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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…
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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…
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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…
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If Houston were a state,
it would rank…
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• 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…
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Aerospace Health Care/Biotechnology Electronics and Technology International Business Engineering Chemicals Energy Logistics Corporate Headquarters
Houston-Area Industry Mix
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• 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
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• 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
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• 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
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• $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
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• 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
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• 40.8% of the U.S. base petrochemical manufacturing capacity
• 400+ chemical plants
• 31,000+ employees (refining & chemicals)
• Comprehensive, developed infrastructure
Chemicals
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• 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
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• 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
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• 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
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Rea
l GD
P
Time
July ‘08
March ‘09
We’re somewhere
here.
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Houston Business Cycle
Where Houston lost jobs
Houston jobs lost from the month of peak employment to the month of employment trough.
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Houston jobs recovered so far
Shaded part indicates Houston jobs gained in recovery so far.
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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…
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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…
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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
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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
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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)
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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
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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
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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?
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• ’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?
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• ‘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?
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• ‘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?
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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
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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
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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
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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