According to an investor survey published by the Urban Land Institute and PriceWaterhouseCoopers, Dallas and Houston are two of the most popular markets for commercial real estate investment in 2013. Dallas shows up at number 9 in the Top 10 CRE markets list, beating Orange County. Houston shows up at number 5, ahead of Boston, Seattle, and Washington, D.C. Integra Realty Resources estimates Dallas has or will have 794,000 SF of office real estate under construction, while Houston has 1,000,000 SF. Compare that to Philadelphia’s 300,000 SF.
The office pipelines for Houston and Dallas signal significant growth, consistent with the ULI’s reports of these markets’ appeal to investors. Obviously, economic vitality and population growth are often a product of numerous factors. Healthcare, technology, education, and other industries are certainly major drivers for the ongoing growth of these cities and their commercial real estate activity. But no one will dispute the fact that the energy sector–in this case, “Big oil”–is fundamental.
Thanks to their proximity to oil assets both on land and off shore, these two cities host operations for some of the biggest energy companies in the world: BP America, Citgo, ConocoPhillips, ExxonMobil, Gexa Energy, and so on. The high concentration of energy interests in these cities has made some of their real estate markets, in the opinion of many, “recession-proof.”
Pittsburgh, Pennsylvania, didn’t make the ULI’s top ten list.
Still, some believe the former steel town and second-best city in Pennsylvania is on the cusp of a renaissance, one largely prompted by the influx of natural gas extraction (“fracking”) operations taking place on the Marcellus Shale play, an enormous deposit of potential energy on which the city sits.
A commentator on the Wall Street Journal’s MarketWatch believes domestic energy production is crucial to job growth, and he believes the sort of fracking taking place in central and western Pennsylvania is key:
Some experts call the U.S. the Saudi Arabia of shale oil and gas… Already, tens of thousands of jobs in states such as Texas, Colorado, North Dakota and Pennsylvania have been created by the new form of fuel extraction — with possibly many more to come. …The White House could promote further development by opening federal lands… At the very least, the administration could maintain a light regulatory touch…
The commentator casually dismisses fracking’s critics:
…environmental groups close to the White House are pushing for more federal oversight and tougher regulations because of concerns — largely unfounded so far — about water pollution. It’s unclear what stance Obama will take.
And let’s not forget about the additional commentary in the article’s discussion board!
impeach the disgrace obama or a failing america will be as the rest of the world calls it a DEADBEAT NATION…
learning sentence structure should be a goal of yours, before commenting
Discussion boards are awesome.
Even as this sector of the energy industry gains steam, fracking remains controversial, mainly because of concern over the long-term effects of fracking chemicals on water supplies (and, presumably, the soil, flora and fauna that depend on this water, not to mention the people). We see plenty of skepticism toward fracking online and in the media, such as this piece in the Pittsburgh Post-Gazette, and the recent Matt Damon film, Promised Land.
Will Pittsburgh become the next Houston or Dallas? Maybe, but I wouldn’t expect the nearby energy production to heat up the city’s office, retail, or other markets in the near term.
The problem is this: natural gas prices are quite low, and expected to remain that way for a while. Energy companies won’t have enough incentive to ramp up their fracking operations until demand picks up (perhaps through international volatility or shortages).
If the prices begin to rise, though, Pittsburgh’s economy could see its biggest boost since Carnegie Steel. But at that point, residents may want to switch to bottled water…