In the middle of May the Urban Land Institute (ULI), the US non-profit research and education organization which focuses on development and land use, held one of its biannual conferences in Houston, Texas.
This was the first time in more than two decades that a national ULI conference had been held in Houston. Great for the city, of course, but it came at a time when sources speaking to PERE expressed nervousness about the city’s real estate market and its questionable resilience to plummeting oil prices.
Oil prices have been dropping rapidly after continued signs of oversupply in the global crude market which has caused fear of job losses in store, although city insiders will maintain that Houston’s economy is diversified.
One notable advocate of Houston’s diversified economy is Martin Brühl, head of international investment management for Union Investment Real Estate, who said as much at the ULI conference. This is not too surprising though as the Hamburg, Germany-based real estate investment manager acquired 1000 Main Street, a 36-story trophy office building in Houston from Invesco Real Estate for approximately $440 million in April.
However, he reportedly admitted at the conference that demand for Houston office space was slowing, but took comfort in the lack of new office space under construction downtown. Union’s 836,000-square-foot 1000 Main building is also fully leased, with an average lease term of more than seven years.
Yet, analysts suggest that oil prices look set to continue to drop as the Organization of Petroleum Exporting Countries has decided not to try to curb their production to try and keep the oil price up. It seems that a market correction awaits.