BY IVANNA C. SUKKAR
Spotlight: Texas
YES, TEXAS IS GETTING BIGGER: THE COUNTRY’S SECOND-MOST-POPULOUS STATE ADDED
THE MOST NEW RESIDENTS FROM 2008 TO ’09, ACCORDING TO U.S. CENSUS DATA. FOUR
TEXAS CITIES ALSO WERE AMONG THE TOP 10 POPULATION-GAINERS IN THE ’00S.
A better-than-average job market, lack of state income tax and overall affordability may be spurring
migration to Texas. Superlative honors have followed: CNBC ranked it as the best state in which to do
business, the Brookings Institution calls six Texas metro areas the nation’s most recession-proof and
four out of Forbes magazine’s five “best big cities for jobs” are in the Lone Star State.
Economic diversification also may play a role. Although oil has long led Texas’ economy, health care
and renewable energy are redefining the state’s direction, with help from the American Recovery and
Reinvestment Act. According to the Office of the Texas Comptroller, the act provides about $78 million
for the state’s community health centers to hire and expand.
In addition, the comptroller’s office says the State Energy Conservation Office is providing renewable-
energy grants; this past March, it awarded 32 rooftop solar projects worth $31.4 million.
Houston Office Market
VACANC Y RATES: HOUSTON MEDICAL- VS. GENERAL-OFFICE MARKE T
This past second quarter, Houston’s
office market’s absorption-rate de-
clined for the sixth-straight quarter,
according to CB Richard Ellis data.
CB Richard Ellis says that the city’s
office market may see further de-
clines in its fundamentals as en-
ergy companies react in the wake of
the Gulf of Mexico oil spill. The spill
spurred some companies to renew
their office leases on short-term
contracts, rather than long-term, CB
Richard Ellis says.
Source: Grubb & Ellis Excludes medical, government and owner-occupied properties
While its overall office market has yet to turn around, Houston’s medical-office sector is making waves.
Grubb & Ellis reports that the vacancy rate for the area’s medical offices was 11. 5 percent this past
second quarter, compared to 16. 6 percent for nonmedical and nongovernment offices in that period.
Banks and Commercial Real Estate
Texas banks’ exposure to commercial real estate is about twice the national average, according to the
Federal Reserve Bank of Dallas. But borrowers are mostly paying on time: The Fed says noncurrent
commercial real estate loans comprised 4 percent of Texas banks’ total commercial real estate loans in
the fourth quarter of ’09, compared to the national average of 7.1 percent in that period.
Also, of the 108 banks the Federal Deposit Insurance Corp. closed this year as of press time, just one
has been in Texas. Since the beginning of ’08, the state has had eight bank closures.
Unemployment
UNEMPLOYMENT RATE
Texas’ unemployment rate was con-
sistently greater than the national
average before the recession. In
early ’07, however, as the nation’s
rate began its incline, the Lone Star
State’s unemployment rate dropped
— and it has stayed below the U.S.
rate in that time.
Although the state lost almost
339,000 jobs in ’09, according to
the Federal Reserve Bank of Dallas,
it added more than 75,000 jobs this
past May alone, according to Texas Labor Market Information.
Sources: U.S. Department of Labor
The Real Estate Center at Texas A&M University also cites 0.2-percent employment growth for the state
from May ’09 to this past May, while the nation lost jobs in that period.
3 Regions to Watch
AUSTIN
The Texas capital is one of the country’s most-reces-
sion-proof cities, according to the Brookings Institu-
tion. Job growth is a reason: The city’s 0.7-percent
employment-rate increase the final quarter of ’09 to this
past first quarter was the second-highest in the nation.
Technology is a large factor, with Facebook and Sam-
sung Electronics among companies bringing jobs here
in coming years, according to CNNMoney.com.
RIO GRANDE VALLEY
The McAllen metro area was the only one nationwide to
gain jobs this past first quarter and each of the previous
three quarters, the Brookings Institution reports. Numer-
ous retailers entered the market in the past year, an area
hospital expanded its services in ’09, and a new bridge
opened this past January, according to NAI Global.
SAN ANTONIO
The Alamo City’s unemployment rate sat below the
state average this past May, at 6. 8 percent, and the city
continues to add jobs via companies such as Toyota
Motor Corp., Caterpillar Inc., Kohl’s and Medtronic Inc.,
according to the San Antonio Express-News. Helping
them: The Texas Enterprise Fund has offered financial
incentives to companies moving to or expanding in the
state, the Express-News reports.
WHAT THE LOCALS SAY
“There’s been a little improvement in occupancy
[in most areas], but not much in rents. Occupancy
is doing a little bit better and expected to continue
because there is no new construction.”
— HAROLD HUNT, RESEARCH ECONOMIST,
REAL ES TATE CENTER AT TEXAS A&M UNIVERSIT Y
Ivanna C. Sukkar is senior associate editor at Scotsman Guide. Reach her at (800) 297-6061 or ivannas@scotsmanguide.com.
Sources: Bizjournals.com, Brookings Institution, CNBC, CNNMoney.com,
Federal Deposit Insurance Corp., Federal Reserve Bank of Dallas, Forbes
magazine, NAI Global, Office of the Texas Comptroller, Real Estate Center
at Texas A&M University, San Antonio Express-News, Texas Labor Market
Information, U. S. Census Bureau, U. S. Department of Labor, U. S. Small
Business Association
