3 Experts On Why You Shouldn't Worry About The Energy Corridor

There is no submarket in Houston so tied to oil and gas as the The Energy Corridor. With the price of crude so low, everyone wants to know what the future holds for the west side, which is why we’re so excited to host Bisnow’s Future of the Energy Corridor event on March 30 at 7:30am. Join us and read on for sneak peek predictions from three of our expert panelists.

JLL EVP Louis Rosenthal (third from left during JLL's flag football for charity game) believes the worst is behind us. He says demand improved over the last two quarters of 2015, and even the price of oil has firmed up a smidge.  

There haven’t been a lot of big deals in the Energy Corridor—the last significant one was BASF's move in January—but small and midsized businesses (especially medical admin and tech companies) are steadily signing leases. These folks delayed moving when prices were stratospheric, and are now carpe-ing their diem. The quality of space is unparalleled, Louis says: new buildings and sublease space have been occupied only a short time or not at all, and the amenities are first class. A lot of companies are making do with less, but there are bargains to be found.

Core Real Estate managing director Mike Wyatt takes a global view of the Energy Corridor. Events in the Middle East, China and elsewhere can radically rock the demand for oil in a single afternoon. Shale wells, which have contributed to the global glut, have an 18-month life cycle after which they have a steep depletand we’re approaching the end. If some of those wells go offline, that could tighten the market.   

We’re not going to replace carbon fuels in this generation, Mike says, so Houston is going to live and die by the price of oil for the foreseeable future. And that means the Energy Corridor is going to always be important to Houston.

Mike points out that Houston is moving west. Mass transit is helping that happen, with a park-and-ride and light rail planned.

Lincoln Property Co SVP Kevin Wyatt says 4M SF of quality office is available in the Energy Corridor. That's nearly the same amount available when Lincoln Property took over Energy Crossing 1 in 2010. When oil prices moved upward in 2011, the submarket turned around very quickly. Kevin says it'll happen again, likely sooner than later.  

Kevin is seeing flight from trophy quality and high prices to good value. And, he echoes Mike’s observation that companies are continuing to relocate west. That's spurred by the new product in the Energy Corridor; the Houston office market is dominated by buildings 30 to 40 years old, and many companies no longer want to deal with capital improvements. They also have a greater appreciation for efficiency (new buildings are up to 15% more efficient), and taking down 15% less space makes a real difference to the bottom line. 

Find out more at Bisnow's Future of the Energy Corridor event on March 30. Tickets are still available so join your colleagues and friends for a fun, informative discussion.