Panelists Reflect Optimism in “The Future of Houston’s Economy” at BoyarMiller’s Breakfast Forum Discussion on Energy, Capital, and Real Estate
Houston (Oct. 26, 2022) – A return engagement of BoyarMiller’s popular Breakfast Forum brought together business leaders in energy, real estate, and finance to share their perspectives on “The Future of Houston: What’s Shaping Our Economy” for the more than 100 guests in attendance.
“Texas is growing, the energy industry is bifurcated and strong, capital is available, and the real estate market has much opportunity,” said Chris Hanslik, chairman of BoyarMiller. “Those are the themes presented by Houston experts in capital markets, energy, and real estate. The goal of our Forum is to review trends that impact local businesses so that we can consider these insights in future business planning. We appreciated our panelists’ straightforward and insightful views of Houston’s future.”
The BoyarMiller Forum panelists were: David Hightower, EVP Development at Midway Companies; Sanjiv Shah, Global Co-Head of Energy and Power Investment Banking at Piper Sandler; and Julie Sudduth, Regional President, Greater Houston at PNC Bank.
The new energy economy
The market has been bifurcated the last couple of years between conventional energy and new energy. During the last two years, there was a surge of interest in renewables and clean energy while interest in oil and gas related companies collapsed. But Sanjiv Shah of Piper Sandler told the audience that the pendulum is now swinging towards redefining energy transition and conventional energy.
“We are seeing more conventional energy becoming attractive to the investor base,” said Shah. “Financing for those deals may still be challenging, but I believe it is a once-in-a-generation buying opportunity for private equity because you can see the surge in commodity prices and valuations are still low.”
Shah also commented on the acceleration of technology adoption among the oil and gas industry that has been under way for some time, and especially during the pandemic, to allow more production for less money. “That sets up an economy with a powerhouse in energy,” said Shah.
Renewable and clean energy investments have been driven by conventional energy investors, such as Chevron buying renewable natural gas projects, said Shah. “So, I think the conventional energy industry has broadened its aperture over energy transition to remain competitive. And Houston is the epicenter of that activity.”
Strong real estate market
Real estate activity is strong and Texas is growing, said Midway Companies’ David Hightower.
“Even during the pandemic, Texas received a lot of influx from both coasts. While Dallas and Austin may get more visible corporate relocations to their cities, Houston is getting its’ share of quiet moves,” he said. “There will be some great opportunities ahead and we need to start aligning capital for them.”
Hightower admits that the office sector is challenging and may take another three years for companies to address the shift to work from home, desk hoteling, or hybrid work programs. Tenants are evaluating how much space they need for a workforce that may only be onsite a few days a week.
“We want collaborative space but companies now want private spaces, offices with doors, for people to focus,” he said. “That’s making a dynamic change in design. We want to provide a workspace that employees want to come to and be productive. Mixed use environments are clearly the focus of future office, where employees have retail and hospitality options within an easy lunch time walk.”
Hightower also added that the retail sector is strong right now because Houston is seeing a lot of new retailers coming into the market that have not had a presence before. The industrial sector also continues to remain exceptionally strong.
Access to capital
Julie Sudduth of PNC Bank said there are plenty of banks and broad access to capital depending on the specific industry sectors.
“There is more demand from financial institutions for balance sheet deals,” she said. “I was pleasantly surprised to see across the board five percent loan growth last month at PNC. So, we are very active and growing.”
She added that the higher interest rate environment came at an accelerated pace and it would be nice to get a pause in December. “But for the foreseeable future, at least 12 to 18 months, I don’t think we will see rate reductions.”
Hightower agreed with the availability of capital for development. “The investment community is looking hard at Houston. Our city has finally achieved some recognition and respect. I used to call Houston the Rodney Dangerfield of cities, but we are now recognized as a global gateway city.”
Perhaps Shah summed up the optimism expressed by the panelists when he stated that it is a really exciting time to be in Houston.
For more insights from the BoyarMiller Forum on “The Future of Houston: What’s Shaping Our Economy” visit the website at boyarmiller.com and download the eGuide summary.
BoyarMiller is a mid-size Houston-based law firm that advances client business goals by bringing new possibilities into focus with confidence and clarity to achieve extraordinary outcomes. Since 1990, we have been providing practical and smart business solutions. Our firm is comprised of three practice groups—corporate mergers and acquisitions, real estate, and litigation—and we serve multinational companies, middle-market businesses, and entrepreneurs in need of collaborative and strategic representation. See boyarmiller.com for more information.