Sunday, December 20, 2020

Post-pandemic housing reality, charter amendment, alt-cities to CA-NYC, housing boom, and more

 A crazy week with a *ton* of new items I'll only be able to partially get through in this post, including some followups to last week's post about California tech companies moving to Texas:

"In terms of tech hype, Houston isn’t Austin, but it does check an awful lot of boxes for Musk. Also, if he spends much time on Twitter—and we know he does—Musk might be aware that there is a robust argument among Texans on the platform about whether Austin has “jumped the shark” and been supplanted by Houston for the title of coolest city in Texas."
"Affordable suburban living
From the 1980s to the mid-1990s, cities suffered from high crime rates and numerous quality of life issues. New York City, San Francisco, Los Angeles, and some other major cities have recreated the environment of that era, with non-scientific pandemic restrictions that devastated local businesses and a penchant for placing the mentally ill directly in family-oriented, residential neighborhoods. These cities have stopped prosecuting many property and quality of life crimes, inevitably leading to bad quality of life and apathetic enforcement of more serious crimes.

The coronavirus has reset consumer expectations back to suburban living with the mental health benefits of living in greenspace. There has been an exodus from major industry centers to their suburbs and to the alt-cities. The alt-cities of Miami, Austin, and Nashville all offer car-friendly, suburban living, relatively cheap housing, and continual housing construction. With the acceleration of sustainable building materials and clean and cheap energy, the urban planning rationale to pack people into urban cores with mass transportation was already beginning to fray, and the coronavirus has sealed its fate.
...
Low taxes and quality government
People are not moving solely for tax purposes. New York and California’s tax rates are only a few points higher than they were twenty years ago. However, once people decide to move, of course tax rate is a factor in choosing a destination. Florida, Texas, and Tennessee seemingly offer everything that California and New York offer: highways, streets, schools, police departments, fire departments, and such. All the government services one would expect are there, and none of the capital gains taxes that entrepreneurs and venture capitalists typically pay.

As comedian and political commentator Bill Maher recently noted, California is reminiscent of a 1970s Italy, with high taxes and terrible government services. In return for high taxes, one would expect to go to Hunter's Point, East Palo Alto, or East San Jose and see excellent schools and services for disadvantaged people. A hyperloop instead of a failed high-speed train. Fire mitigation and stable power to complement long term climate change goals. A boom in middle-class housing rather than a $700K median house price. California and New York are becoming bad versions of Singapore, with a wealthy technocratic elite, an immigrant servant class, and a collapsed middle class."
"Buyers are paying more, too: The average sale price in Houston jumped by about 15 percent to a historic high of $341,765 in November. And luxury homes—or those going for more than $775,000—saw a staggering 80-percent increase in demand, as well."
  • The Houston Charter Amendment Petition Coalition has a good video arguing for the need to spread power from our mayor to city council by allowing three city council members to put items on the agenda.
  • Unfortunate that Houston is not on this list of top ten cities gaining residents during the pandemic (Austin and Dallas are), but with the severe oil recession, it's not too surprising. I have still seen a ton of out-of-state plates around town, and do think we are getting some significant migration during the pandemic. 
  • Southwest announced new service from Houston Intergalactic to Dallas Love, Chicago Midway, Denver, Nashville, and New Orleans starting April 12th. I expect Dallas Love to be especially popular for The Woodlands and north Houston suburbs since United only goes to less convenient DFW.
Finally, our think tank the Urban Reform Institute - A Center for Opportunity Urbanism held a recent panel on the Post-Pandemic Housing Reality in conjunction with the Bush Center in Dallas.  A lot of good insights here - well worth watching.



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posted by Tory Gattis @ 6:06 PM 5 comments

Sunday, December 13, 2020

Texas +3, California -3: More details on the HPE, Elon Musk, and Oracle moves to TX

The big news this week is all the different tech companies announcing their moves to Texas.

The big one for Houston is the announcement that HP Enterprise is moving its HQ from Silicon Valley to Spring just north of Houston - a long-term legacy benefit of Compaq Computer (which was acquired by HP and kept substantial operations here).

“Houston is also an attractive market for us to recruit and retain talent, and a great place to do business,” Mr. Neri said, adding that as one of the largest and most diverse cities in the country, “Houston provides the opportunity over time to draw more diverse talent into our ranks.”

  • And some more detail from their press release: (hat tip George)  
"Why Houston?
    Houston has long been our largest U.S. employment hub, and construction has been underway since the beginning of the year on a new, state-of-the-art campus in the area. Houston is also an attractive market for us to recruit and retain talent, and a great place to do business. The most diverse city in America and the fourth largest, Houston provides the opportunity over time to draw more diverse talent into our ranks – a key priority for HPE as we work to be unconditionally inclusive.
      We also anticipate long term cost savings associated with this move that we can reinvest in key areas of our business and innovation."
      • And finally a repost from Facebook that digs into what that increased affordability really means for employees:
      "Hewlett-Packard announced its leaving Palo Alto for Houston. 
      $1,100 is the average rent in Houston. 
      $3,350 is the average rent in Palo Alto. 
      Just to give a concept of how much the extra $2,250 a month that saves is. 
      $530 is the average monthly payment on a car. 
      $460 is the monthly individual cost of health insurance. 
      $400 is the average monthly cost of food. 
      $145 is the average monthly spending on gas for a car. 
      $130 is the average monthly cost of car insurance. 
      $1,665 a month total. 
      Those 5 things which are just as essential for people in Palo Alto as Houston and cost about as much in both places cost that much. 
      If an HP employee moved to Houston and cut rent cost down, but chose to save $585 more a month and put it in a 401k paying 5% for 10 years, they’d have $92,700 or 7 years average rent in Houston. 
      Those 5 things are also essential, so let’s just say an HP employee moved to Houston and saved the entire $2,250 a month for 10 years. 
      $27,000 saved a year. 
      $357,000 saved over 10 years. 
      27 years worth of rent in Houston. 
      9 years worth of rent in Palo Alto. 
      A lot of people have a lot of different reasons for companies leaving, but I think the rent factor and how it’s extremely hard for employees to live is the problem. 
      Hewlett-Packard was the birth of Silicon Valley and it’s leaving. 
      I don’t see it as unlikely a future where Facebook, Uber, Google and more could join."
      Then there are the other stories on Elon Musk's and Oracle's moves to Austin:
      "California, with its steep housing costs, raging wildfires and strict business regulations, has been losing residents to other states, with Texas as the most popular exodus destination. Of more than 653,000 people who left California last year, about 82,000 went to Texas, more than any other state, according to census figures. 
      Or, as The Stanford Review wrote in a nod to the native Texan George Strait, “All of California’s Exes Are Moving to Texas.” (😅) ...
      California and Texas — two economic powerhouses, one led by Democrats and the other by Republicans, with respective populations of 40 million and 29 million — are in many ways natural frenemies. It is a rivalry made up of In-N-Out versus Whataburger, of Disneyland versus the State Fair of Texas, of tacos versus, well, other tacos."
      "Taxes, a more affordable cost of living for employees, a lower cost of doing business, and less competition for talent are among the top drivers for the companies’ moves, though there is also a growing sense that culture is a factor, as well."
      All in all a very good week for Houston and Texas!  Let's hope this is just the beginning of a much larger tech exodus from California to Texas...

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      posted by Tory Gattis @ 6:40 PM 5 comments

      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 and industrial bases 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, especially industrial ones.  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...

      UPDATE 4/14/21: Here's one great example - Growing Italian company with U.S. HQ in Houston launches new industrial-scale 3D printing.

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      posted by Tory Gattis @ 6:26 PM 8 comments

      Wednesday, April 08, 2020

      Houston is 'Chaotic Good' and #2 in population and corporate growth, Chris Shepherd in NYT, transit mysteries, and more

      Hope everyone is staying safe. A few random items this week:
      "Houston Public Works has pulled proposals to permanently close the Brazos Street bridge and implement new pedestrian features around a corridor threaded between the Montrose area and Midtown. 
      “Please be advised that the Houston Public Works Department along with Mayor Turner has made the decision to resume the project with the original design,” reads a Public Works notice sent to stakeholders on April 2."
      "Of the 10 counties with the largest population growth in the country between 2010 and 2019, six of them are in Texas. Harris/Houston had the 2nd largest population increase adding more than 620,000 people just behind Maricopa/Phoenix." 
      "Large metro areas had the steepest decline over the course of the decade, Mr. Frey found in an analysis, with the growth rate down by nearly half. Rural areas, in contrast, grew slightly by the end of the decade, though that followed several years of declines. 
      Places that had once been popular destinations for young people — New York, Los Angeles and Chicago — ended the decade with some of the biggest declines. New York began losing population in 2017, and last year it registered a loss of more than 60,000 people, the biggest population decline of any American city, Mr. Frey found. 
      The housing market collapse of 2008 and the rising prices in suburbs prompted millennials to move to big coastal cities. But that pattern reversed by mid-decade, Mr. Frey said, as millennials fled rising rents and home prices. 
      Places with the biggest gains for the decade were Dallas, Houston, Phoenix, Atlanta and Washington, D.C. Medium-size metro areas, like Las Vegas, have also moved up the ranks of gainers, as have Charlotte, N.C.; Seattle; and Austin, Texas.
      "The experience of Los Angeles County — with its dense urbanization and ideal weather — should be a warning to those, in California and elsewhere, who assume that high density, “transit oriented development” and substituting transit for driving alone naturally go together. In fact, they do not."
      Finally, a fun item to end the week with: Nolan Gray's alignment chart for cities, with Houston perfectly positioned at Chaotic Good due to our lack of zoning. This one sparked a huge debate in the Market Urbanism Report Facebook Group and on Twitter... 😅



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      posted by Tory Gattis @ 5:49 PM 0 comments

      Monday, December 10, 2018

      Bush and Houston, #1 take-home pay, Europe's rail fail, increasing access to jobs, zoning as crony capitalism, transit's decline, Houston beats Austin and Dallas for affordable housing, and more

      Apologies for the long gap between posts due to travel.  Catching up on many smaller items:
      "So Dallas has decided to legalize the granny flat — subject to enough rules and regulations to ensure that this has approximately zero impact on the housing market. The political mind at work again: Dallas studied Austin’s granny-flat liberalization program, which over the course of several years saw 200 units come onto the market, some of them new construction but mostly the rental of properties that hadn’t been rented before. Austin has almost 1 million people. Dallas copied the Austin model — on purpose, knowing that it would produce negligible results. 
      Let’s summarize: The city, having prohibited a common form of affordable housing, decided to reverse that prohibition in the hopes of bringing back some of that affordable housing by following the example of another city whose efforts produced basically no affordable housing. Ingenious! 
      Down the road a bit in Houston, they’ve had some success with a radically different approach: building houses."
      "For decades transit planning agencies and public officials (including when I served on the Los Angeles County Transportation Commission) have claimed that new transit rail systems can materially reduce traffic congestion. The development of access metrics should put an end to such misconceptions (Note 3). 
      Regional planning agencies, transportation agencies and public officials should use the access metrics to direct funding to strategies that improve 30 minute access throughout cities. That principally means attention to improving the highway system. It’s time to develop a metric for urban transportation investments to address the fundamental goal of improving access, specifically the cost per new percentage point of job access. Getting people more access is critical to strong economies and reducing poverty, and deserves an assessment based on facts, not wishful thinking or mythology."
      "Five cities—New York, Chicago, Dallas, Houston, San Francisco—accounted for a third of all Fortune 500 headquarters and half of Fortune 500 firms’ profits last year"
      Finally, a moment of remembrance for a great Houstonian, George H.W. Bush, whose statue I was admiring at the airport just hours before his death hit the news.  And a quote I love from the NYT piece talking about his relationship with Houston:
      "Mr. Bush and Houston — both a little quirky, a little square, a little misunderstood — were a natural fit. "

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      posted by Tory Gattis @ 5:55 PM 4 comments

      Sunday, August 26, 2018

      GQ: Houston Is the New Capital Of Southern Cool, plus Houston's freeways+employment advantage and oil cluster domination

      This week's lead item is GQ's long feature on Houston, which is really well done and has some great excerpts.  It's very cool for Houston to get some good national attention, especially vs. Austin.  Paper City discusses the coverage, as does CultureMap: 5 reasons every Houstonian should read GQ's love letter to our city.  Hat tip to Oscar. Excerpts:
      Houston Is the New Capital Of Southern Cool
      We’ve been hearing the buzz for a few years now: Houston may, sneakily, be America’s best food city. But when we sent GQ food critic Brett Martin to dive into the scene, we realized that was selling the city way short.
      ...
      “At the time, having grown up in Houston in kind of a bubble, I was pretty skeptical about the city,” Odam says. So Odam asked the kid in the black T-shirt why he'd be moving there from someplace as verifiably and undeniably hip as Austin. The kid shrugged. Austin, he said, was a white monoculture of hipsters, yuppies, and techies. (Odam was telling me this story in a Japanese-fusion spot in East Austin, which made it easy to visualize said culture.) In Houston, the kid said, things were happening.
      ...
      He gripped the wheel and considered the unspeakable: “Was Houston cooler than Austin? Really?”
      ...
      But a good deal of what's happening in Houston feels more organic and idiosyncratic than what an urban-studies expert might devise in a PowerPoint presentation—an energy that feels born of two major factors: one, the growth that has turned the city's diverse but discrete bubbles into a series of unavoidable Venn overlaps, allowing cultures to clash, cohabitate, and collaborate; the other, a pervading sense of independent frontier wildness. 
      That trait may not ride in wearing the cowboy costume it does farther west, but it nevertheless feels distinctly Texan. “There are no zoning laws here” is the sentence you will hear more than any other in Houston. This is a key point of identity: the theoretical ability for anyone to build anything anywhere (never mind that it is in part responsible for the kind of development that makes the city so susceptible to damage from natural disaster). People chatter about commercial real estate in Houston with the same mix of envy, romance, and fascination that they do residential real estate in New York or San Francisco: who's developing what project and where; which buildings are sitting empty, waiting for the price of oil to rise; who's erecting what glass tower as revenge for which other guy's glass tower. “No zoning” turns out to be the urban equivalent of the great western myth of “no fences.”
      ...
      “Austin is like your young, hip millennial brother who always knows the latest cool thing. Dallas is the metrosexual middle brother that nobody really wants to spend time with. But Houston is the older, cooler sibling—he's got some miles on him, he's been through some stuff, but he totally knows what's cool and what's not. You love all your siblings, but you know which one you want to hang out with.”
      ...
      We drove mile after flat mile filled with parking lots and strip malls, fast-food restaurants and box stores, new undistinguished construction cheek by jowl with older undistinguished construction. It is empirically ugly and totally intoxicating. The point isn't that there are beautiful places hidden amid the ugliness; it's that the ugliness itself becomes imbued with a kind of beauty, thanks to the thrum of human energy that takes root there.
      ...
      Maybe it's that sense of defiance that ultimately defines Houston's cool—the sense that a city where cool isn't the primary commodity can afford to lie back and let the world come to it, whenever the world catches on. As Matthew Odam's passenger put it, before closing the car door and taking off toward the Menil's lawn and into legend: “Houston is cool because Houston doesn't give a f**k about being cool.”
      Just awesome.

      On to a few other items this week:
      Proximity Counts: How Houston Dominates the Oil Industry 
      ..."Once formed, these clusters set up a virtuous cycle that eventually draws in a major piece of their industry: the bigger the cluster, the greater the cost savings; the greater the savings, the more firms are drawn into the cluster; more firms mean more savings … and the industry concentration continues on. These cost advantages are powerful enough to (1) explain why only one large headquarters/technical center typically dominates each industry, and (2) why it is so hard for other cities to challenge these centers for a share of their work. 
      Proximity generates the cost savings that accrue to companies operating inside Houston’s oil cluster, and these savings arise in three ways: access to many local companies specializing in oil; large numbers of skilled and specialized employees; and by generating company-specific intelligence on oil markets through its local knowledge loop."
      "The South holds some lessons. Dallas and Houston both built out major freeway networks with multiple rings and connectors. Atlanta stuck with a simple hub and spoke plus beltway system typical of smaller metros and has paid a big price for it. "
      • Building on that, it leads to this *huge* tax base and vibrancy advantage for our city and region.  It's a testament to the amazing freeway and commuter lane network we've built that employers have chosen to stay in the core because suburban employees can reach those employers within a reasonable commute, unlike many metros.
      "Also, the city of Houston is home to 60.2 percent of the region's jobs. In Miami, Detroit and Atlanta, for example, the city is home to 11.7 percent, 13.1 percent and 17.7 percent of the region's jobs, respectively."

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      posted by Tory Gattis @ 5:33 PM 1 comments

      Thursday, March 15, 2018

      My interview on Houston's transportation future, our traffic is better and housing more affordable than you think, and more

      Apologies for going almost a month without a new post.  The big new item is my interview with KPRC Channel 2 on Houston’s transportation future that finally aired this week, promoting MaX Lanes of course.  I start at the 2:29 point after Kyle Shelton from the Kinder Institute at Rice. On camera is not my strength, but I think it came out ok.  Oddly, they also included a separate 5m video with my complete raw interview (including some stuff that honestly should be outtakes), but the benefit is it includes many more of my points, as awkward as it is.  It was quite loud next to the freeway, and they were yelling questions from a good distance away.  Kyle also has his 26m raw interview video where he makes some great points.

      Ok, getting to the backlog of smaller items:
      "Any rail system we build will not stop at the corner of McKinney and Main," said Metro board member Christof Spieler. "We are talking about a service that is better than commuter rail."
      "Eventually, driverless cars are going to completely replace transit. Until that happens, it makes sense to only spend money on transit buses, which are inexpensive, flexible, can start new service tomorrow, and don’t require 30 years of debt payments. That’s a lesson most major American cities have yet to learn."
      "You Can Build Your Way out of Congestion 
      Los Angeles is still the most congested urban area in the world, according to the latest INRIX traffic scorecard. However, what is more interesting is that congestion seems to be declining in several fast-growing cities in Texas, thanks to construction of new highways. 
      Dallas is twice as big as Seattle and Houston is three times as big. The Dallas and Houston urban areas are both growing nearly twice as fast as Seattle’s, but Seattle is concentrating its growth in the city while Dallas and Houston allow more people to settle in the suburbs. INRIX found that congestion was worse in Seattle than either Dallas or Houston, which was a direct result of Washington’s growth-management policies. 
      Moreover, while INRIX’s congestion index for Seattle — and most other cities — grew worse since last year’s scorecard, the congestion indices for Dallas, Houston, Austin, San Antonio, and El Paso all improved."
                  That's enough for this week - more next.

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                  posted by Tory Gattis @ 6:04 PM 5 comments

                  Monday, October 02, 2017

                  Assessing Houston’s Chances and Suitability for Amazon HQ2

                  This week we have a guest post from Oscar (Erik) Slotboom analyzing Houston's chances for Amazon HQ2.  Chris Tomlinson also weighed in at the Chronicle. And I'll weigh in with my own thoughts at the end, including a silver lining option I think we have a real chance with!

                  Assessing Houston’s Chances and Suitability for Amazon HQ2
                  Amazon’s request for proposals by October 19 for its planned second headquarters dubbed HQ2 has unleashed a frenzy of interest across the country. The New York Times has designated Denver as the city to beat, and a leading site candidate in the area is a large tract halfway between Denver and Boulder along highway 36, an office park which curiously was originally developed by Houston’s Phillips 66 to target alternative energy research. Denver’s front-runner status seems justified, since it has the Rocky Mountain high (in more sense than one!) and does not have any fatal flaws which could knock out other likely leading candidates, such as high housing costs and inability to build new housing (Boston, NYC, California), poor business climate and/or government finance (NYC and Chicago), inadequate infrastructure for a 50K workforce (Austin), lack of coolness (Dallas-Fort Worth, Atlanta), and lack of tech workforce in numerous cities, including Houston. There are plenty of rankings and lists of contenders on the web, and not a single one I’ve seen mentions Houston as a candidate (1, 2, 3, 4, 5, 6).

                  North Texas has been especially interested and eager, with daily press reports of sites that local interests are promoting, including a detailed proposal for Victory Park by Hillwood (Perot’s firm) and Hines, as well as numerous other sites including the planned Texas Central rail station , Reunion arena site, the Valley View mall redevelopment site in North Dallas, the State Fair site at Exposition Park, Plano, and many more. Local interests are submitting up to 50 sites, which are being filtered for one unified submission.

                  The Houston Business Journal reported that Houston will likely submit a bid. But in contrast to North Texas and other cities, there’s been negligible reporting of HQ2 activity in Houston. Which leads to the questions: how extensive is the local effort, does Houston have a chance, and would HQ2 even be a good fit for Houston?

                  Amazon’s Requirement
                  Amazon’s RFP spells out their wishful wish list, and there is no magical place which meets all their desires. So Amazon’s decision will be based on which criteria are most important, and perhaps only Jeff Bezos knows what will drive the decision. And Bezos may already have preferred location(s) in mind and is using this exercise to maximize the incentives to be offered by increasing the sense of competition.

                  Looking at the RFP, here is the number of lines dedicated to each criteria category:
                  Lines in RFP on the subject
                  Houston’s position
                  Site and Buildings
                  50
                  Probably average or below
                  Incentives
                  27
                  Likely to be less than other big cities
                  Workforce
                  17
                  Below tech hubs
                  Overall Logistics
                  14
                  Good
                  Sustainability and Environment (mainly site buildings)
                  12
                  Depends on the building site
                  Business Climate
                  10
                  Good
                  Education
                  8
                  Average
                  Quality of Life
                  8
                  Average or below
                  Highways
                  7
                  Good (congestion is a factor)
                  Culture
                  4
                  Average or below
                  Public transit, bikes and pedestrians
                  4
                  Below average
                  Housing
                  2
                  Very good

                  If Amazon’s decision criteria are in proportion to the RFQ space, then issues like public transit, culture, and quality of life may not be as important as numerous press reports have suggested, which would work in Houston’s favor. The facility site, incentives, workforce, and logistics appear to be most important. On the other hand, business climate and housing, Houston’s strengths, are not among top categories in the RFP. Most cities including Houston are going to struggle to meet the real estate requirement, either with downtown sites or ready-to-build suburban sites with around 100 acres. Cities with suitable sites under single ownership will have an advantage.

                  Houston’s Chances
                  First things first: will the risk of hurricane disasters and potential major disruption to business operations be a fatal flaw for Houston, especially with Harvey fresh on everyone’s minds? There’s a good chance the answer to that question is yes, especially since Seattle is at risk for a major earthquake, and a near 100% safe location for HQ2 makes sense from the business perspective. But the RFQ makes no mention of operational continuity, so let’s assume we’re still in the running.

                  Sites: Amazon is open to anything and everything, but ideally wants 500,000+ sf by 2019 with space to expand to 8,000,000 sf, which is equivalent to eight of Hines’ newly built 48 story 1,050,000 sf office tower at 609 Main.While there is plenty of vacant space in Houston, I can’t think of a location which is an ideal match for Amazon, especially given the 2019 deadline for phase 1 space of 500,000 to 1,000,000 sf.

                  This web post suggests three sites in Houston: 800 Bell (former ExxonMobil office), the 150-acre East River site , and the Astrodome.  While 800 Bell is empty and available, it was completed in 1963 and its exterior design screams early 1960s retro, which is probably a negative. Can it be renovated to meet modern standards, everything including LEED standards , trans-gender restrooms and ceiling heights? While the originally planned renovation would have redone the exterior, I’m inclined to think Amazon will want something newer than a 54-year-old building. On the plus side, there are plenty of vacant lots around 800 Bell, and it is downtown, if that’s what Amazon prefers.

                  I surveyed the East River site last week and I think it is a nonstarter. Approaching it from interstate 10 on Hirsch, you pass through a disadvantaged neighborhood with pre-WW2 housing and vacant lots – definitely not attractive. The east side of the site is bordered by warehouses, and going east along Clinton you’ll find more warehouses, industrial facilities, and a scrap yard. Buffalo Bayou along the site has a large cliff-like dropoff to the water, as well as bulkheads along the water, and is not much of asset in its current state. The north side of the property along Clinton is modern housing, which is not a vibrant urban scene Amazon may be seeking for a downtown location. In addition, there is no site work in progress yet, and the only office building is the old KBR building. I just can’t see Amazon wanting to bring potential recruits to this site, it won’t impress.

                  The Astrodome may have potential. Harris County has already slated $105 million towards its conversion to a parking garage and event center , and that money could be redirected to an office conversion. Once the Dome is reduced to a shell, you could build multiple levels of offices in a ring around the perimeter inside, potentially getting up to 1 million square feet of offices overlooking the field area, creating one of the most distinctive offices anywhere with myriad possibilities for the center field area and maybe catwalks up high. Somewhat like a smaller version of the Apple headquarters inside a dome. There’s plenty of parking, land for additional buildings is available probably for free since it is publicly owned, and it has good transportation access with the freeway and light rail. On negative side – potentially a show-stopper – is the need to coexist with the Houston Livestock Show and Rodeo, which may be possible for a smaller presence but not for a 50,000 person campus.

                  The former downtown post office site could be a potential candidate for downtown, but may not be large enough and the developer’s current plan would need to be totally redone. Of course there is plenty office space in the Energy Corridor, such as the 1.4 million sf campus Conoco has recently abandoned , but environmentally-oriented Amazon will probably not want to be anywhere near an oil and gas industry cluster. There could be suburban sites readily available in a suburban area like the Woodlands, but the challenge is to deliver 500,000+ sf by 2019 with sufficient space for massive expansion.

                  In summary, Houston does not appear to have ideal candidates for the site, so we don’t have any advantage in this crucial category.

                  Incentives: Houston will of course offer something, but most likely it will be much less than others will offer (and rightfully so, since there’s no compelling reason to give away the farm for Amazon, like Wisconsin did for Foxconn).  Incentives are unlikely to be an advantage for Houston.

                  Workforce and Education: We’re going to rank behind tech hubs in the important workforce category, and we’ll probably be in middle of the pack in terms of education. Conclusion: there is no advantage for Houston in these categories.

                  For education, I can’t help but lament the demise of the proposed University of Texas Data Science Center.  This new campus could have been a big plus in Houston’s bid, as well as being a tremendous asset to the region to prepare our workforce for the future. The University of Texas name would have brought prestige and resources that others can’t match. The cancellation due to narrow-minded political interests was a huge loss to Houston. (Disclosure: I’m a Texas Ex.)

                  Other Factors: For the remaining factors Houston will have advantages in business climate, logistics and housing, but lag behind others in public transit, culture and quality of life (or at least outside perceptions of those -Tory). Overall, no net advantage.

                  Which brings up a larger, more philosophical issue: are Amazon and Houston a good fit? If Amazon wants to duplicate its Seattle culture, image, and workforce dynamics, probably not. Being in the world’s leading oil and gas center may not be consistent with their values. The high-growth Seattle tech scene is a totally different workforce dynamic with abundant tech workers and high churn. Amazon is notorious for its high turnover rate. Houston’s lack of rival tech employers would provide a more staid, subdued employment scene.

                  Wildcards for Houston which could put us in play
                  Diversity: Page 5 of the RFQ calls for the “presence and support of a diverse population”. Houston would probably rank #1 among all contenders in this category, both domestically and in terms of immigrants. With the increased scrutiny of workforce diversity and inclusion in the tech industry, Houston would be a much better place to recruit black and Hispanic workers than Denver, Boston, and Austin, and certainly at least as good as any other place.

                  Sites and Building: Page 2 states that Amazon has a preference for “communities that think big and creatively when considering locations and real estate options”. As mentioned above, an office in the Astrodome would be highly unique and something that no other city can duplicate, and likely very attractive to millennials due to the coolness factor. But that’s only if the Astrodome is in play for Houston’s proposal.

                  Health Care: Does Amazon have any future aspirations of being in the health care industry beyond prescriptions?  If yes, the Texas Medical Center workforce and strong medical education system is among the best in the country.

                  The scuttled University of Texas data science center: Can this project be resurrected as part of Houston’s proposal? It seems unlikely in the short time before the Amazon deadline, but if it can be resurrected it would be very helpful in closing the education gap.

                  Jeff Bezos Houston connection: He attended elementary school in Houston at River Oaks Elementary from fourth through sixth grade. Does he have fond memories of Houston, or does he prefer to avoid Houston? 

                  Downtown Freeway plans: The $4 billion plan to rebuild and expand Houston’s downtown freeways to relieve congestion is expected to move forward in the 2020s. Most or all competing cities except Dallas have nothing in the works even remotely this ambitious for center-city highway infrastructure. Will Amazon view this as a plus?

                  Airports (Tory addition): fantastic nonstop air access to all of the Americas, if they want to drive an international expansion across Latin America.

                  Verdict
                  The chances of Houston being selected seem very unlikely due to our lack of strength in the key categories. And that’s not necessarily a bad thing, since Amazon is probably not a good fit for Houston.

                  Just about every city with at least 1 million in population will submit a bid. For most cities (including Houston), this isn’t about winning, but it is about showing what you have to offer, and also that partnerships with Amazon are desired and valued. Amazon will continue to need distribution sites and regional offices, and here’s a chance to show Amazon our strengths, so when they need that next logistics facility, they’ll know we’re a good place to do business. So, assuming that Houston will submit a bid, the Greater Houston Partnership should be sure to highlight our strengths in logistics and transportation.

                  Amazon’s RFP says the final site selection and announcement will be in 2018. And North Texas should calm down and not get overexcited. Most likely, they’ll also be on the losing end.

                  Tory Commentary
                  In general, I pretty much agree with Oscar. I also think there's a more fundamental issue, which is that Amazon doesn't want to compete with the high-paying energy industry for local talent (especially if there's another oil boom!), nor does the energy industry want Amazon poaching their hard-recruited talent, especially technical talent. I just don't think there's much appetite here for Amazon, and the feeling is probably mutual.  

                  Also, I think Amazon wants to be the "big fish in a small pond" (or maybe 'modest lake' for sufficient scale) wherever they go, with dominant influence (think Mercedes or Airbus in Alabama or BMW or Boeing in South Carolina), and that just wouldn't be the case in Houston with so many major Fortune 500 corporations here.  They certainly would be in Denver though, and I agree with the NYTimes it's the most likely winner if they put a competitive incentive package together.

                  The silver lining: The most interesting wild card from Oscar's analysis is the UT data science center: if somehow those became synergistic campuses (maybe using the Astrodome or old Astroworld land?), it would certainly be a major differentiator vs. other cities.  Even if we didn't win the HQ2, they may circle back for a major secondary office (data science + Americas intl HQ?)... a consolation prize worth shooting for?

                  UPDATE just added some new thoughts on the Astrodome option here.
                  UPDATE 2: Big Houston proposal at Generation Park.

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                  posted by Tory Gattis @ 6:14 PM 5 comments

                  Tuesday, March 18, 2014

                  17 facts that make Houston the best city in America, traffic is not as bad as you think, our new economic normal, and more

                  Another week working through the backlog of smaller misc items...

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                  posted by Tory Gattis @ 5:02 PM 4 comments

                  Thursday, September 06, 2007

                  Houston and TX dominate Fortune's 100 Fastest-Growing Companies

                  Fortune recently released their 2007 list of the 100 Fastest-Growing Companies, and there's a pretty stunning domination by Texas and Houston. We all know there's an energy boom, but it's stats like this that really drive it home.
                  • Texas has the most with 32 of the top 100. California is in distant second place with 11.
                  • West Coast + Northeast combined only have 30; that's CA, OR, WA, HI, AK, ME, NH, VT, NY, NJ, CT, MA, RI, PA, DE, MD combined.
                  • It's not even close within Texas. The Houston metro area has 19 of the 32 Texas companies (17 inside the city + The Woodlands and Alvin). San Antonio 3, Dallas and Ft. Worth 2 each (although more in the metro), and only one in Austin.
                  • The three other Big 4 states - California, NY, and Florida - combined have only 18. That's less than Houston alone, which is simply incredible.
                  In the immortal words of Mel Brooks, "It's good to be the king..."

                  Thanks to Brian for the heads up and most of the analysis. Have a great weekend.

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                  posted by Tory Gattis @ 10:51 PM 6 comments

                  Thursday, July 19, 2007

                  Our boom, Houston's other mission control, a top-tier blog-savvy town, videos and more

                  Time again to cover the smaller miscellaneous items. Been coming across a lot of these lately.
                  • Houston tops the residential construction rankings (thanks to Hugh for the link)
                  • Why is Houston booming, you might ask? Well, the most recent issue of Fortune magazine contains a clue: 6 of the top 10 Global 500 are energy companies, all with their largest U.S. employment base in Houston. Three more of those top 10 make cars that use the fuel created by the other six. And where are all those cars going, burning that gas? You guessed it: #1 is Wal-Mart - which also happens to be one of the largest employers in Houston, and has one of its largest distribution centers at the Port of Houston.
                  • A graphic in Business Week's cover story on global youth culture on the web shows Houston to be a top-tier blog-savvy town, ahead of cities like Seattle, Denver, San Francisco, Portland, and even cross-state rivals Dallas and Austin. As far as I can tell, it's all me (just kidding! ;-)
                  • A blog post about high-rise bland "condo sprawl"
                  • NYT story on personalized traffic alerts, with some specifics about Houston's other, lesser known, mission control:
                  "In pitching its reports, whether on radio or pager, to broadcasters and motorists alike, Westwood One emphasizes its process for checking and rechecking its findings. Its version of Mission Control is in Houston, in a gleaming skyscraper down the road from NASA’s. From a room crammed with flat-panel television and computer screens, four fact checkers continually scan databases for outdated information and browbeat affiliates around the country to update drivers."

                  One concluding note: Thanks to a generous invitation from Ron Woliver, I saw David Crossley make a very good presentation to the Rotary Club today on improving Houston's quality of life as we grow tremendously over the next 30 years. I'd say we agree on most of the types of things that would be good for Houston - I'm just more "encouragement, markets and facilitation" vs. a more activist government intervention. Oh, and we also differ a bit on transportation: I believe the aggressive expansion of our freeway network (as outlined in the 2035 plan) is a more practical mobility strategy than transit, which I think has realistic limits on ridership in a dispersed, decentralized city like Houston with very pedestrian-hostile weather much of the year.

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                  posted by Tory Gattis @ 5:17 PM 13 comments

                  Thursday, April 19, 2007

                  2007 Fortune 500 HQ analysis for Houston and Texas

                  A couple years ago, I looked at how Houston and Texas scored with the Fortune 500 headquarters. Well, the new 2007 list is out, and I thought it might be interesting to take a look again at how we're doing.
                  • We're still the #2 city behind NYC, with each of us gaining 2 more HQs. They moved from 43 to 45, and we moved from 20 to 22. Atlanta lost a couple from 14 to 12 (one of those was San Antonio-based SWB/AT&T buying Bell South), and Chicago picked up 1 from 10 to 11. They counted Halliburton in Houston this year, and they really should count it again in Houston next year, even if the CEO "offices" in Dubai.
                  • They don't have stats for metros, and I didn't try to add them up (who can guess which metro has all those small cities in CA?), but I don't think we would fall much from #2: behind Chicago and possibly the SF Bay Area. We only pick up 1 to 23, with Anadarko in The Woodlands, but Chicago and SF pick up a lot in their smaller suburban cities.
                  OK, a little bad news. I just did the count, and the greater DFW metro has 24 F500 HQs, edging us out by 1. If it makes you feel any better, we have 4 in the mega-biggie F100, while they only have 1 (Exxon in Irving, and by far the majority of their employees are in Houston).
                  • As a state, Texas has moved up in the world over the last two years (48->56), passing California (52->52) to become the #2 state just behind New York (54->57). It is quite possible we will pass New York in the near future, as we have 10 companies ranked between 500 and 600 ready to move up (including 4 between 501-520), while New York only has 6, and their highest one is 544.
                  Somehow a major editing error made it into their opening article, which included this sentence with some very wrong numbers:

                  "New York boasts the most Fortune 500 firms this year with 57 companies, while Texas and California took the No. 2 and 3 spots, with 45 and 22 headquarters respectively."

                  For some reason they knocked 11 off our count, but a whopping 30 off the CA count. I'm sure CA isn't happy. No idea how they let that slip through.
                  All in all, a great couple of years for Houston and Texas. We'll have to check the progress again in another couple of years...

                  Update: I thought of another interesting cut on how well Texas and Houston are doing. Texas has 11% of the F500 with only 8% of the US population (1.4x), the Houston metro has 4.6% of the F500 with only 1.8% of the US population (2.5x), and the city of Houston has 4.4% of the F500 with only 0.7% of the US population (quite the impressive 6.3x).

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                  posted by Tory Gattis @ 7:58 PM 1 comments