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Land exec still bullish on Houston’s Energy Corridor

 

 

By Cara Smith

Has the energy slump been a good thing?

Most people wouldn’t argue the downward spiral of the energy industry has been a good thing, but David Hightower, chief development officer of Houston-based Wolff Cos., said the slump has helped taper off a real estate market that was operating at over capacity.

“The real estate industry was running at 120 percent,” Hightower said. “The whole industry was running above capacity. We needed to pull back.”

It’s for this reason, among others, that Hightower is still bullish on the Energy Corridor submarket in west Houston, which has acutely suffered during the slump based on its high concentration of energy tenants. Last year, it was one of the hardest hit submarkets in terms of sublease space coming online. It’s also the submarket where Wolff Cos. does most of its work in Houston – notably, Wolff Cos. sold M.D. Anderson nearly 35 acres in the Energy Corridor for $34.1 million in 2012.

But as the energy industry’s decline has forced landlords and property owners to offer deeper concessions, including a year’s worth of free rent in some cases, Houston could be in a position to attract more tenants based on the market being in their favor.

“Affordability was one of Houston’s advantages and we were losing that advantage,” said Carolyn Wolff Dorros, vice president of Wolff Cos.

And a cautious pool of investors and developers is helping the Energy Corridor, Hightower argued.

“We don’t have the kind of financial devastation in real estate that we did in the ’80s,” Hightower said. “The land deals (are) much more measured and constrained simply because we don’t have the kind of irresponsible lending we had in the ’80s. … Money is a developer’s opium. Developers are more scared and it serves them well.”

In fact, the Energy Corridor is becoming a redevelopment opportunity, he said, based on the scarcity of land available in the area. Hightower said he’s seen redevelopment interest picking up this year, and tangible redevelopment projects should take off in a couple of years.

“People say the Energy Corridor must be a ghost town,” Hightower said. “But they don’t understand the Energy Corridor. They don’t understand what’s going on down there.”

For the complete article, please go to:
http://www.bizjournals.com/houston/news/2016/02/08/land-exec-still-bullish-on-houstons-energy.html