houston's future in a less carbon-intensive energy world.  Will we still be the world's energy capital in the coming decades, and what does that mean? The Greater Houston Partnership and Center for Houston's Future have taken the lead on this challenge with their Energy 2.0 and energy transition work, and I hope they're getting traction with it (despite pandemic distractions).  We certainly have a lot of expertise here that can work on big problems like carbon capture with the right economic incentives.

Another strategy is growing our innovation and startup ecosystem to build the companies of tomorrow - especially in energy, space, and biotech - and I think there has been great progress made in recent years, including Rice's building of the Ion in Midtown.  One area that has not been as successful is trying to attract tech companies building new offices.  To be brutally honest, we can't out-Austin Austin.

The energy transition and innovation ecosystem are both great initiatives to help secure Houston's economic future, but I think there's a third opportunity we're overlooking. It plays perfectly to our strengths:

  • America's most affordable global city (vs. NYC, LA, Chicago, SF, Miami)
  • Being more attractive to global migrants than domestic ones (which seem to be more interested in places like Austin, Denver, and Nashville)
  • Large expat communities from countries all over the world
  • 92 foreign consular offices, the third-largest set in the US after NYC and LA
  • One of the largest ports in the country
  • A friendly and welcoming local culture
  • A huge United hub at IAH with nonstops covering all of the Americas in addition to European, Asian, Middle Eastern, and ANZ connections.

IAH nonstops on United

Put all those strengths together and what's the opportunity? To be the location of choice for foreign companies establishing their branch office for the Americas.  There are thousands of fast-growing companies around the world that will need to establish a presence in the Americas at some point, and Houston is really the ideal place for them to put it for all the reasons listed above.

I think we already compete for these to some extent, but there's an opportunity to do it much more aggressively with a formal, well-funded program that cooperates closely with all our foreign consulates to identify their up-and-coming companies and start wooing them as early as possible. Without outside influence, they probably tend to end up in the cities that are more obvious and well-known to them like NYC, LA, and Miami.  But if we intervene early and show them how much better Houston will ultimately be for both their business and their employees, I think we can win over a substantial number of them.  Their expat employees used to small flats and public transport in crowded cities will be blown away by the equivalent home and car they can buy in Houston, Sugar Land, or The Woodlands!

These foreign branch offices aren't as sexy as green energy, tech, or entrepreneurial startups, but over time they could provide a very strong foundational component to Houston's economy with a whole lot less uncertainty and volatility.  Even better, we won't have that much competition - it's an opportunity ignored by most cities as they chase the hot tech companies and try to cultivate their own startup scenes.  Foreign corporate offices should definitely be the third strategy to secure Houston's economic future in a world increasingly hostile to oil and gas.

Would love to hear additional thoughts and feedback in the comments...

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Sunday, October 11, 2020

HTX top five global city in America, big SWA increase at Hobby, Dilbert vs. city red tape, big growth, and more

 Lots of interesting items this week:

But mainly I expect everything to (eventually) get more affordable under covid (see previous item). It will certainly free up a lot of workers from service industries for construction, which has been a major issue for builders. And people being free from commutes reduces price premium of close-in properties and opens up exurban ones.
#12. Houston-The Woodlands-Sugar Land, TX
3-year population growth (percent): 5.11%
3-year population growth (total): 340,438
Cost of living (compared to national average): +1.8%
Median home price: $221,426
Average 2-bedroom rent: $1,096 per month

Finally, ending on a humorous note, Dilbert takes on development over-regulation and corruption! I'm sure many developers are familiar with the 'false hope phase', at least outside of Houston!

Click to enlarge

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Tuesday, October 06, 2020

Food deserts aren't real, energy transition, tourism surprise, NYC's anemic recovery, and HTX pandemic response failure

 Just a few items this week:

  • Bloomberg Businessweek: Houston Had an All-American Pandemic Response: Ignore Until It’s Too Late - The city knows about disasters. It’s got a world-renowned medical center. It saw what happened in New York. And it still couldn’t stop Covid-19. I know I still shake my head every time I see a full pedal party in Midtown (close proximity + heavy breathing!). Hat tip George. Sad conclusion:

Crisis is brewing from every direction, and we’re as ready as we ever were. It’s as Hidalgo says: “We’re right on the edge of disaster. It’s almost become our way of business.”

“But a number of civic and business leaders say New York’s reliance on mass transit—and concerns that the new coronavirus could spread through subways, buses or regional trains—has kept many people working from home. Cities that have more driving commuters have seen a higher percentage of workers return.” 
“New Yorkers’ slow return to the workplace is the latest blow to the nation’s biggest city, which has also suffered from homeowners fleeing Manhattan for larger spaces, rises in murders and homelessness, and the shutting or partial closings of Broadway theaters, museums and other popular attractions.” 
“But for some New Yorkers who recall the early weeks of the pandemic, when the rates of sickness and death were among the highest in the world, complimentary parking might not be enough to bring them back to midtown and the prospect of mixing with crowds. Many were traumatized, said Chris Jones, senior vice president of the Regional Plan Association, an urban policy organization.” 
And here’s the top rated comment: 
“Let's be real.  There is no social distancing in NYC whatsoever when the buildings and streets are full.   Zero.  None whatsoever.  Source: a person who's worked in NYC every day for 25 years. “
"We study the causes of “nutritional inequality”: why the wealthy tend to eat more healthfully than the poor in the U.S. Using event study designs exploiting supermarket entry and households’ moves to healthier neighborhoods, we reject that neighborhood environments have meaningful effects on healthy eating. Using a structural demand model, we find that exposing low-income households to the same availability and prices experienced by high-income households reduces nutritional inequality by only 9%, while the remaining 91% is driven by differences in demand. These findings contrast with discussions of nutritional inequality that emphasize supply-side factors such as food deserts."

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