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Houston’s Monthly Metrics: February 2016

The following article originally appeared in the February newsletter to clients of Kiley Advisors, LLC for the purpose of providing the latest leading indicators and industry issues to those clients.  Reprinted with permission.

As the year-end numbers come in, Houston is beginning to noticeably slow down.  After gaining more than 100,000 jobs in 2014, in 2015 Houston managed to only add 23,200 – a number that will likely be revised down by the Texas Workforce Commission in the months ahead.  As Dr. Gilmer noted this past November, the word is now out that the jobs are no longer in Houston, setting our city up for another slow year.  For construction, it typically can take two to three years to feel the full impact of a market change as sudden as Houston has experienced in the energy sector.  As such, 2016 – and especially the first half of 2016 – appears to remain robust.  Those markets that were dormant during the strong population and job growth of the last five years, have emerged, checkbook in hand, ready to put construction companies to work.

Which markets?  The big spenders will be primarily in public work (City of Houston, TxDOT, etc.), schools, both grade and postsecondary, retail and medical work.  Each of these markets will easily post over $1 Billion each in work in 2016.  And none of these markets show signs of slowing.  Office and Light Industrial will be noticeably slower, but not dead, and multifamily, we suspect, will come to an abrupt halt as they are beginning to overbuild, especially given the latest population and employment projections.