There’s rarely a dull moment in Houston’s real estate world, and the fallout from the pandemic has only accelerated trends already underway in residential and commercial real estate. As the Houston Chronicle’s senior real estate reporter, I’ve compiled this list of several key trends affecting Houston’s real estate scene — and in honor of 713 day, all of these articles will be free to access July 12-14.
1. Downtown Houston is in the midst of a major economic shift. Two years after lockdowns emptied the city center, people are again catching Astros games at Minute Maid Park, crowding into concerts at Jones Hall, strolling through Discovery Green and gathering for major meetings and conferences. But a critical element remains missing: the 168,600 workers that once stampeded into the district every weekday. That’s forcing a complete restructuring of the downtown Houston economy. It’s not just the tunnel businesses taking a hit. You can dive in here to see how this uneven economic recovery in downtown is shaping up or check out this accompanying Looped In podcast here.
2. Mortgage rates are pricing out more homebuyers already facing rising prices and limited inventory. The effect of rising mortgage rates is starting to ripple through Houston’s single-family home market. After the historically low rates fueled a frenzied buying boom last year, higher mortgage rates, rising home prices and limited supply of new homes are forcing some would-be homebuyers to sit on the sidelines. The expectation is that higher rates will start to pump the brakes on home sales in Houston, which so far are only modestly slower. However, prices are still expected to remain relatively high as the inventory of homes on the market stays tight, and homebuilders face construction delays in getting new homes on the ground.
3.The suburbs are no longer a sure-fire way to access affordable housing. The old phrase used to be “Drive until qualify,” but now homebuyers searching for affordability in Houston’s sprawling suburbs will have to drive farther and farther out to find it. Explore our home value tracker developed by data visualization editor Alexander Kanik to see how much home values have jumped throughout Houston’s suburbs. Strong demand and limited inventories are pushing up prices rapidly in suburbs like Katy, which now has two of the hottest ZIP codes for real estate nationally, according to a report from Opendoor, Claire Goodman reports. Reporter R.A. Schuetz dives into recent Rice University Kinder Institute research showing how the suburbs are losing their reputation as an affordable haven. Meanwhile suburbs such as Sugar Land and Pearland also are becoming less affordable for renters too.
A suburb located northwest of Houston as seen from Co-Star’s aerial research team plane in Katy. The suburbs are becoming less affordable in Houston. ( Elizabeth Conley / Houston Chronicle )
Elizabeth Conley, Staff / Houston Chronicle
4. Build-to-rent activity continues to grow. With nearly half of Houstonians unable to afford to buy a home here, that is only increasing demand for single-family rentals. While some institutional investors are scooping up single-family homes to turn into rentals, other developers in Houston are building master-planned single-family rental communities, such as Howard Hughes’ in the Cypress community of Bridgeland and Wan Bridge in Brazoria County.
5. Hybrid work is reshaping how companies use the office. For many office workers, commuting into the office is now optional or at least only a part-time requirement. That’s pushing some firms to rethink how they use office space, with some companies such as Shell redesigning their office spaces to facilitate more collaboration and team work when people do come into work. (You can also listen to an interview with architecture firm Gensler to hear more about how hybrid work is affecting office design in this Looped In podcast.) Other companies are choosing to downsize their space requirements, meaning that even with oil priced above $100 barrel, the Houston office market can’t expect a big boom. Meanwhile, some firms are increasing their use of co-working space as a more flexible option than a long-term lease that allows workers to separate their home and work lives, reporter Katherine Feser writes in her feature on Boxer Property. Offices with large outdoor spaces are also a key draw for office tenants post-pandemic.
6. Sustainability is becoming a bigger focus for commercial developers. The real estate sector is a major but often overlooked driver of climate change, according to a U.N. report, but developers are trying to reduce their emissions. Skanska USA is building its greenest office tower yet in Texas with its 1550 on the Green tower in downtown Houston, where it is tracking embodied carbon, or all the carbon emissions tied to construction of the building. Meanwhile, Houston-based real estate firm Hines has set an ambitious goal to make all properties in its global portfolio reach net-zero carbon emissions, which could affect some 27 million square feet of real estate in Houston. The focus on sustainability comes as more office tenants are emphasizing environmental effects in their office search, with companies like Cheniere Energy and Bechtel seeking out sustainable offices recently in Houston.
One of the key attractions to Texas Tower for tenants is its high priority on outdoor spaces, Hines said. Pictured is an outdoor space in Texas Tower, where LNG firm Cheniere Energy recently inked a major lease.
Jason O’Rear, Courtesy Hines
7. Developers are giving new life to underused or vacant buildings. Adaptive reuse projects – which convert often-vacant buildings into new uses – are another way developers are reducing climate effects of construction in projects such as The Post in downtown, M-K-T in The Heights or the proposed new redevelopment of historic warehouses in the East End.
8. Life sciences is driving more commercial real estate demand. More commercial developers are betting on a rise in life sciences as the sector starts to grow in Houston, with developments such as Hines’ 53-acre life sciences district, Levit Green, and the Texas Medical Center’s 37-acre biomedical research campus, TMC3, greatly expanding the amount of life sciences and medical office space available in Houston. However, even with this rising interest in biomedical research space, it will still be difficult to turn Houston into a biotech hub, Becca Carballo reports.
9. Evictions are still rampant and rental relief is running out. After the pandemic pummeled the Houston economy, government and charitable agencies moved to disperse rental relief funds to struggling renters, with Houston helping out the most families out of any city in the country by May 2021, R.A. Schuetz reports. But as of June 2022, only $25 million in federal rental relief funds remained, and that is quickly getting used even as the risk of eviction remains elevated for many.
10. Rental scams are on the rise. Soaring rental prices are forcing some tenants to move to find a place they can afford, but when some renters find a good deal on a rental unit, it really can be too good to be true. Reporter R.A. Schuetz takes a look at the rise in rental scams spreading throughout Houston as desperate tenants try to find a place they can afford right as scammers have gotten more tech savvy. Landlords are also getting scammed, Schuetz reports.
marissa.luck@chron.com
