The Future of the Energy Corridor: Q&A with David Hightower
HOUSTON – (Realty News Report) – Houston is the world’s energy capital and a seven-mile stretch of Interstate 10 has been the city’s Energy Corridor for decades. Located on the west side between Beltway 8 and the Grand Parkway, the Energy Corridor currently is home to some 300 multi-national, national and local companies including BP America, ConocoPhillips, and Shell Oil Company. The Corridor boasts more than 26 million square feet of office space. In recent years, as the price of oil declined, the Energy Corridor experienced a tremendous oversupply of space. The third quarter office availability rate (including sublease space) is 27.3 percent, according to CBRE. In 2013, the Energy Corridor had Class A office occupancy of more than 99 percent, making it one of the strong office markets in the world. So what is the future of what was once the city’s most vibrant office submarket? To find out, Realty News Report talked with David W. Hightower, executive vice president, development, at Midway. Prior to joining Midway, David was executive vice president and chief development officer with Wolff Companies, the Houston-based investment and land development firm, and was involved in ownership, development, and/or management of more than 6,000 acres of commercial, residential and agricultural land investments and development. A founding member and director of the Harris County Improvement District #4, (The Energy Corridor Management District), David has served in leadership positions in the West Houston Association and a number of other organizations.
Realty News Report: The Energy Corridor office market has suffered from high occupancy and an oversupply of sublease space. When do you think the Energy Corridor will fully recover?
David W. Hightower: I think The Corridor is already recovering. *There have been several sizable leases announced in the last two weeks. And Occidental (OXY) is purchasing the former ConocoPhillips campus at the northeast corner of I-10 and Eldridge. That is a major indication that the future of The Corridor is very positive.
Realty News Report: Flooding from Hurricane Harvey damaged some buildings and some buildings were not accessible for more than a week, due to the Corps of Engineers releases from Addicks Dam. How did the flooding impact the market?
David W. Hightower: I don’t believe the flooding has had a long term or lingering negative impact. Obviously, it had a short-term impact, but as noted previously, the market is coming back.
Realty News Report: A few years ago, when Exxon Chemical relocated from the Energy Corridor to the new ExxonMobil campus north of Houston, some real estate promoters began calling north Houston the “New Energy Corridor.” Is it premature to christen a New Energy Corridor?
David W. Hightower: Yes. There is no denying that some energy companies are located in other parts of the metropolitan region. But there is only one “Energy Corridor.”
Realty News Report: What’s going on in the Energy Corridor’s multifamily, retail and hotel markets?
David W. Hightower: Multifamily is beginning to get active again. Several hotels have been added to the market in the last few years and there are other operators looking for sites. Retail is always going to be a challenge because of the reservoirs, but as more multifamily is added more retail and restaurants will open.
Realty News Report: Looking ahead, what lies ahead for the Energy Corridor over the next 10 or 20 years?
David W. Hightower: I think we will continue to see The Corridor become denser. We are already seeing some of the early light industrial buildings built in the 1970’s in Park 10 demolished and new office buildings and other higher uses replace them. And I think we will see other industries grow in the corridor that may serve the energy companies there, but that are not so reliant on the energy industry. After all, what is attractive to the energy companies is important to all businesses, and that is being convenient to a large, talented, educated labor pool. In the Energy Corridor, we like to say our “energy” is not fossil fuel. It’s our people.
*Earlier in October, it was learned Transocean leased the entire 300,000-SF Enclave Place building, which has been vacant since construction was completed in 2015 at 1414 Enclave Parkway in the Energy Corridor.