Commercial Real Estate Investors Find Success in Houston

Houston is the fourth largest city in the United States and global investors are flocking to this hotspot in order to take advantage of the low property prices and potential for a huge return on real estate investments. According to Real Capital Analytics Inc:

  • Foreign firms have acquired over $2.8 billion worth of Houston office buildings in the last 3 years
  • Non-U.S firms have spent four times more on Houston office buildings than U.S Real Estate Trusts in that time
  • Houston is now in the world’s top 5 cities for real estate

Houston is viewed as a world-class market for real estate and this can be seen in the recent increase in jobs and gas refineries, along with the fact that office space sales in Houston are up over 30%.

Rise of Office Buildings
Investors Find Success In Houston Commercial Real Estate

Investors from around the world are taking advantage of the low prices and potential for a huge return on investing in Houston properties.

When it comes to commercial real estate, office buildings are #1 and make up 45% of foreign investment over the past 6 years. Groups like H&R REIT from Toronto, Psagot from Tel Aviv and CBRE Group Inc. from Munich have made investments ranging from $130 – 440 million in that time. Invesco spent over $400 to buy Williams Tower, the city’s third tallest building in March 2013.

Employment & Return On Investment

Unemployment figures in Houston are down considerably since 2011 and this job growth is directly related to the increase in the city’s energy industry. With more money in the city, rents have also increased with offices in the desirable Galleria district, jumping 11% in a year.

According to Real Capital’s managing director, Dan Fasulo, Houston’s market is cheaper than rival cities, like New York which makes it an attractive proposition for faster returns. Donald Wise is the CEO of Metzler Realty Advisors Inc., a company based in Seattle, and he admits being won over by the city and believes energy production is much broader than it was a generation ago. Some experts believe Houston’s status as the energy capital of the nation can be traced back to 1901, shortly after the famous Spindletop oil discovery.

Changing Times

Houston has had a volatile past and like many US cities, it was directly affected by the savings and loan crisis of the 1980s. Oil output in the United States rose to over 6.4 million barrels a day in 2012 and as an oil producing behemoth, Houston is set to benefit more than most. The future looks bright for the city with Europe’s largest oil company, Royal Dutch Shell Plc., set to add two more buildings to its existing Energy Corridor campus.

Additionally, 2,500 apartment and condo units are planned for downtown Houston while Marriott International is building a giant 1,000 room hotel. Finally, a stretch of Main Street which was considered a ‘no-go’ area not so long ago has been revived and is now home to the BG Group Place. In Houston, growth is increasing, occupancy rates are rising, and success is coming to those who are investing in real estate.

Image license: Creative Commons (view source)

 

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