Economic outlook still strong for region

Despite oil slump, northwest Houston continues to see boom in construction

The northwest Houston economy may be in the midst of an economic slump as it relates to the oil and gas industries, but the area’s economy as a whole is still seeing sustained and steady growth in other industries. Industry experts in transportation, real estate and economics provided their perspective on the current state of the economy, and their projections on the foreseeable future during the 2016 Economic Outlook Forum.

In real estate, for example, the market saw growth in residential and commercial construction in 2015.

“This growth that we saw from last year has not stopped,” said Harris County Precinct 4 Commissioner Jack Cagle, who delivered the keynote address for the morning segment of the recent forum. “Our builders are busy…and today we trying to make sure we’ve got the bridges and infrastructure in place.”

Scott Davis, executive director for Houston-based Metrostudy, said while singlefamily housing starts were down slightly in 2015, the market was still pretty robust.

“Dallas is on fire. It’s a market people really want to get

into,” he said. “We still started 1,700 more singlefamily homes last year than they did in Dallas. Our top 15 builders started 2,500 more homes than Atlanta, which is the No. 3 market. We continue to provide the bulk of singlefamily housing built in the United States, here in Houston, and will continue to do so over each of the next three years.”

As expected, much of the development is happening now, or is projected to happen along the newly opened segments of the Grand Parkway, connecting U.S. 290 Cypress to Interstate 69 north of Kingwood.

The segments between U.S. 290 and Interstate 45, opened in early February. The remaining segment, which connects I-45 and I-69, opened the last week of March.

Much of those segments fall within Cagle’s precinct, as do other key roadways, such as Texas 249 in Tomball where the 153-acre Grand Parkway Town Center is under development.

“These roads excite me,” Cagle said.

Meanwhile, Davis who provided his perspective of the continued economic development potential in the region, said the Houston metro area has seen steady growth since the last census in 2010.

Davis said that over that five-year span, the Houston metro area has added more than 750,000 new residents — with many of them choosing to live in northwest Houston.

“(It’s) by far the largest growth of any metro area (in the U.S.), and the recently released census statistics show that we added 159,000 people to the Houston metro area in the last year,” Davis said.

Roughly 60,000 of those came through births, while the remaining new residents moved here.

Between 2010-15, the local economy added 520,000 new jobs with 11 percent of those within the upstream energy or energy exploration sector.

By the same token, a larger portion or 52 percent of the jobs created, indirectly supported those energy sector jobs, he said.

“Energy is vitally important to our economy, it’s one of our largest sectors,” Davis added. “But it’s important to remember the growth experienced the last five years has not been built on a tidal wave of shale oil plays. We’ve had a lot of non-energy growth in the market.”

Last year, University of Houston economist Bill Gilmer shined the light on the current slump indicating that the region would see a slower economy resulting from a lower demand for oil and gas.

The result of that slowdown was the loss of 17,000 energy-sector jobs last year.

“We still added 15,000 jobs last year,” Davis said.

Health care, which is the region’s largest employer with more than 300,000 employees, amounted to most of the growth in 2015.

Davis projected more growth in the education and hospitality fields over the next year, with a small percentage of those resulting from the Super Bowl coming in February 2017.

Adam Perdue, an economist for the Institute for Regional Forecasting, C.T. Bauer College of Business at the University of Houston, focused on the rise of shale oil production, the subsequent spike three years earlier, the slump in 2015, and what consumers and business leaders can expect to happen this year and into next year.

“From December 2014 to February 2016, we added a total of 15,000 jobs, about .52 percentage of growth in the Houston area, which is much slower than we’d seen between 2011 to 2014 when we were adding 100,000 jobs per year,” Perdue said.

This year, the region is forecast to add 16,000 jobs, while 48,000 are forecast for 2017 and 66,000 for 2018.

Perdue said anticipated growth will depend partly on the resurgence of rig counts, which diminished significantly in 2015, the increasing rise of the petrochemical markets as well as the construction market picking back up downtown.

“Through 2016 and 2017, we still believe we will see relatively slow growth as we continue to work out the excess of the upstream industry, but we will be counter-balanced by the petrochemical construction projects that are happening on the east side, and the rest of the Houston economy unrelated to the segments of the energy industry.”

“Energ y is vitally important to our economy, it’s one of our largest sectors. But it’s important to remember the growth experienced the last five years has not been built on a tidal wave of shale oil plays. We’ve had a lot of non-energ y growth in the market.” Scott Davis, executive director for Houston-based Metrostudy