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Oil Prices To Impact Real Estate in 2009

HOUSTON-Lower oil prices could slow real estate more in the coming year.

By Amy Wolff Sorter | Updated on December 24, 2008

HOUSTON-In early 2008, Houston was operating on all cylinders, the beneficiary of very high oil prices. In recent weeks, however, oil prices have dropped; and if the trend continues, experts tell GlobeSt.com it could spell trouble for real estate in 2009.

“We had a great year up until the last quarter,” says H. Dan Miller, senior managing director with Holliday Fenoglio Fowler’s Houston office. “It was just in the past quarter that the credit crunch finally manifested itself.”

That, and the declining price of oil were the big blame factors for the sudden halt in the area’s booming real estate market. “When you go from $150 per barrel for oil to $50 per barrel, you’re impacted,” comments Randy Moore, Grubb & Ellis Co.’s executive vice president and managing director of the Houston office. “We’re starting to feel that. We’re starting to see, anecdotally, tenants saying they’re not wanting to do a 10-year lease, that maybe they’ll do a five-year lease with a right to cancel after 2.5 years.”

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