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Houston’s Monthly Metrics: May 2019

The following article originally appeared in the May newsletter to clients of FMI Corporation, for the purpose of providing the latest leading indicators and industry issues to those clients.  Reprinted with permission.

NOTE: Multifamily is included in the residential numbers.

This year the data is developing slowly.  The overall permit data, current only through January, reflects 2019 started strongly.  Total residential permits were up 62.7%, and total nonresidential permits, 67.8%.  In addition, commercial contractors, especially specialty subcontractors, are reporting multiple opportunities to bid or propose.  But general contractors are seeing some projects delayed and, in a few cases, canceled.  So the outlook for the year is still a bit unclear.  However, a major project in the Texas Medical Center is finally moving forward, the 1.4 million-square-foot shared research facility, located in the center’s new geographic area, called TMC3, to designate it as the third coast of this internationally renowned complex.  This long-awaited announcement has ignited other projects that are peripheral but integral to the concept of TMC3, including a 450-room hotel, more office space and major renovations and repurposing of older medical office buildings.  The most consistent strong market is the light industrial market, driven by the Port and Houston’s increasing role as a “last mile” hub.  K-12 and higher education both have decent momentum and volume.

The labor shortage looms ever larger, as two large industrial projects just got underway.  They are both close to Houston, one in Channelview and the other in Baytown.  They total over $4 billion and will last several years.  On these megaprojects the wage rates, amount of overtime available and per diem rates telegraph this tightening picture.

The Construction Career Collaborative (C3), gains support and grows, but most contractors and other employers in this state realize comprehensive immigration reform is also critical in addition to these other efforts.

The educational Rational Middle video series has just surpassed one million views --- encouraging, but legislative action is needed.

Houston will also have large new civil projects starting in the next two years.  Labor is the most limiting factor.

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