Business Loves Houston
Even first-time visitors here can tell that Houston is growing rapidly. Construction cranes overhang office and apartment sites all along the Katy Freeway, a stretch of Interstate 10 that connects a string of booming submarkets west of the 610 Loop. This expanse includes the Westchase neighborhood and the Energy Corridor, home to an expanding cluster of energy companies.
The energy sector drives job growth and all manner of business activity here, with the greatest demand for office space concentrated in the west side where oil and gas companies are clustered, in the medical center just south of the central business district and in the Woodlands, a master-planned community 27 miles north of downtown.
Houston is clearly a growth leader. It was the first major economy in the U.S. to register more jobs than it lost in the recession. Employment is up. Developers are creating new space to meet that strong demand for office space, completing 15 major office buildings in the last year. Of the 3.9 million square feet of office space under construction, more than 90 percent is in the western submarkets or in the Woodlands.
The energy sector accounts for 3.4 percent of the city’s employment, more than five times the national average of 0.6 percent. Despite that heavy concentration, the rest of the city’s economy is diverse and helps spread the wealth that energy brings into the community to other sectors.
Brisk commercial real estate sales reflect investor interest in the market. Recently, an affiliate of the Houston-based Enterprise Products Company bought the Shell Plaza, a 1.8 million-square-foot office complex in the central business district, for $550 million. Last year, Shell renewed its leases for nearly 1.3 million square feet at Shell Plaza. Today the company’s projects here include multifamily construction in the shadow of office buildings than it developed in the Galleria, a group of office towers, hotels and retail on the southwestern rim of Loop 610, with a skyline that rivals downtown’s.
The energy sector, the medical center and the Port of Houston are the three largest engines driving the economy here. The global energy industry is headquartered here. It’s not just oil and gas, it is alternatives, too.
Houston is the only major city in the United States without zoning laws, developers can, in theory, build virtually anything, anywhere in the city. In practice, however, understanding and catering to local industries is a critical element in site selection. Market forces shape the city’s development in hubs. Refineries and distribution centers cluster near the port, while energy companies and other major employers tend to establish a presence, either downtown or in a submarket, and stick to that area indefinitely.
Employees generally move close to work rather than make long commutes in the city’s heavy traffic, so apartments and single-family housing grow around major employers, eventually attracting retailers to service those populations.
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