The world felt a seismic shift on November 9 when it was announced Donald Trump had won the U.S. presidency. The election of Trump, who has never held elected office, was a major surprise since all major polls predicted the election of Secretary Hillary Clinton. So what does it mean when an outsider like Trump is elected to the most powerful post in the world? And what affect will it have on Houston’s struggling real estate market? To find out, Realty News Report talked with Charles Herder, a principal shareholder and co-chairman of Colliers International in Houston. Charles has parlayed an engineering background and strong skills in financial analysis into a successful 30-year career in real estate. Today, Colliers is one of the largest real estate firms in Houston with offices in Houston, Sugar Land and The Woodlands.
Realty News Report: What about President-elect Donald Trump? Will the new administration have an impact on the Houston real estate market?
Charles Herder: To the extent that Trump’s administration frees up capitalism and provides regulatory relief to business, it will be positive. One example is the dismantling of Dodd-Frank. We have seen the exit of GE Capital and the onslaught of costly regulatory compliance particularly by small banks that fund a great deal of entrepreneurial real estate investment. Reversing some of Obama’s Executive Orders and written regulations will likely provide a boost for the U.S. economy as well. To put this in context, the U.S. is the world’s greatest economy based on democracy and capitalism and this won’t easily be sidetracked by any president’s term in office – prior president or future president.
Realty News Report: How do you feel about 2017? What lies ahead for Houston’s economy and the commercial real estate market?
Charles Herder: 2017 will be a good year. The recent major oil discovery in the Midland/Permian area will increase the drive for drilling and production in that area that will stabilize an energy sector that is now seeking to find its footing. The world also seems poised to engage the use of natural gas to offset oil and coal. LNG exports from the U.S. are going all over the world. Houston is the primary location in the world to take advantage of this.
Realty News Report: What do investors think about Houston these days? Have out-of-town investors lost interest in Space City?
Charles Herder: As long as the energy sector is perceived as weak, Houston will continue to be suspect. This won’t eliminate investment but will clearly be a litmus test for some capital. On the other hand, Houston is and always will be seen as a center of population diversification and free market initiatives. This will always work well in 2017.
Realty News Report: The Houston office market has rising vacancy rates and a lot of sublease space. Has the office market hit bottom yet, or are things going to get worse before they get better?
Charles Herder: I think we have likely seen the worst of this in 2016. Given the amount of sublease office space on the market, however, it won’t rebalance in the short run. As in the past, the movement of tenants into higher quality space from their existing space, the “blend and extend” initiative, and similar arbitrage moves will be in very active play.
Dec. 4, 2016 Realty News Report Copyright 2016