Commercial real estate in Texas saw an impact due to Hurricane Harvey. Offices are being transformed as businesses relocate temporarily.
The commercial real-estate firm CBRE reports 40 centrally located Houston office buildings were damaged by the storm. Short term displacement is forcing many businesses to capitalize on technology and to take up new trends. Office buildings in Houston’s Energy Corridor felt the brunt of Harvey’s impact. The release of water from the nearby Addicks Reservoir caused extensive flooding in the area. According to NAI Partners representative Dan Boyles Jr, the main problem appears to be water in the mechanical and electrical systems of office buildings. Even with minor structural damage, the demand for temporary office space has been high in the wake of Hurricane Harvey. Energy Corridor President David Hightower claims he is “getting flooded with emails about folks needing space.” With the need for temporary space, the dynamics of how businesses operate is being changed by Hurricane Harvey.
Telecommuting has offset the demand for temporary space on the part of businesses impacted by Hurricane Harvey. This is no great surprise, Global Work Place Analytics estimates 50 percent of jobs in the US are telecommuting compatible and 25 percent of Americans telecommute to work on a regular basis. Technologies like Skype are allowing businesses to continue their operations without the need for temporary space. Businesses weren’t able to rely so heavily on such technology in the past, but this appears to be the case after Hurricane Harvey.
More businesses are making use of shared office space and the Texas commercial real-estate market could change as a result.
Other businesses are making use of shared office spaces. Many businesses in the area were unfamiliar with the co-working concept, leading to many co-working spaces to suffer from high vacancies prior to the storm. Now co-working occupancies are sky rocking. Tech-space, a co-working office in the West Chase area has 60 percent of its seats currently occupied. Its owner expects that by the end of the week all of Techspaces seats will be leased out. Co-working offices can be operational in less than 24 hours. Many local businesses are realizing the benefits of the co-working concept. Spoden the owner of Techspace, claims some new tenants are considering leaving some staff-members behind, even after their offices are repaired. A temporary boost in co-working spaces and telecommuting may have a long lasting impact on the dynamics of Houston’s office market.
It is still unclear whether telecommuting and co-working will have a long term impact on Texas commercial real estate.
Short term demand for offices is likely be propped up by businesses whose operations are directly related to rebuilding efforts. But after damaged offices are repaired, will Houston businesses continue to take advantage of technology or more modern cooperative office spaces? If so this could reduce the demand for traditional office space and vacancies in the Houston area could continue to remain high even after Harvey’s damage is repaired.
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About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.