Oil and Location Equal Strong Medium-Term Prospects

Wilson says houses can’t be built fast enough for the refinery construction workers in Mont Belvieu.

HOUSTON—In the first of a two-part exclusive to GlobeSt.com, Reid C. Wilson , chairman, Wilson Cribbs + Goren PC , a real estate boutique law firm, discusses some of the affordable housing projects recently completed and ones underway, along with impacts he is seeing in real estate from the oil industry’s woes. GlobeSt.com: What are some examples of affordable housing projects that are underway or on the horizon? Reid Wilson: Our firm assisted The Women’s Home in an expansion of its facility for homeless women.  Our clients, Covenant Community Capital and Avenue CDC , recently completed a mixture of senior housing, low income housing and single-family affordable houses in a series of projects. New Hope Housing is selling its facility near Minute Maid Park (baseball) and building a larger replacement facility in the East Downtown area off the MetroRail.  Due to a relaxed regulatory scheme (no zoning), affordable housing has fewer legal hurdles in Houston. In response to court action requiring more low income housing in high opportunity neighborhoods, Houston Housing Authority proposes to demolish its office building in the Galleria Area to build affordable housing near the affluent Briar Grove neighborhood.  This has triggered a strong NIMBY (not in my back yard) response for the residential neighbors. Although legally entitled, the facility is facing multi-directional political opposition. Many in Houston are looking to the result of that proposal to see if low-income housing in affluent areas will succeed. GlobeSt.com:  What impacts are you seeing in real estate from the oil industry’s woes? Wilson:   Jobs, Jobs, Jobs. We will be lucky to have only a small amount of net job loss in Houston this year (which is the consensus view of economists). The energy corridor along the Katy Freeway (Interstate 10) in west Houston, once the darling of developers, has an oversupply of office and multifamily with no new development likely for a few years. Equity and debt is on the sideline for many product types. However, local investors and commercial banks have a strong appetite for properly underwritten deal with strong sponsorship and location. The development focus has shifted from the upscale west side to the blue collar/industrial east side.  La Porte, Baytown and Mont Belvieu (east side suburbs) are active with residential, retail and industrial development.  A firm client that is the largest homebuilder in adjacent west Chambers County, where Mont Belvieu is located, told us that he can’t build houses fast enough for the refinery and related construction workers. Retail development, which was the last to recover, continues.  New lot and new house development continues, but at a more rational pace. Used homes have returned to typical inventory levels. Overall, deal velocity is down. Medium- and long-term prospects are strong, according to economists, in part based on Sun Belt location, low tax/regulatory environment and natural increase in population. Hopefully commercial brokers and developers have saved some of their recent profits for the return of development, supposedly to occur by 2017 or 2018. Wilson Cribbs + Goren is based in Houston and was established in 1985.