houston h town day 2010

H-Town Day 2010Understanding Houston’s Past, Present & Future

Houston Association of REALTORS® Thursday, October 21, 2010

Daniel G. Bellow, CRE, SIOR, CCIM

President-Houston

Jones Lang LaSalle Americas

Houston MSA

10,062 sq. mi.

New Jersey = 8,722 Sq. Mi.

New Hampshire = 9,351 Sq. Mi.

Vermont = 9,615 Sq. Mi.

If Houston were a state,

it would be larger than…

2

Minnesota = 5,266,214

Houston MSA

Population = 5,867,489

Wisconsin = 5,654,774

Maryland = 5,699,478

If Houston were a state,

it would be more populous than…

3

Arizona = 2,382,300

Colorado = 2,206,100

Houston MSA

2,508,000 jobs

Maryland = 2,492,100

If Houston were a state,

it would have more jobs than…

4

If Houston were a state,

it would rank…

5

• 44th in land mass

• 19th in population

• 20th in jobs

If it were a sovereign nation, Houston would

have the world’s 23rd largest economy

Houston MSA

GRP = $325.5 billion

Belgium = $390.5 billion

Malaysia = $386.6 billion

Venezuela = $357.9 billion

Houston MSA

GDP = $403.2 billion

…its GDP would be larger than…

6

Aerospace Health Care/Biotechnology Electronics and Technology International Business Engineering Chemicals Energy Logistics Corporate Headquarters

Houston-Area Industry Mix

7

• Home to NASA’s Johnson Space Center

• 18,000+ employees (3,300 civil, 15,000 contract)

• Major contractors: Boeing, Lockheed, Raytheon

• $1.35 billion – Houston’s 2009 total trade in

aircraft, spacecraft and parts, up 53.2 percent

from 2008

Aerospace

8

• Texas Medical Center - the world’s largest

– 46.0 million gross sq ft physical space

– 93,500 employees

• 49 member institutions, including 13 hospitals

• 21 educational institutions, 71,500 students

• $7.1 billion capital investment through 2014

• 5.6 million patient visits annually

• More than 18,000 international patients

Health Care

9

• 250+ establishments

• Major employers include:

– HP, Benchmark, BMC, Foxconn, Texas Instruments

• Software development centers include: – Texas Medical Center, JSC, Rice, UH, Texas A&M

Electronics & Technology

10

• $167 billion in trade

• 3,000+ international companies

• 92 consulates

• 22 foreign banks

• 62 of the 100 largest foreign corporations

• Over one in five residents foreign-born

International Business

11

• 2,900 engineering, architectural and design firms– 25 of U.S. top 25 engineering and design firms

have Houston offices

– Operations in every region of the world

• 86,300 engineers, architects and technicians

Engineering

12

• 40.8% of the U.S. base petrochemical manufacturing capacity

• 400+ chemical plants

• 31,000+ employees (refining & chemicals)

• Comprehensive, developed infrastructure

Chemicals

13

• International center for every aspect of the oil and gas industry

• More than 3,700 establishments:– 30.6% of U.S. jobs in oil and gas extraction– 13.7% of U.S. jobs in oil field services– 13.5% of U.S. jobs in O&G and construction machinery manufacturing

Energy

14

• 15th busiest in the world

• First in the U.S. in foreign tonnage

• Second in U.S. in total tonnage

• 220 million tons annually

• 7,700+ deep draft ships called at Houston

• Service between Houston and more than

1,000 world ports

Logistics – Port of Houston

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• One of nation’s busiest rail centers

– Burlington Northern Santa Fe

– Union Pacific

– Texas Mexican Railway

• 800 miles of mainline track

• 2,200 trains per week

• Typical commodities:

– chemicals, plastics, grain, forest products, coal, minerals and steel

Logistics – Rail

16

• Passengers– 8th busiest in U.S.– 48.5 million in ’09

• Air cargo– 11th busiest int’l hub– 336.8 million metric import tons

in ’09

• 11 international carriers– 67 destinations

• 10 domestic carriers– 110 domestic destinations

Logistics – Bush IAH

17

Rea

l GD

P

Time

July ‘08

March ‘09

We’re somewhere

here.

18

Houston Business Cycle

Where Houston lost jobs

Houston jobs lost from the month of peak employment to the month of employment trough.

19

Houston jobs recovered so far

Shaded part indicates Houston jobs gained in recovery so far.

20

Nationwide

Jobs Lost This Recession . . . . . . . . . . . . . . . . . . . . . . . 8.4 million Job Losses Began . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jan ‘08Duration of Job Losses . . . . . . . . . . . . . . . . . . . . . . . . . 24 monthsPercent Jobs lost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1%

A back of envelope calculation

The Recession…

21

Nationwide

Jobs Lost This Recession . . . . . . . . . . . . . . . . . . . . . . . 8.4 million Job Losses Began . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jan ‘08Duration of Job Losses . . . . . . . . . . . . . . . . . . . . . . . . . 24 monthsPercent Jobs lost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1%

Houston

Jobs Lost This Recession. . . . . . . . . . . . . . . . . . . . . . . . . .115,900Job Losses Began . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sep ‘08Duration of Job Losses . . . . . . . . . . . . . . . . . . . . . . . . . 17 monthsPercent Jobs lost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4%

A back of envelope calculation

The Recession…

22

Houston Purchasing Managers Index

30

35

40

45

50

55

60

65

70

1/05 1/06 1/07 1/08 1/09 1/10

Source: National Association of Purchasing Management - Houston, Inc.

Ne

utr

al =

50

March `0939.0

Sep`1053.6

23

North American Rig Count

500

700

900

1,100

1,300

1,500

1,700

1,900

2,100

2,300

Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10

Source: Baker Hughes

June `09895

Sep`101,655

24

HAS Passengers (12-month total, millions)

40

42

44

46

48

50

52

54

1/05 1/06 1/07 1/08 1/09 1/10

Source: Houston Airport System

August `0947.6 M

Aug`1049.0 M

25

40,000

45,000

50,000

55,000

60,000

65,000

70,000

75,000

1/05 1/06 1/07 1/08 1/09 1/10 1/11

Source: Houston Association of Realtors

August `0951,667

Sept `1053,399

Single-Family Home Sales (12-month total)

26

Motor Vehicle Sales (12-month total, thousands)

180

230

280

330

380

Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11

Source: InfoNation, Inc.

December `09218,700

Aug `10235,504

27

Payroll Employment (thousands, seasonally unadjusted)

GREATER HOUSTON PARTNERSHIPHouston.org

Source: Texas Workforce Commission

Jan `102.479 M

Aug `102.511 M

49,000 private sector jobs added since Jan ‘10

28

What does the future look like for Houston?

• Not like ’07 – ’08

•More like ‘05 – ’06

What will the recovery look like?

What does the future look like for Houston?

30

• ’07 – ’08 was not “the norm”

– $145 barrel oil

• Price more than doubling in 12 months

– 100,000 jobs per year

• Almost double historical pace

– $240 billion in foreign trade

• Up nearly 50 percent from three years earlier

– 50,000 single family starts

• Up nearly 50 percent from three years earlier

What will the recovery look like?

What does the future look like for Houston?

31

• ‘05 and ’06 are more like the “norm”

• You can expect . . .

– $75 – $85 barrel oil

• Slightly above historic trend

– 50,000 – 60,000 jobs per year

• Significantly fewer jobs created in ’10

• Job growth returning in ’11

What does the future look like for Houston?

32

• ‘05 and ’06 are more like the “norm”

– $180 - $190 billion in foreign trade

• Growth returns as the economy rebounds

• No distortion from inflated commodity prices

– 20,000 – 25,000 single family starts

• Tighter lending standards = fewer new homes

What does the future look like for Houston?

33

294.4

294.4

384.1

466.0

556.6

656.1

'10 '15 '20 '25 '30 '35

Houston-Sugar Land-Baytown MSA 2010-2035

$ Billions*

* 2000 Constant Dollars

Source: The Perryman Group, Spring/Summer 2010

Gross Regional Product

34

5.3

5.9

6.5

7.2

7.9

8.6

2.42.6

3.0 3.33.5

3.8

'10 '15 '20 '25 '30 '35

Houston-Sugar Land-Baytown MSA 2010-2035(Millions)

Population Employment

Source: The Perryman Group, Spring/Summer 2010

Population & Employment

35

Ratings of the Houston Area

As a Place to Live (1996-2010)

Source: Stephen L. Klineberg / Rice University

Belief in the “American Work Ethic”

(1982-2010)

Source: Stephen L. Klineberg / Rice University

“#3 Cities with the Strongest Economies”

Brookings Institution - June 2009

“Top 10 Cities to Find a Job”

U.S. News & World Report - August 2009

“World Capitals of the Future”Forbes.com - September 2009

“#7 World’s Smartest Cities”Forbes.com - December 2009

Houston Region Rankings

“#3 Best Housing Markets”

Forbes.com - February 2010

“Largest Population Gain”

U.S. Census Bureau - March 2010

“#4 Cities Where the Recession is Easing”Forbes.com - March 2010

“#3 Best Cities for Job Growth”New Geography and Forbes: Large Cities Ranking

2010 Best Cities for Jobs - April 2010

Houston Region Rankings

“Top Destination City”

U-Haul International - April 2010

“Home to 25 Fortune 500 Headquarters”

Fortune - April 2010

“Top U.S. Manufacturing Cities”Manufacturers’ News Inc. - May 21, 2010

“Best Cities for Young Professionals”Forbes.com - June 17, 2010

Houston Region Rankings

41

H-Town Day 2010Understanding Houston’s Past, Present & Future

Houston Association of REALTORS® Thursday, October 21, 2010

Daniel G. Bellow, CRE, SIOR, CCIM

President-Houston

Jones Lang LaSalle Americas