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.Despite the recent dip in oil prices, 2015 continues to look like a good year for the commercial construction market in Houston. And while 2015 is not expected to be the same pace as 2014, a slowdown was already expected as the 2014 levels of construction in some markets were unsustainable. For instance, 2014 saw records broken in light industrial and retail markets, with near records in the office market. To continue at that pace would mean that Houston would run the risk of overbuilding, a scenario no contractor from the 80’s wants to see repeated.So which markets are the winners and losers of 2015? In short, there are no real losers. All markets, while some will slow, will still post very respectable numbers. Our sister industries, residential and industrial, will continue to be strong, particularly industrial.
The following article originally appeared in the January 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.Oil prices have dampened the outlook for 2015. Reports of delayed or indefinitely postponed projects are already being heard. While coming off of a record year, 2015 will not be a continuation of 2014.Office and retail are both expected to taper off from their astounding number of projects and housing demand is expected to ease as the lower oil prices will likely result in a dip in consumer confidence. However, schools and medical construction are both expected to rise in 2015, playing catch up with the residential and commercial growth over the past few years. Light industrial is also expected to remain strong, as the preparation for the Panama Canal expansion and ethylene plants and LNG come online in 2017 and 2018, respectively.
January 26, 2015
The following article originally appeared in the December 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 comes to a close, Houston did significantly better than we expected. We started the year by telling you to expect the “new normal,” the Greater Houston Partnership’s forecast of 69,800 new jobs, 30,000 new home starts and 12,000 multi-family units to be built in 2014. And eleven months later, we are expecting over 100,000 new jobs, 18,000 multi-family units delivered thus far with another 24,500 under construction and an estimated 30,000 new homes. This year was a much better “normal” than anyone expected, so will this be the “normal” in 2015?
December 04, 2014
The following article originally appeared in the November 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.Despite a recent dip in oil prices, Houston continues to hum. The Houston branch of the Federal Reserve Bank does not see an effect from the lower oil prices on the Houston economy, as long as we stay above $75 per barrel and there are no unexpected outages, because there is a shortage of space for any surplus capacity that would need to be stowed during an outage.And, additional good news is the Houston unemployment rate is now below 5% with construction jobs driving the number down.
November 06, 2014
The following article originally appeared in the October 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.The market continues to prosper in Houston. New projects are being announced each week and the market shows no signs of slowing. The Architecture Billings Index (ABI), a national leading indicator for construction still shows growth across the nation, and even stronger growth in the southern region, which includes Texas. The ABI’s project inquiries index is even higher, which suggests that the architect’s telephone is still ringing as more owners want to pursue projects across the nation.
October 07, 2014
The following article originally appeared in the September 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.The Houston construction market is firing on all cylinders. In addition to the hot market segments such as office and light industrial, now k-12 and healthcare are gaining momentum as well. With the Affordable Care Act somewhat more “known”, the delayed construction of many medical facilities is now being planned or is underway. Under the direction of their leader Dr. Robbins at the Texas Medical Center, Houston is poised to become one of the leading research parks in the world.
September 02, 2014
The following article originally appeared in the August 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.The construction market has become so busy, that there are reports of delays and pushbacks. This is, in part, due to contractors being stretched too thin from the shortage of skilled workers. And with no signs of slowing anytime soon – in residential, commercial, and industrial construction – the workforce bottleneck is expected to continue, if not worsen going forward.CBRE’s second quarter numbers are in, and they are staggering. The light industrial market currently has 7.9 million square feet (msf) under construction. The retail market continues to see rental rates rise with 2.7 msf is under construction.
August 06, 2014
The following article originally appeared in the July 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.The construction market continues to be on fire. CBRE’s early preview of the second quarter shows all sectors are still busy. Office absorption and asking rates are up quarter over quarter. It is the same story in light industrial and retail with the latter reportedly having 2.7 msf under construction in the second quarter.Multi-family has 25,000 units under construction in the greater Houston area. The rising rates in apartments have two primary drivers.
July 08, 2014
The following article originally appeared in the June 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.When will the positive trends in Houston end?That is the question being asked by Houston economists as we continue to see positive growth across our area. Home builders are experiencing the best margins they have ever seen (perhaps commercial builders should take a page from their book) as the red hot residential market keeps absorbing homes as fast as they can be built. Home inventories continue to be very low, and the trend of rising home prices is expected to continue for the next 18 months as builders try to catch up to the demand.
June 06, 2014
The following article originally appeared in the February newsletter to clients of Kiley Advisors, LLC and was intended to provide the latest leading indicators and industry issues to those clients. It is a summary of the Kiley Advisors 2014 Forecast with a focus on the outlook for Houston. Reprinted with permission.Houston is off to a running start in 2014. The typical slowdown seen in the winter months has yet to occur as construction marches on around the city. New construction projects continue to be announced each week, and it looks to be a year of steady growth for all construction markets in 2014. Retail remains strong as grocery-anchored centers persist. Aldi is halfway to reaching its 30 store goal for Houston, Trader Joe’s is seeping into the suburbs, and Krispy Kreme is reentering the Houston market after a seven year hiatus. FMC is rumored to be planning a campus on the northeast side of town that will rival Exxon, and development of the recently opened stretch of the Grand Parkway, along with the soon to follow segments F and G, are being discussed.
February 18, 2014
