NAI Partners: Some Positives, But Not Quite There

NAI Partners’ recent Q4 2017 Press Breakfast, which took place in the company’s Houston headquarters, had a mix of pretty good news, not-so-good news, and areas that need work. When it comes to Houston commercial real estate, retail and industrial seem to be doing quite well, while office is just beginning its climb upward.

When it came to retail, Senior Vice President Jason Gaines noted that the sector is almost at full absorption. The historically low vacancy is due to less space being delivered in 2017. “Houston definitely has a stigma about two-story retail,” he observed. “If I were to survey my clients right now, 75% would say ‘no thanks,’ while 25% would consider giving it a chance.”

Meanwhile, on the office side, Partner Dan Boyles acknowledged that conversation with clients has been positive, “though there is still a bit of a way to go before we feel comfortable saying we’re fully out of the woods in the Houston office market.” The segments that remain hot include coworking, executive suites and healthcare space, he added.

Flipping back over, Partner Gray Gilbert mentioned that industrial is expanding, and “we’re seeing bigger spec construction than ever before.” He added that land constraints are a major factor inhibiting big boxes from building distribution centers in the city limits. As a result, “you’re seeing the industrial market expand beyond Beltway 8,” Gilbert said.

Houston’s infrastructure was a topic of conversation, with Managing Partner Jon Silberman bluntly pointing out that the region would continue having difficulty attracting the Amazons of the world until there is some kind of infrastructure plan in place. “While the high-speed train to Dallas isn’t a bad idea, I’d rather see that $18 billion go toward a plan to address the infrastructure problems, that would allay the fears of companies considering our city. Right now, if we’re counting on big corporations moving to Houston as a driver of economic growth, Amazon’s decision to pass us over should be a wake-up call.”

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