Register Real Estate Advisors

HOUSTON (Marcus & Millichap) – Although oil prices have rebounded to a level that should sustain operations in most energy companies, the national recession is weighing on office operations in Houston, according to a fourth-quarter Office Research Report by Marcus & Millichap.

The abundance of Fortune 500 headquarters in the area, in particular, is resulting in significant layoffs in the professional and business services segment.

Other findings from the report:

• The rate of job losses is expected to fall dramatically in the next few months. Nonetheless, payrolls are forecast to be thinned by 76,000 positions this year, a 2.9 percent decline. Office-using employment is projected to decrease 4 percent, or by 22,300 jobs.
• Builders are expected to complete 4.2 million sf of office space in 2009.
• As the recession weighs on office properties in the Houston metro, vacancy is projected to rise to 15.7 percent by year end, 300 basis points above the rate at the close of last year.
• Asking rents are forecasted to fall 1.4 percent this year to $23.93 per sf while effective rents retreat 3.7 percent to $19.91 per sf. In 2010, office rents are expected to recede further because of sluggish economic growth.

COLLEGE STATION (Real Estate Center) – Three things have to happen before the current recession can be declared ended. One is underway, said Dr. Mark Dotzour, chief economist for the Real Estate Center at Texas A&M University.
“I think the economy will begin to turn for the better once the health care and cap-and-trade issues are settled. Those two political debates are creating substantial uncertainty for business owners and investors,” he said.
The personal savings rate is the second trend to watch, said Dotzour.
“Over 70 percent of the U.S. economy is consumer spending,” he said. “When the savings rate finally levels out, consumer spending will start to increase again.”
Increased corporate profits are the third trend that must occur to bring the recession to an end. There is some indication that has already begun. The last three data points were all up. Rising profits lessen the urge for companies to lay off workers.
Research Economist Dr. Jim Gaines added that the increased corporate profits have come from reduced costs, not the kind that leads to expansion.
“Keep your eye on these three issues,” Dotzour said. “When they are resolved, the economy will begin to turn the corner.”

COLLEGE STATION (Real Estate Center) – The Texas economy is in a deep recession but is still weathering the downturn better than the nation’s economy. The state’s economy lost 274,600 jobs from June 2008 to June 2009, an annual job loss of 2.6 percent. Over the same period, the U.S. economy lost more than 5.8 million jobs or 4.2 percent of its total nonfarm jobs.

The state’s seasonally adjusted unemployment rate rose from 4.8 percent in June 2008 to 7.5 percent in June 2009. The U.S. rate rose from 5.6 percent to 9.5 percent during that time.

Only two Texas industries (education and health services and leisure and hospitality) and the government sector had more jobs in June 2009 than in June 2008. Nine industries had net job losses over the same period.

Only three Texas metro areas had positive employment growth rates from June 2008 to June 2009. Twenty-three metro areas had net job losses. Odessa ranked first in job creation followed by Killeen–Temple–Fort Hood and McAllen-Edinburg-Mission.

The state’s actual unemployment rate in June 2009 was 8 percent. Amarillo had the lowest unemployment rate followed by Lubbock, Midland, Abilene and Texarkana.

The complete Texas monthly economic review is available on the Real Estate Center’s website.

WASHINGTON (Forbes) – Several Texas cities are poised for a quick recovery from the national recession, according to Forbes.

Austin–Round Rock ranked first on the magazine’s recent list of ten cities most likely to bounce back quickly.

Meanwhile, San Antonio ranked fifth, Dallas–Fort Worth–Arlington seventh and McAllen-Edinburg-Mission ninth.

To compile its list, Forbes looked at estimates from Moody’s Economy.com of the projected gross domestic product of metropolitan areas across the United States, as well as unemployment figures from the Bureau of Labor Statistics and home prices, incomes and affordability data from the National Association of Home Builders.

Forbes also put together a list of ten worst cities for recession recovery. No Texas cities made that list.