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Houston Construction Industrial Market Commercial Real Estate Economic Data and Information - employment medical, oil and energy sector construction

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Houston exceeds nation for construction job growth

From July 2017 to July 2018, the Houston area added 25,500 construction jobs, according to the Associated General Contractors of America (AGC). That is more jobs added than any of the other 350 U.S. markets. There are presently 239,000 workers in the construction industry in Houston, an all-time high for the region. Despite record employment in the industry, a new survey by the AGC reported that 78.0% of construction firms in Texas say they’re having difficulty finding skilled workers, resulting in increased spending on overtime and training. Companies have also started raising the bid pricing for future projects and the amount of time it will take to complete projects. Experts have said that the construction labor shortage may be hampering construction, but not limiting construction.

Construction job growth rose last year after Hurricane Harvey as flooded homes were repaired or rebuilt. The growth rate increased to an annualized pace of 9.8% between September and December. Growth slowed to 0.4% in the following months as heavy and civil construction and specialty trades jobs decreased. However, the 25,500 construction jobs that were added locally from July a year ago, was the second-largest job gain among the construction sector. Jobs increased in each of the three reporting industries, with the largest gain in construction of buildings, up 15,200 or 26.9%. Area employment in the construction sector climbed 11.9% compared to the 4.2% gain for the U.S.

With the downturn in the oil industry finally over, more companies are reporting profits than losses, and fewer firms are filing for bankruptcy. Oil is now trading above a break-even cost for most producers, allowing exploration budgets to increase. Most analysts forecast the price of oil between $60 and $70 per barrel through the end of next year. The U.S. Energy Information Administration agrees, forecasting WTI to average $66 this year and $64 though the end of 2019. As the energy capital of the world, Houston has always attracted Fortune 500 companies in the oil and gas industry such as Halliburton, Marathon Oil, and Phillips 66.

From a sector perspective, healthcare not only continues to be a significant economic driver in Houston, but is also responsible for an increasing amount of construction. It has been reported that the Texas Medical Center, the largest medical center in the world, has more than $3.0 billion in construction projects scheduled and more in the planning stages.

Houston Construction Industrial Market Commercial Real Estate Economic Data and Information - employment graph

Construction starts in Houston

The Greater Houston Partnership’s building activity update reported that construction starts in Houston totaled $3.9 billion in July, a more than double increase from $1.3 billion this time last year, according to the latest report from Dodge Data & Analytics. The firm did not report what caused the increase in construction activity. Nonresidential building activity accounted for $2.8 billion, and $1.0 billion was represented by residential activity. For the 12 months ending July 2018, starts totaled $19.0 billion, up 7.7% from $17.6 billion for the same period July 2017. The 12-month total peaked at $30.9 billion in February 2015, the height of the chemical plant construction boom.

Product type overview

In the office market there is 2.65 million sq. ft. is currently under construction—an increase of 73.8% from year-end 2017—a total that now includes Hines’ 1 million-sq.-ft. office tower at 801 Texas Ave. Houston industrial has 83 properties totaling 10.9 million sq. ft. currently under construction, with 43.1% of that space has been spoken for. And the retail market has 141 properties with 4.1 million sq. ft. currently under construction, and only 36.0% of that space available for lease.

Healthy market in Houston’s future

With the downturn in the oil industry finally over, more companies are reporting profits than losses, and fewer firms are filing for bankruptcy. Oil is now trading above break-even cost for most producers, allowing exploration budgets to increase. Most analysts forecast the price of oil between $60 and $70 per barrel through the end of next year. The U.S. Energy Information Administration agrees, forecasting WTI to average $66 this year and $64 though the end of 2019. All of these factors will pave the way for both consumers and businesses to look towards the future with confidence.

 


Leta Wauson
Director of Research
[email protected]
tel 713 275 9618

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