- Houston’s office market continues to struggle. The region recorded 1.9 million square feet of negative absorption through the end of June. The market has seen positive absorption in only six of the most recent 18 quarters. Leasing activity (new and renewals) totaled 3.0 million square feet in Q2/18 versus 5.4 million in Q2/17. Though overall job growth is strong, gains have been weak in sectors associated with white collar employment (i.e., office leasing clients).
- With 60 million square feet of office space available (direct and indirect, all classes), there’s little need to construct new space. Of the 1.5 million square feet under construction, is 42 percent is preleased.
- Metro Houston added 79,200 jobs in the 12 months ending May ’18, a 2.6 percent increase, according to the Texas Workforce Commission (TWC). Growth has occurred across most sectors, with the largest gains in manufacturing, construction, professional and technical services, and employment services.
- Construction employment had been stagnant until Hurricane Harvey struck and damaged more than 160,000 homes. Only two mega chemicals projects have broken ground over the past 12 months: LyondellBassell’s $2.4-billion plant in Channelview and Braskem’s $675-million plant in La Porte.
- Employment services, largely temporary help and contract workers, has grown at a near-record pace since May ’17. The last time growth occurred at a similar pace was in the early stages of the fracking boom. The current pace of job growth may reflect local employers’ unease about future growth.
- The price of West Texas Intermediate (WTI), the U.S. benchmark for light, sweet crude, averaged $65.49 per barrel during the first six months of ’18, a nice bump from $49.94 during the first six months of ’17. The average breakeven price to profitably drill a new well ranges from $47 to $55 per barrel, depending on the region, according to a March ’18 survey by the Federal Reserve Bank of Dallas.
Click here for a copy of the full July publication of Greater Houston Partnership’s Economy at a Glance