Houston: Booming oil industry drives economic engine
Higher oil prices and investments to recover from Hurricane Harvey are buoying the Houston area’s economy, which is projected to continue to expand in 2018.
Houston itself is the largest city in Texas and the fourth largest in the United States with a population of more than 2.3 million, and the metro area is the sixth largest with a population of nearly 6.5 million.
The Houston metro area had the sixth largest nominal gross domestic product of any metropolitan area in the country in 2017 at $526 billion — an increase of about 10% over 2016 levels, according to the U.S. Commerce Department’s Bureau of Economic Statistics.
Oil is quite literally the fuel of the Houston-area economy, and local forecasts call for a robust year amid higher energy prices. If the price of crude oil remains above $60 per barrel, the area will add about 75,000 jobs this year, according to a recent report in the Houston Chronicle.
An economic forecast from Waco-Texas-based research firm the Perryman Group recently projected job growth in the Houston metropolitan area will exceed the rates of both the United States and all of Texas in the next five years. The firm said the region should be able to recover relatively quickly from the damage caused by Hurricane Harvey last fall, in part because of the robust energy industry.
“When [Hurricane Harvey] hit the Texas gulf coast, it hit a vibrant, rapidly growing area,” Ray Perryman, president and CEO of The Perryman Group, said during a presentation earlier this year to the Houston West Chamber of Commerce.
Retail expansion in the Houston area continues to be robust, although some retail projects that had been slated for completion in 2017 have been pushed back to 2018 due to the hurricane, according to a recent report from local real estate firm Wulfe & Co.
According to the firm’s 25th Annual Retail Survey, the greater Houston area will add 3.3 million sq. ft. of new retail shopping center space in 2018. While this represents a decline from the average of 4.4 million sq. ft. per year added in 2016 and 2017, it is more typical of the market’s growth.
“This year’s square footage projection is realistic and appropriate when considering that the square foot average over the previous 10 years was 3.0 million per year,” Ed Wulfe, chairman and CEO of Wulfe & Co., said.
Wulfe said that many of the retailers in the area have been focused on reconfiguring existing stores to more efficiently provide pick up and delivery of items ordered online.
San Antonio-based H-E-B, which is the largest supermarket operator in the market with 91 stores and a 26.6% share, is planning six new stores in the market in 2018, according to Wulfe & Co., which cited
market share data from the Shelby Report.
Walmart is No. 2 in the market with 101 stores and 25.1% share, followed by Kroger with 112 stores and 22.5% share. Kroger is planning to add two of its 100,000-sq.-ft. plus Marketplace stores in the market this year, according to the Wulfe & Co. report.
Walgreens currently holds the lead in market-share among drug stores in the market, with 13 of its locations featuring in-store Boots Beauty departments. The stores feature beauty consultants who can explain the attributes of Walgreens’ Boots line of skincare and makeup products. CVS Pharmacy also has a strong presence in the market, where Camp Hill, Pa.-based Rite Aid does not operate.
Forthcoming retail openings include 10 new small-format, limited-assortment stores from Batavia, Ill.-based Aldi, and one store each from Sprouts Farmers Market, Costco Wholesale and Korean food retailer H Mart.
Neither Target nor Walmart have openings planned for the market in 2018, according to Wulfe & Co. dsn