HOUSTON – (Realty News Report) – Preston Young is the National Head of Office Investor Services for Stream Realty Partners in Houston where he oversees the strategy and advancement of the firm’s national office portfolio. In this role, he leads Stream’s strategic efforts in recruiting talent, identifying new business opportunities and developing essential resources to achieve growth initiatives. Previously, he was regional managing partners in the firm’s Houston office where he directed the service and principal portfolio which now exceeds 50 million SF. Before joining Stream, he worked in capital markets at Trammell Crow Co.
Young was a guest on THE RALPH BIVINS PROJECT, a new podcast published by Realty News Report.
To listen to the entire interview CLICK HERE.
Here is an excerpt of Young’s’ appearance on THE RALPH BIVINS PROJECT:
Ralph Bivins: What is the state of affairs in the Houston commercial real estate market?
Preston Young: That’s a good question. Houston, in some respects, is just like the rest of the country, with vast amounts of uncertainty. Just look at the events of 2020: A presidential election, civil unrest, all the things tied to COVID. If it was only one of these, that would define the year. But we had to deal with three, four, five life-altering events all dovetailed together. Houston, like the rest of the world, was shell-shocked. We had to deal with the pandemic, first and foremost. And when we began trying to get back to normalcy after the summer, we saw the number of virus cases rising. In the financial market, uncertainty is always negative. The state of Houston? We are sitting in the same boat as the rest of the country, we’ve been mired in incredibly low oil prices for the past five years. There has been a swath of bankruptcies, a lot of sublease space. Now, I’m feeling bullish again about Houston. Companies are expanding. Subleases are starting to come down significantly. There is new development in parts of the city. We all took a huge collective step backward with the pandemic. It dealt a blow to many of the oil and gas companies. In the long term, I am bullish. What’s interesting to me is the period from 2014 to 2019 which was a really bad time in Houston. The Harris County MSA and Harris County in particular was the second fastest growing county in the country, only behind Maricopa County, which is Phoenix, over the same time frame. This really illustrates that these are not the ‘80s all over again, with difficulties tied exclusively to energy. We were able to have a really substantial population growth. Office jobs tied to oil and gas are running behind. But the innovation in this town, the population growth, the Texan can-do spirit, all that continues and will put Houston well ahead going into the future.
Ralph Bivins: You look at all the office space that’s still vacant. How long will it take to get these buildings refilled? Among the energy companies, I don’t see any expansion.
Preston Young: There are certainly those headlines that show flashes of: “Suddenly, 10,000 new jobs come to a region.” We also look at the net outmigration of jobs from California and New York. Houston may benefit from another HP announcement. We must remember that two-thirds of all jobs come from companies that are much smaller than the Fortune 500 companies. That’s the backbone of the economy. Houston is awash in these companies because of the culture here. I’d like to see one big splash, but it will likely come as 50 jobs here, 100 jobs there, another 15 jobs here. We look up after a year or two and find that there has been job growth resulting from that. Houston has that incubator that is capable of being hospitable to these jobs. A lot of people are flooding into Houston. What’s interesting is to look at Houston on a grand scale. Historically, what has been the biggest threat to the country overall? First, it was conventional military attacks, then it evolved into terrorist attacks. But nothing has brought us to our knees as fast as the pandemic. Nationally, billions of dollars will be pouring into biotech and life sciences. And what does Houston have? It’s a hotbed for these jobs. Houston will get a disproportionate amount of research dollars. It has the infrastructure to support it. We really can’t calculate today what will happen, but it’s going to be a big impact.
Ralph Bivins: You’re right, there’s a lot of potential around. Let’s look at other cities, like Austin. Elon Musk is putting a Tesla plant there, and the headquarters of Oracle just came in. Samsung may build a $17 billion manufacturing plant there. Your firm, Stream, has an office building under construction there called River South, on the southern shore of Lady Bird Lake. Tell me about Austin – it’s super hot, and you’re there.
Preston Young: Super hot. It reminds me of an article I read about the unique nature of Texas and its focus on corporate relocations. Of the last 25 corporate relocations, only one – when AT&T moved from San Antonio to Dallas — that involved one Texas city losing to another. Actually, in Texas, each city has carved its own niche on the world stage. Houston has energy and health care. Dallas is banking and general corporate relocation. Austin has been tech. Any tech company coming to Texas goes to Austin. And it’s on a roll. Facebook may take another million SF. Oracle could add another 10,000 people. It’s one good bit of news after another. Seeing that demand, we got excited about what’s happening. We looked at the Charles Shultz property that overlooks Lady Bird Lake. For us, it checked all the boxes. We just poured the 10thfloor of what will be a 15-story, 350,000 SF building that is going to be delivered in the first quarter of next year. It will be an incredibly green building. We have received some really good interest in it. Like leasing all around the country, it was a bit stalled last year, but we see the light at the end of the tunnel, with vaccines being distributed and the presidential election having come to an end, we are seeing a lot more activity.
Ralph Bivins: That site was once owned by the family of Charles Schultz, the cartoonist who created the comic strip, Peanuts. It’s an important location that’s been called the first piece in the city’s South Central Waterfront Initiative, across from downtown on Lady Bird Lake. The 19-acre Austin American-Statesman site at Congress Avenue and the lake is planned for major development. It’s like many of the old newspaper plants being acquired around the nation.
Preston Young: Even today, anything that is tied to communications is at Main and Main. The old newspaper business is giving way to the next form of communications.
Ralph Bivins: Your firm has also acquired a lot of retail, bars and old commercial buildings and parcels along Sixth Street entertainment blocks in downtown Austin. What is your vision for this expanding assemblage?
Preston Young: It’s like the old adage from Mark Twain: “Buy land. They’re not making any more of it.” We are big believers in Austin. We all felt Austin was a special place before others did, and we are heavily invested in it. We are looking at the real estate and the place making. We are looking at the residential resurgence in downtown Austin, the walkability factor there. When you have a good handle on the real estate in a certain area, you have options. I can’t look you in the eye right now and tell you what our plans are for the next 10 years. But we know from pure history that tying up land sites will portend good things for the future.
(Edited for clarity.)
Feb. 11, 2021 Realty News Report Copyright 2021
File: Emerging Markets with Preston Young of Stream Realty Partners