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A Rebound Sign? – Oilfield Equipment Manufacturer Leases More Space in North Houston

HOUSTON – Basintek LLC, a manufacturer of oilfield equipment, has renewed its existing lease and leased an additional 50,000 SF of industrial space at its manufacturing facility in north Houston near George Bush International Airport.

The 200,000-SF deal is one of the largest industrial leases of 2017, reports NAI Partners. Nick Peterson and John Ferruzzo of NAI Partners represented Basintek, which manufacturers down hole drilling motor power sections.

Nick Peterson

“Arranging a lease of this magnitude for a drilling company in expansion mode is a breath of fresh air for Houston and a testament to the city’s slowly recovering oil and gas industry,” Peterson said.

The rig count, which measures the number of drilling rigs operating in the nation, has increased this year to almost 1,000 rigs, after dipping below 500 last year.

Basintek is located at 713 Northpark Central Drive in a Prologis facility about two miles west of the airport, between Interstate 45 and the Hardy Toll Road, near the corner of East Richey Road and Imperial Valley Drive.

Houston-based Basintek also has a manufacturing plant in Edmonton, Canada and staging facilities in Dubai, UAE and Odessa in West Texas.

Prices for West Texas Intermediate crude peaked about three years ago in June 2014 at $107 a barrel. Then oil took a deep dive that became extreme on Thanksgiving Day 2014 when OPEC failed to take measures to support prices. By early 2016, oil had dipped below $30 a barrel.

Oil prices have rebounded and rose over $54 a barrel earlier this year. But they have declined somewhat in recent weeks and have been around $46 a barrel this week.

An oversupply of oil has developed and forecasts that oil could reach $60 a barrel at year-end 2017 have been reduced. Now the U.S. Energy Administration has revised the year-end projection to $50 a barrel, instead of $60.

The decline in oil prices and drilling activity (a few years ago America had a rig count of almost 2,000 rigs in operation, twice as many as today’s rig count) has impacted real estate in Houston, which is called the Energy Capital of the World.

Most parts of the Houston real estate market, including residential, have been strong, even with the oil price decline. However, Houston’s industrial buildings that were devoted to manufacturing, especially crane-served properties of less than 50,000 SF, took a hit.

And of course Houston’s office market was hit hard and huge blocks of office space were vacated as oil companies laid off thousands of workers.

An expansion lease by a Houston oilfield equipment manufacturer like Basintek is somewhat of a rarity. Time will tell if Basintek’s expansion is an anomaly – or an early light at the end of the industry’s dark tunnel.

July 18, 2017 Realty News Report Copyright 2017

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