Jeff Blau, CEO of Related Companies, had some choice words about the Houston real estate market in a recent interview with The Real Deal, in which he detailed the New York-based company’s expansion into the Texas market, save for Houston.
“I actually think it’s a terrible market. It’s so concentrated on one industry — oil — and they have no zoning in Houston and a lot of land and lots of sprawl,” he said.
Cities with plentiful parking lots are red flags for investors, as they indicate a lack of strategic building, Blau said. Houston ranks seventh in the nation in terms of parking-lot density with space designated for parking, comprising more than one quarter, 26 percent, of downtown Houston’s infrastructure, according to Parking Reform Network.
Houston’s lack of comprehensive zoning laws has long kept developers like Blau from breaking ground in the bustling energy capital. Decades-long debate on the matter has coincided with the city adopting decreasingly subtle land-use restrictions, including residential buffering zones and historic preservation districts deemed “perilously close to the line” of zoning by the state’s supreme court, but these policies continually fall just short of comprehensive zoning.
However, the Bayou City’s free-for-all development scene has also proved to be a boon for those willing to throw their hats in the ring. Global development company Hines has stamped its name across the Houston skyline with some of the city’s most prized properties including its tallest building, the 75-story JP Morgan Chase Tower, as well as its largest retail mall, the Galleria. It’s trapezoidal towers, Pennzoil Place, was deemed the 1970s “building of the decade,” and its new life-science hubs the Ion and Levit Green could be the wave of the future.
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If Hines is any indication, Houston’s not wanting for premier, top-of-the-line development opportunities. Other developers, like MetroNational, Transwestern and Howard Hughes, have also found success in Greater Houston. The latter is responsible for one of the country’s largest and most successful master-planned communities, the Woodlands, as well as the newly minted Bridgeland, which has consistently ranked within RCLCO’s top-selling master-planned communities in the nation since 2020.
While commercial property sales have declined more in Houston than in most other major metropolitan areas, falling 74 percent year-over-year, the city’s real estate market remains rife with construction and new supply.
Houston topped the list of the strongest real estate markets, indicating booming growth over the past decade, according to StorageCafe. It ranked first in industrial and home construction while falling to second, just behind New York, in new self-storage and office developments. Warnings of Houston’s real estate market will continue to reverberate through the industry, but the picture on the ground complicates that cautionary tale.