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Impact of Hurricane Harvey On Houston Commercial Real Estate Market
Experts from CBRE, a worldwide commercial real estate services and investment firm, are available to discuss Hurricane Harvey's impact on Houston's resilient commercial real estate market. In addition, CBRE has released a report that outlines the storm's impact on major commercial real estate asset classes in Houston.
“Houston’s commercial real estate market is resilient after weathering Hurricane Harvey and the largest rainfall the area has recorded in decades,” says Spencer Levy, head researcher with CBRE. “The outlook for recovery is optimistic, but short-term disruptions are to be expected. Available space to house displaced companies, stores and residents—as well as relief workers -- is likely to become scarce in certain Houston submarkets, and the rebuilding effort will temporarily fuel a rise in retail sales and additional demand for warehouses in the area from building supply companies. Overall, Houston's recovery will take time, but the area's strong economy will help it rebound soundly."
AREAS OF COMMENTARY:
- Fewer than 40 office buildings, or 4.2 percent of Houston’s office stock, suffered damage. Displaced companies already are looking for temporary, turnkey space, likely soaking up some of the 11.1 million sq. ft. of availability in the market. Others that had marketed space for sublease have withdrawn it to preserve their options.
- The majority of Houston’s warehouse and distribution center market weathered the storm without major damage.
- Expect a spike in demand for warehouse space from building supply companies, charities and consumer-goods distributors, which will further constrict availability.
- Most damage limited to neighborhood and strip centers in hardest hit submarkets. Still, displaced retailers looking for space face a tight market.
- Houston’s retail sales will increase, especially for vehicles, home-improvement goods, furniture and appliances.
- Up to 100,000 apartments were flooded, amounting to one of every six units in the area. Expect occupancy rates to rise and concessions for new renters to be curtailed amid the rise in demand.
- In other metro areas struck by hurricanes in recent years, hotel occupancy increased by an average of 15 percent for the four months after major storms.
- The additional demand in Texas stands to deliver a 4.4 percent gain in revenue per available room for the U.S. hotel industry rather than CBRE’s previously forecast 3.5 percent gain.
CBRE EXPERTS: Spencer Levy , Head of Research, The Americas; Cody Armbrister, CBRE Senior Managing Director, Houston; Robert Kramp, Director of Research & Analysis, Houston.
To read the full report, click here.