Houston, the fourth largest city in the United States, and the largest in Texas, is considered one of the top cities for business. Oil and natural gas industries contribute to the greatest portion of Houston’s growing economy, plus a flourishing international trade community has transformed the Port of Houston into one of the most important shipping channels in the world.
The combination of these thriving industries has kept Houston as one of the top cities in the country for business. The commercial real estate market in Houston: office and retail space, farms and ranches, mobile home parks, hotel/motel, industrial and warehouse space, and multifamily housing units, provide ample investment opportunities.
With Houston’s vibrant business growth, there is a strong demand for available rental office space. Current availability offers about 1.8 million square feet of total office space throughout the metro area, with costs averaging around $24 per square foot based upon an annual rate. As expected, these rates do fluctuate according to location, ranging from $16 sq. ft. on the east side, to around $26 sq. ft. in the Energy Corridor.
The sales of office space are another attractive incentive for corporations to relocate to the city. Being “the place to be” for off-shore drilling, Houston has recently seen an upsurge of sales activity from oil companies moving into the area from the lift of the moratorium of drilling following the BP spill.
Sales of office space average $224 per square foot; much less than places such as Manhattan at $470 sq. ft., or Washington at $476 per sq. ft.
Industrial and Warehouse Space
Another key draw for business to Houston is the low cost of industrial and warehousing space. Compared to markets to New York and California, the square footage costs in Houston are nearly one-half the costs based on an annual basis. In addition operation, labor, truck access, and local taxes and fees offer supplemental cost savings that in itself is a reason businesses are migrating to cities such as Houston.
Investing in Houston’s Commercial Real Estate
Many are reluctant to invest in today’s real estate market. Stories of declining home values and record foreclosures still grace the headlines in many areas of the country, which creates an extremely high potential of losing some or all of any investment.
Just because residential home prices may still be falling, does not mean that commercial property values are declining, as well. In fact, Houston commercial real estate provides an excellent choice for investors looking to diversify their holdings and increase their monthly cash flows. Houston’s positive growth trends in specific industries will provide good monthly income potential, plus increasing property values as growth continues.
Anwar Barbouti is currently the president of Greenwhich Management company which handles all areas of commercial property management.