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Lone Star
Look beyond the long horns and discover one of North America’s most vibrant cities
| Text : Elizabeth Kerr | Photo : www.thinkstocksphoto.com |
Play a game of word association with “Texas” and most people would start throwing out phrases that have to do with cowboys, beef, guns, oil and the late, great Dallas. Perception belies the current reality of the second largest state of the union. Much of the United States is still reeling from the banking shock of 2008, but Texas has managed to pull through relatively unscathed, and Houston in particular — the largest city in Texas the fourth largest in the US — is actually exceeding expectations.
Incredibly sprawling, Houston has become a hotbed of economic activity and the poster child for the American urban centre of the future. Houston is easily Texas’s most cultural city, and doesn’t fit in with most ideas of what a Texas city is. Slightly more urban than San Antonio or Austin and more liberal than Dallas, Houston is aggressively green and sustainable and has a fine arts scene with a wealth of performing arts facilities that could rival Manhattan to go along with swanky dining. It’s Houston that boasts an out lesbian mayor (Annise Parker) who was honorary grand marshal in the city’s Pride Day parade in 2010.
Despite continuing recession conditions many parts of the US Houston has weathered the storm largely do to the traditional oil town’s diverse economy, a hard-earned lesson. “Houston was all oil all the time in the ’80s and we suffered dramatically. Not anymore,” comments David Kelsch, vice president and branch manager at Coldwell Banker United Realtors in Houston, the city’s most active.
In addition to oil and energy (Texas, ironically, is the US’s largest producer of alternative wind power), engineering, communications and technology (let’s not forget NASA is based in Houston), medicine and biotech, shipping and education are major drivers that are drawing people to the city. The metro area is expected to grow almost 7 percent over the next five years to a total of just over six million people. “On a more long-term basis, demographers project strong population growth for the area over the next thirty years as domestic and international migration trends favor Houston’s geographical, cultural, and economic strengths,” stated Colliers International’s 2010 Houston Economic Outlook. It has the second largest number of Fortune 500 company headquarters in the country and a highly educated population. Throw in the fact that Texans take food very seriously and Houston has more restaurants per capita than any other city in the US and you’ve got a major hospitality industry as well.
Jones Lang LaSalle’s fourth quarter Houston Pulse stated, “Increased capital spending in the oil industry this year will lead to elevated demand for [office] space from the majors and energy suppliers starting with the energy engineering firms. This increased demand should translate into higher rent levels in the latter half of 2011 and continued demand form the investor level moving forward due to the expanding energy base.” Judging from the activity around the mixed-use Citycentre, and Oak Boulevard developments — complete with chic restaurants, shopping and boutique hotels to go with new office towers — the demand is already there. And as we’re so familiar with in Hong Kong that means a rising population that should buoy the residential market.
So where does everybody live? Almost anywhere they want to given the state’s lack of an income tax to complement Houston’s income tax-free status and a low cost of living index. For now, houses are the most popular properties in the city, not surprising given the space available, but it’s also dotted with less popular loft apartments. “We’re going up a little bit but we still have plenty of space to grow in all directions,” says Kelsch. “One of the reasons housing remains affordable is that unions don’t build homes so the cost is much less. A second thing, and this is different from many cities, is that there are almost zero basements here, which is a bigger cost factor.”
Houston is as notable for its lack of zoning laws as it is for its size. A three-storey home, coffee shop, low-rise apartment and auto-body shop on the same block is not an uncommon sight. Kelsch admits that’s a bit odd, but it’s worked for the city so far. More vital to purchasing property in Houston is location. “It’s not hard to buy … but if you’re moving here you need to find something close to work. Travel time is measured in minutes, not miles. And there will probably be something in your price range nearby. Houston is blessed with more outstanding value for dollar than any city in the world.” The West and Rice university areas, Memorial, Sugar Land, Katy, Tanglewood, tony River Oaks and the Victorian The Heights district are among the most desirable addresses for homes, but investment property is also on the upswing. “It’s becoming [an investment market]. We’ve always had international investors for individual units … but there has not been the international intent the way there seems to be now,” explains Kelsch. Rental investment is on the rise largely due to major corporations setting up shop, but Kelsch warns rental returns are modest. “If you’re investing, prices are low but so are the rents. It’s stable with gradually increasing price points.” However, it’s that stability that makes Houston attractive to begin with. “It’s looks stable and the world over doesn’t. There’s no income tax but a high property tax. About 2.56 percent.” High, of course, is relative.
Houston may be flying low on the radar right now, but the influx of new residents is testament to its burgeoning reputation. “Houston is a city of no zoning, and it’s always had this attitude of ‘Can do, can do, will do.’ So it’s good for the business climate and if you have jobs, it’s good for everybody else,” Kelsch summarises succinctly. Houston, we have a problem? Don’t think so.
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