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THE MAGAZINE OF CORPORATE REAL ESTATE STRATEGY & AREA ECONOMIC DEVELOPMENT
TOP METROS OF 2012
From Site Selection magazine, March 2013

‘Houston, We Have a Winner’
UptownHouston
The Uptown Houston District has more than 5 million sq. ft. (464,500 sq. m.) of retail space in more than 1,000 stores.
Photo by Hugh Hargrave/courtesy of Greater Houston Convention and Visitors Bureau
Ranking first in the U.S. in total projects, Texas’ largest city claims familiar award.
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merica's energy boom has been kind to Houston, the country's fastest-growing job market. As new discoveries of underground shale rich with pockets of natural gas create fertile fields of exploration and harvest for many of the world's largest energy companies, Houston is reaping a windfall of investment.

In 2012, Texas' largest city added a bevy of new jobs as it led the nation corporate facility projects, earning Houston the title of Top Metropolitan Area in the U.S.

Houston led all metropolitan areas with 325 facility deals in 2012, ahead of second-place Chicago, which had 311 projects, and third-place Dallas-Fort Worth, which had 224. Atlanta ranked fourth with 165, while Detroit ranked fifth with 144.

It's a familiar ranking for Houston, which also won the honor for 2011.

"We can attribute it to a strong year in all of our major crown jewel industries — energy, life sciences, chemicals manufacturing, headquarters projects and high-tech companies," says Fred Welch, vice president of regional economic development for the Greater Houston Partnership.

"We are seeing more manufacturing and assembly of components in engineering and design. That talent resides here in Houston," Welch says. "The cost of doing business affects these companies. They come into the region and operate profitably. In some cases, these are business units that left the country 10 or 12 years ago, and they are coming back."

BuffaloBayou_Houston

Buffalo Bayou stretches 52 miles through Houston, from the mouth of the Houston Ship Channel to the forests of Memorial Park. Photo courtesy of Greater Houston Convention and Visitors Bureau

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He adds that Houston "is a low-tax-burden market. There is no income tax here, and it is a very diverse region. One in five people here are from international locations. We have a world-class port and airport and medical complex. Those things all attract people to the Houston region."

Among Houston's 325 corporate facility investments in 2012 were 20 valued at $100 million or greater. The two largest deals — Chevron Phillips Chemical Co. in Sweeny and Dow Chemical Co. in Oyster Creek — accounted for $5 billion and $1.7 billion, respectively.

Chevron Phillips is building a new petrochemical manufacturing plant that will employ 400 people, while Dow is developing an ethylene cracker complex that will employ 100.

"Close to $60 billion in energy projects have been either announced, planned or are in design and construction right now in Greater Houston," says Welch. "For every new energy job created in Houston, another eight jobs are generated throughout the regional economy."

Welch notes that the Dow Chemical expansion in Oyster Creek will come online in 2016. "They are well into design and will start construction later this year," he says. "That project will create up to 4,000 construction jobs."

Other large investments are coming from Ineos USA, which is spending $1 billion to build a new ethylene plant in La Porte, and LyondellBasell, which is spending $500 million to expand its ethane and methanol R&D complex in Channelview.

FredWelch

“Close to $60 billion in energy projects have been either announced, planned or are in design and construction right now in Greater Houston.”
Fred Welch, vice president of regional economic development, Greater Houston Partnership

Bodycote, meanwhile, is investing $473 million into a new manufacturing and flex facility for engineering work in Houston, while Air Liquide is investing $400 million to construct a new hydrogen plant and steam methane reformer plant in Pasadena.

Katy Fits Medline's Culture

Hospital products manufacturer Medline Industries selected Katy for a new 500,000-sq.-ft. (46,450-sq. m.) distribution center. The project will create up to 50 new jobs and will be "a vital part of the future growth of Medline," says Bill Abington, president of global operations for Medline.

"The Houston market is a nationally recognized and growing medical community, in addition to being the fifth-largest metropolitan area in the country," says Abington. "The Katy location, in addition to providing us with an outstanding business park and location, gives Medline the best access to our Houston and southern Texas customer base so we can continue to efficiently provide our products, clinical programs and supply-chain services to health-care providers in the area."

Abington says Medline found everything it was looking for in the Houston area. "Having operated in Texas for decades, we find a very high-quality and excellent employment base to recruit from, and this fits our corporate culture very well," he says. "We received a very warm welcome from all agencies and departments within the state. This includes the State of Texas, the Greater Houston Partnership, the City of Katy, and the Moody Family whose business park we are locating in."

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Abington adds that the new distribution center is "strategically located near major highways and roads to enable us to more efficiently service the medical community in the Greater Houston area and all of South Texas."

Rapidly growing Niagara Bottling LLC also selected the Houston area for a sizable expansion last year. The Ontario, Calif.-based company chose Missouri City for a $65-million, 356,000-sq.-ft. (33,072-sq.-m.) bottled water manufacturing facility that will employ 98 workers in its first year of operation.

Derieth Sutton, economic development and government relations manager for Niagara, says the firm selected a 25-acre (10-hectare) site in the Lakeview Business Park "because of its great community fit and closer access to our customer base."

Niagara considered various sites in Texas and Louisiana prior to announcing the Houston suburb as the location of choice, says Sutton. "Niagara has found the work force in Missouri City to be skilled, enthusiastic and in line with the Niagara culture. We believe we've added great team members to the Niagara family."

Sutton adds that "the Greater Houston Partnership was extremely helpful in connecting Niagara to the various communities under consideration within the Houston MSA. In addition, they conducted an economic impact analysis which showed the impact of our project for both Missouri City and Fort Bend County."

Sugar Land Hits Sweet Spot

One of the biggest winners in metro Houston last year was the City of Sugar Land, which was the beneficiary of major facility investments from Texas Instruments, Fluor Corp. and United Health Group.

Texas Instruments is building a new campus of 160,000 sq. ft. (14,864 sq. m.) for its business and marketing division. The $35-million facility investment creates over 375 new jobs in R&D and business development for TI.

Fluor is investing $165 million to build a new 1-million-sq.-ft. (92,900-sq.-m.) office complex. And United Health Group is creating over 330 new jobs in 50,000 sq. ft. (4,645 sq. m.) of office space in Granite Towers on the east side of the city in the Sugar Creek office development.

"Last year was one of our best years ever," says Regina Morales, director of economic development for the City of Sugar Land, about 20 miles southwest of downtown Houston. "We had more than $220 million in capital investment and almost 1,000 new jobs created in the city, plus the 50-acre Fluor campus that retains over 2,000 positions."

Morales says that Corporate America likes Sugar Land, a community of 85,000 residents, for several reasons. "We have the second-lowest tax rate of any community in Texas," she says. "We are a master-planned city and we have zoning — that is unique in Houston. We balance the amount of commercial development relative to residential development. That balanced land use has allowed us to be very fiscally responsible."

Community pride is evident all over Sugar Land, she adds. "We just opened our brand new minor league ballpark in 2012. The Sugar Land Skeeters play there," Morales says. "Roger Clemens came and pitched at some of our games last year."

The $36-million baseball stadium seats up to 7,500 for ballgames and up to 10,000 for concerts. "REO Speedwagon and ZZ Top have played there already," Morales notes.

"We were the third-highest attendance of any triple-A-category ballpark in the country in 2012," she adds. "A lot of the pro sports players in Houston love to live out here, and it's easy to see why. There is something here for everyone."



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