2015 HOUSTON REGION ECONOMIC HIGHLIGHTS

2015 HOUSTON

ECONOMIC HIGHLIGHTS December 7, 2015

Publication underwritten by:

Contents

2 | Houston in Perspective

32 | Retail Sales

4 | Payroll Employment

34 | New Car, Truck and SUV Sales

6 | Unemployment Rate

36 | Inflation

8 | Goods-Producing and Service-Providing Jobs

38 | Cost of Living Comparison

10 | Employment by Industry

40 | Housing Cost Comparison

12 | Employment Change by Industry

42 | Houston Region Population

14 | Employment Growth in Major Metros

44 | Foreign-Born Population

16 | Purchasing Managers Index

46 | Most Populous Metropolitan Areas

18 | Oil and Natural Gas Prices

47 | Most Populous Cities

20 | Drilling Activity and Oil Prices

48 | Most Populous Counties

22 | Foreign Trade

49 | The Work Ethic in Houston

24 | Air Passengers

50 | Gross Area Product Forecast

26 | Residential Real Estate

52 | Population and Employment Forecast

28 | Office Market

54 | Top Metro Areas by Gross Domestic Product

30 | Hotels

Houston Economic Highlights, a publication of the Greater Houston Partnership, is designed to impart a quick understanding of the changes in Houston’s economy over the past decade.

Each page is devoted to a single indicator or a few related indicators. In most cases, a key point and a few bullets that amplify what the data say appear on one page, and a table with historical data follows on the next.

December 2015

Partnership Research

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Houston in Perspective People The nine-county Houston MSA had a population of 6,490,180 residents as of July 1, 2014, according to estimates by the U.S. Census Bureau. If metro Houston were a state, it would have the 18th largest population in the U.S., behind Tennessee (6,549,352) and ahead of Missouri (6,063,589) and Maryland (5,976,407).

Harris County had a population of 4,441,370 residents as of July 1, 2014, according to estimates by the U.S. Census Bureau.

If Harris County were a state, it would have the 26th largest population in the U.S., behind Louisiana (4,649,676) and ahead of Kentucky (4,413,457) and Oklahoma (3,970,239).

The city of Houston had a population of 2,239,558 residents as of July 1, 2014, according to estimates by the U.S. Census Bureau. If the city were a state, it would rank 36th in population in the U.S., behind Nevada (2,839,099) and ahead of New Mexico (2,085,572).

Among the nation’s metropolitan areas, the Houston MSA in 2014 ranked fourth in number of Hispanics (2,356,245), seventh in number of blacks (1,063,017) and seventh in number of Asians (473,582), according to the Census Bureau’s American Community Survey.

Economy The U.S. Bureau of Economic Analysis estimates the Houston MSA GDP at $525.4 billion in 2014. If Houston were a state, its GDP would rank 9th, after New Jersey ($549.1 billion) and ahead of North Carolina ($483.1 billion).

If the MSA were an independent nation, it would rank as the world’s 26th largest economy, behind Belgium ($527.8 billion), but ahead of Norway ($511.6 billion).

In 2014, the Houston Association of Realtors® Multiple Listing Service recorded closings on 91,305 properties (includes single-family homes, townhomes, condos, high rises, etc.)–an average of one every 5.8 minutes.

In 2014, Houston MSA automobile dealers sold 373,998 new cars, trucks and SUVs–an average of one every 1.4 minutes.

In 2014, the Houston Airport System handled 53,194,544 passengers–an average of 6,073 passengers per hour around the clock.

In 2014, the City of Houston issued building permits for construction valued at $8.67 billion–an average of $275 per second.

In 2014, contracts for the construction of new buildings in the Houston MSA totaled $30.5 billion–an average of $58,029 per minute.

4,441,370

2,239,558

residents in Harris County

residents in the city of Houston

91,305 property closings

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Partnership Research

373,998 new cars, trucks and SUVs sold

December 2015

City of Houston ranks:

4th in number of Hispanics 7th in number of Asians 7th in number of blacks

53,194,544 airport passengers

$8.67 billion in construction building permits

Houston in Perspective Houston has one of the youngest, fastest- growing, and most diverse populations in the nation.

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The nine-county Houston metropolitan statistical area (MSA) covers 9,432 square miles–an area smaller than Maryland but larger than New Jersey.

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Harris County covers 1,778 square miles–an area nearly half as large as Rhode Island.

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At 655 square miles, the city limits of Houston could contain the cities of New York, Washington, D.C., Boston, San Francisco, Seattle, Minneapolis and Miami.

Geography for the Data in this Publication •

9-COUNTY HOUSTON MSA

Montgomery Liberty

Austin Waller

Some governmental agencies (e.g., U.S. Bureau of Labor Statistics and Texas Workforce Commission) continue to use the 2009 MSA delineation. In other cases, agencies have adopted the new 2013 MSA delineation for reporting purposes.

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This publication contains data based on both of these two delineations for the Houston MSA, depending on the source. Where possible, every effort was made to revise data to reflect the nine-county Houston MSA.

Chambers

Fort Bend

Metropolitan statistical areas (MSA) are geographic delineations defined by the Office of Management and Budget (OMB) for use by federal statistical agencies in collecting, tabulating and publishing federal statistics. These geographic delineations change over time, with the most recent change occurring in March 2013.

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Harris

Galveston

Brazoria

9,432

square miles

6,490,180

residents

$525.4 billion

GDP

2009 MSA Delineation for the Houston region: Houston-Sugar Land-Baytown Metropolitan Statistical Area (MSA) contains 10 counties: Austin, Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery, San Jacinto, and Waller.

2013 MSA Delineation for the Houston region: Houston-The Woodlands-Sugar Land Metropolitan Statistical Area (MSA) contains nine counties: Austin, Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery, and Waller.

December 2015

Partnership Research

3

Payroll Employment Houston’s total nonfarm payroll employment reached 3.0 million in Oc tober ’15, the highest point in the region’s histor y.

NONFARM PAYROLL EMPLOYMENT Houston MSA 12-month change

Total payroll employment

150

3,000

120

2,900

90

2,800

60

2,700

30

2,600

0

2,500

-30

2,400

12-Month Change (000)

Nonfarm Payroll Employment (000)

3,100

-60

2,300 2,200

-90

2,100

-120 ’05

’06

’07

’08

’09

’10

’11

’12

’13

’14

’15

’16

Source: Texas Workforce Commission

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Rapid job growth in upstream energy during ’06 and ’07 led a broad-based expansion that extended to nearly all industries by August ’08, after which job growth fell sharply in the face of a deepening national recession. The 12-month net change in employment turned negative in February ’09 and returned to positive in July ’10.

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From ’10 to ’14, Houston added nearly half a million jobs. This period of phenomenal growth provided the momentum needed to sustain the region through the early stages of the energy downturn that began at the end of ’14.

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As oil prices and rig counts continued to fall through ’15, Houston experienced a net loss of 12,800 jobs from December ’14 to September ’15. The region typically adds an average of 13,200 jobs over this period. It was not until October ’15 that Houston reported year-to-date job growth with 8,000 net new jobs and reached 3.0 million total employment, the highest point in the region’s history.

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A strong U.S. economy, momentum from the previous economic boom, strong population growth, and the $50 billion in petrochemical plant expansions have helped offset losses in upstream energy and manufacturing.

Partnership Research

December 2015

Payroll Employment Houston-The Woodlands-Sugar Land Metropolitan Statistical Area NONFARM PAYROLL EMPLOYMENT, YEAR-END Nonfarm Payroll Employment

2005

2,438,200

2006

91,100

2007

2,635,900

90,700

2,657,500

-110,600

21,600

2,596,600

49,700

2012

82,900

2013

2,887,900

107,000

2010

2011

2,679,500

2,545,200 2008

2009

2,546,900

Change from Prior Year

2,798,000

118,500

2014

89,900

2,992,600

104,700

2015 - as of October

3,000,600

33,100

Source: Texas Workforce Commission

December 2015

Partnership Research

5

Unemployment Rate Houston’s unemployment rate has remained below five percent for 14 consecutive months.

UNEMPLOYMENT RATE - HOUSTON, TEXAS AND U.S. Percent Civilian Labor Force U.S.

Texas

Houston MSA

11 10 9 8 7 6 5 4 3 ’05

’06

’07

’08

’09

’10

’11

’12

’13

’14

’15

’16

Rates are not seasonally adjusted.

Source: Texas Workforce Commission

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Houston's October ’15 unemployment rate was 4.8 percent, up from 4.4 percent in October ’14. Texas' unemployment rate was 4.5 percent in October ’15, unchanged from 4.5 percent in October ’14. The U.S. rate was 4.8 percent in October ’15, down from 5.5 percent in October the year prior. October ’15 marked the first month Houston’s rate was equal to the U.S. rate in nine years.

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The unemployment rate can be misleading in gauging job market conditions. “Discouraged workers,” those who are unemployed but not actively job seeking, are not counted in the labor force and therefore not in captured in the unemployment rate. Many workers who have recently lost their jobs may choose to stay out of the workforce since they feel their prospects are limited. Those who are fortunate enough to have received generous severance packages have even more incentive to sit on the sidelines and wait for conditions to improve before seeking employment again.

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Although Houston’s unemployment rate has remained relatively low through the energy downturn thus far, labor force participation has declined as more workers become discouraged. The civilian labor force has decreased 1.1 percent from 3.28 million in December ’14 to 3.24 million in October ’15. Over the past 10 years, the region experienced an average increase of 2.6 percent during these months.

Partnership Research

December 2015

Unemployment Rate Unemployment Rate: Houston MSA , Texas and the United States PERCENT OF CIVILIAN LABOR FORCE UNEMPLOYED Annual Averages Houston-The Woodlands-Sugar Land MSA

5.6% 2005

2008

20 1 1

5.4%

U.S.

5.0% 2006

4.9%

4.3% 2007

4.4%

5.1%

4.6%

4.6%

4.8%

7.6%

8.5%

4.9%

2009

7.6%

20 1 0

8.2%

5.8%

9.3%

9.6%

8.3%

6.8%

6.2%

8.1%

20 1 2

8.9% 5.0% 20 1 4

Texas

5.1% 6.2%

6.8%

20 1 3

7.4%

8.1% 20 1 5 12 Months ending in October

6.3%

4.4% 4.4% 5.4%

Source: Texas Workforce Commission

December 2015

Partnership Research

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Goods-Producing and Service-Providing Jobs Houston’s ser vice -providing sec tor gained 48,600 jobs from Oc tober ’14 to Oc tober ’15.

The goods-producing sec tor lost 15,500 jobs during the same period.

GOODS-PRODUCING AND SERVICE-PROVIDING EMPLOYMENT Houston MSA Service-providing

620

Goods-producing

2,500

2,300 540

2,200 2,100

500

2,000 460

420

Service-Providing Jobs (000s)

Goods-Producing Jobs (000s)

2,400 580

1,900

’05

’06

’07

’08

’09

’10

’11

’12

’13

’14

’15

’16

1,800

Source: Texas Workforce Commission

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The goods-producing industries (mining and logging, construction, and manufacturing) peaked at 583,000 jobs in December ’14 and fell to 565,900 jobs in October ’15.

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Mining and logging, primarily oil and gas extraction and support activities, lost 5,700 jobs, a 4.9 percent decrease.

Losses in this sector ripple through the economy and triggers declines in other sectors, particularly durable goods manufacturing, wholesale trade and professional and business services.

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Construction experienced a gain of 5,800 jobs, a 2.8 percent increase, as the petrochemical plant expansions continue in the eastside of Houston. Unfortunately, many of these jobs are temporary and offer lower wages than those in energy and manufacturing.

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Manufacturing shed 17,200 jobs, a 6.6 percent decrease. Within the manufacturing sector, fabricated metal products lost 7,100 jobs, a 10.8 percent decrease. Manufacturing of machinery used in mining and construction declined by 1,700 jobs (-4.1 percent), computer and electronic product manufacturing lost 800 jobs (-4.5 percent), and non-durable goods manufacturing fell by 400 jobs (-0.5 percent).

The service-providing industries added 25,100 jobs, a 1.0 percent increase, between December ’14 and October ’15.

Losses in industries that are heavily dependent on the energy sector were offset by gains in lagging industries that rely mainly on population growth.

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Trade, transportation, and utilities lost 14,400 jobs (-2.3 percent), financial activities 4,400 jobs (-2.9 percent), and professional, scientific and technical services 3,400 jobs (-1.5 percent).

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Health care and social assistance gained 13,000 jobs (4.3 percent), accommodation and food services 14,500 (5.6 percent), and government 8,000 (2.1 percent).

Partnership Research

December 2015

Goods-Producing and Service-Providing Jobs Houston Metropolitan Statistical Area (MSA) ANNUAL AVERAGES Goods-producing

2005

453,558

2006

1,919,208

2007

518,042

2,055,825

2,071,225

533,408

2,096,217

468,133

2,086,367

2012

2,134,200

2013

545,967

1,986,592

2010

2011

487,192

485,258 2008

2009

487,825

Service-providing

521,117

2,204,500

2014

2,281,558

568,750

2,356,233

2015 - October 12-month average

569,267

2,409,458 Source: Texas Workforce Commission

December 2015

Partnership Research

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Employment by Industry No single industr y or sec tor dominates Houston employment.

INDUSTRY SHARE OF HOUSTON MSA EMPLOYMENT

20% Trade, Transportation, and Utilities 16% Professional and Business Services 13% Government 12% Educational and Health Services 10% Leisure and Hospitality 8% Manufacturing 7% Construction 4% Mining and Logging (Energy) 4% Other Services 3% Finance and Insurance 2% Real Estate and Rental and Leasing 1% Information

Source: Texas Workforce Commission, October 2015

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Nonfarm payroll employment in the Houston metro area reached a record 3,000,600 in October ’15, a 1.1 percent increase from the 2,967,500 in October ’14.

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Service industries account for 2.4 million Houston-area jobs or eight out of ten workers in the region. The largest service industries are trade, transportation, and utilities (20.2 percent of jobs), professional and business services (15.8 percent), and educational and health services (12.5 percent).

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The goods-producing sector employs more than half a million Houstonians and accounts for nearly one in five of the region’s jobs. Manufacturing is the largest goods-producing industry with 8.0 percent of total jobs, followed by construction (7.2 percent), and energy (3.7 percent).

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Two-thirds of Houston’s manufacturing jobs involve the production of durable goods, items with a useful life of three years of more. In Houston, this includes items such as oil field equipment, structural steel, and computers.

Partnership Research

December 2015

Employment by Industry

HOUSTON MSA EMPLOYMENT BY INDUSTRY Industry

Jobs

Percent of total

Total Nonfarm

3,000,600

100.0

Total Private

2,608,900

86.9

Goods Producing

565,900

18.9

Service Providing

2,434,700

81.1

109,800

3.7

Oil and Gas Extraction

54,100

1.8

Support Activities for Mining

53,700

1.8

Construction

214,600

7.2

Manufacturing

241,500

8.0

160,700

5.4

80,800

2.7

605,700

20.2

Wholesale Trade

167,900

5.6

Retail Trade

306,600

10.2

Transportation, Warehousing, and Utilities

131,200

4.4

34,000

1.1

144,900

4.8

Finance and Insurance

92,700

3.1

Real Estate and Rental and Leasing

52,200

1.7

472,800

15.9

219,700

7.3

33,100

1.1

220,000

7.3

374,300

12.5

56,300

1.9

318,000

10.6

306,300

10.2

Arts, Entertainment, and Recreation

30,600

1.0

Accommodation and Food Services

275,700

9.2

Other Services

105,000

3.5

Government

391,700

13.1

Mining and Logging

Durable Goods Non-Durable Goods Trade, Transportation, and Utilities

Information Financial Activities

Professional and Business Services Professional, Scientific, and Technical Services Management of Companies and Enterprises Admin and Support and Waste Mgmt Educational and Health Services Educational Services Health Care and Social Assistance Leisure and Hospitality

Source: Texas Workforce Commission, October 2015, not seasonally adjusted

December 2015

Partnership Research

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Employment Change by Industry Professional and business ser vices were responsible for a f if th of Houston’s job grow th in the past ten years.

SHARE OF METRO HOUSTON JOB GROWTH October '05 - October '15

19.0

Professional/Business Services

18.3

Trade/Transportation/Utilities

18.1

Educational & Health Services 16.3

Leisure and Hospitality 7.8

Government 6.9

Mining and Logging

6.2

Construction 4.8

Manufacturing 2.4

Other Services Financial Activities -0.3

0.7 Information

Source: Texas Workforce Commission

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Four sectors were responsible for over seventy percent of Houston’s employment growth from October ’05 to October ’15.

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The professional and business services sector added 114,200 jobs and was responsible for 19.0 percent of the total growth in jobs over this period. The professional and business services sector grows as demand increases for technical expertise, such as engineering and computer systems design, and businesses require support services, like office administration, facilities support, and employment services.

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Trade, transportation and utilities gained 109,700 jobs and contributed to 18.3 percent of the gain in employment during this period. The sector benefits from the expanding local consumer market through growth in jobs, wages and population. In the past ten years, Houston added 600,600 jobs, increased average wages (net of inflation) by 12.6 percent, and grew by 1.3 million residents. Transportation also benefits from the $250 billion in annual trade passing through the Houston-Galveston Customs District.

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Educational and health services grew by 108,500 jobs and accounted for 18.1 percent of Houston’s total employment growth in the past ten years. The sector depends on the region’s population and employment growth, and health services is further spurred by the aging of the population.

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Leisure and hospitality added 97,700 jobs from October ’05 to October ’15 and contributed to 16.3 percent of total job growth. Houston is home to more than 77,000 hotel rooms and a net of 300 new bars and restaurants open in Houston each year.

Partnership Research

December 2015

Employment Change by Industry Job Grow th: Houston Metropolitan Statistical Area (MSA) HOUSTON MSA EMPLOYMENT BY INDUSTRY Industry

Oct ’05

Oct ’15

Change

% Change

% Share of Job Growth

2,400,000

3,000,600

600,600

25.0

------

68,400

109,800

41,400

60.5

6.9

Construction

177,600

214,600

37,000

20.8

6.2

Manufacturing

212,800

241,500

28,700

13.5

4.8

132,200

160,700

28,500

21.6

4.7

80,600

80,800

200

0.2

0.0

496,000

605,700

109,700

22.1

18.3

Wholesale Trade

130,200

167,900

37,700

29.0

6.3

Retail Trade

248,700

306,600

57,900

23.3

9.6

Transportation, Warehousing and Utilities

117,100

131,200

14,100

12.0

2.3

35,800

34,000

-1,800

-5.0

-0.3

140,900

144,900

4,000

2.8

0.7

Finance and Insurance

92,600

92,700

100

0.1

0.0

Real Estate and Rental and Leasing

48,300

52,200

3,900

8.1

0.6

358,600

472,800

114,200

31.8

19.0

161,900

219,700

57,800

35.7

9.6

16,600

33,100

16,500

99.4

2.7

180,100

220,000

39,900

22.2

6.6

265,800

374,300

108,500

40.8

18.1

42,500

56,300

13,800

32.5

2.3

223,300

318,000

94,700

42.4

15.8

208,600

306,300

97,700

46.8

16.3

Arts, Entertainment, and Recreation

25,800

30,600

4,800

18.6

0.8

Accommodation and Food Services

182,800

275,700

92,900

50.8

15.5

90,600

105,000

14,400

15.9

2.4

344,900

391,700

46,800

13.6

7.8

Total Nonfarm Mining and Logging

Durable Goods Non-Durable Goods Trade, Transportation, and Utilities

Information Financial Activities

Professional and Business Services Professional, Scientific, and Technical Services Management of Companies and Enterprises Admin and Support and Waste Mgmt Educational and Health Services Educational Services Health Care and Social Assistance Leisure and Hospitality

Other Services Government

Source: Texas Workforce Commission

December 2015

Partnership Research

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Employment Growth in Major Metros Houston gained 33,100 net new jobs from Oc tober ’14 to Oc tober ’15, a 1.1 percent increase.

EMPLOYMENT GROWTH RATE – PERCENT CHANGE (OCTOBER ’14-OCTOBER ’15) 20 Most Populous Metro Areas 3.5

Atlanta, GA

3.4

San Francisco, CA

3.3

Riverside, CA 3.1

Seattle, WA Dallas, TX

3.0

Tampa, FL

3.0 2.9

San Diego, CA 2.6

Phoenix, AZ

2.5

Baltimore, MD 2.2

Los Angeles, CA Miami, FL

2.1

Washington, DC

2.1 2.0

Detroit, MI

1.9

Boston, MA

1.8

Minneapolis, MN

1.7

New York, NY Houston, TX

1.1

Chicago, IL

1.1

Philadelphia, PA

1.1 1.0

St. Louis, MO

Source: U.S. Bureau of Labor Statistics, not seasonally adjusted

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All 20 of the most populous U.S. metro areas posted net job gains from October ’14 to October ’15. During this period, the New York metro led the nation in total job growth with 157,100 jobs, and the Atlanta metro was first in percent change with a 3.5 percent increase.

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After leading the nation in employment gains coming out of the Great Recession, Houston experienced a slower pace of job growth from October ’14 to October ’15. Amid an energy downturn, the region added 33,100 jobs net new jobs, a 1.1 percent increase during this period.

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As Houston diversifies away from energy, the region becomes more dependent on the U.S. economy to support its growth.

Partnership Research

December 2015

Employment Growth in Major Metros Net Change in Nonfarm Payroll Employment EMPLOYMENT CHANGE (OCTOBER ’14-OCTOBER ’15) 20 Most Populous U.S. Metropolitan Statistical Areas

Change in Jobs (000)

Percent Change

New York-Newark-Jersey City, NY-NJ-PA

Los Angeles-Long BeachAnaheim, CA

Dallas-Fort Worth-Arlington, TX

157.1

126.3

98.4

1.7%

2.2%

3.0%

Atlanta-Sandy Springs-Roswell, GA

San Francisco-OaklandHayward, CA

Washington-ArlingtonAlexandria, DC-VA-MD-WV

88.1

74.3

67.1

3.5%

3.4%

2.1%

Seattle-Tacoma-Bellevue, WA

Miami-Fort LauderdaleWest Palm Beach, FL

Chicago-Naperville-Elgin, IL-IN-WI

57.1

52.7

51.7

3.1%

2.1%

1.1%

Boston-CambridgeNewton, MA-NH

Phoenix-Mesa-Scottsdale, AZ

Riverside-San BernardinoOntario, CA

50.8

48.3

43.2

1.9%

2.6%

3.3%

San Diego-Carlsbad, CA

Detroit-Warren-Dearborn, MI

Tampa-St. Petersburg-Clearwater, FL

40.2

38.7

37.1

2.9%

2.0%

3.0%

Minneapolis-St. PaulBloomington, MN-WI

Baltimore-ColumbiaTowson, MD

Houston-The WoodlandsSugar Land, TX

34.2

33.5

33.1

1.8%

Philadelphia-CamdenWilmington, PA-NJ-DE-MD

St. Louis, MO-IL

31.6

13.7

1.1%

2.5%

1.1%

1.0%

Source: U.S. Bureau of Labor Statistics; not seasonally adjusted.

December 2015

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Purchasing Managers Index Houston’s PMI continues to signal a contrac ting economy.

PURCHASING MANAGERS INDEX Above 50 Signals Short-Term Growth, Below 50 Signals Short-Term Contraction

70

Expansion

60

50

Contraction

40

30 ’05

’06

’07

’08

’09

’10

’11

’12

’13

’14

’15

’16

Source: Institute for Supply Management - Houston

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The Houston Purchasing Managers Index (PMI), a short-term leading indicator of regional production, fell below 50 in January ’15 and reached a low of 42.7 in April. Since then, the PMI has inched upwards but has remained below 50 for 10 consecutive months. (Readings below 50 signal likely contraction within the next three to four months.)

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The index stood at 48.0 in October ’15 and has averaged 47.0 through the first ten months of the year, compared to 57.2 over the same period in ’14.

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During the Great Recession, Houston’s PMI registered below 50 from November ’08 to August ’09, bottoming out at 39.0 in March ’09. A V-shaped recovery is less likely in this downturn. Instead, the region may experience a shallower but more protracted contraction period.

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The Houston PMI is based on a survey of some 80 purchasing executives in key Houston industries—oil and gas exploration and production; manufacturing; engineering and construction; chemicals; distribution; health care; and business and financial services. It measures over-the-month changes in sales (new orders), production, employment, purchases of new equipment, prices paid for major purchases, lead times from sellers, purchased materials inventory and finished goods inventory.

Partnership Research

December 2015

Purchasing Managers Index

ANNUAL AVERAGES Houston

2005

61.5

2006

55.5

2008

54.3

United States

62.0

2007

53.9

2009

45.6

44.9

60.1

55.3

2014

58.5

51.1

2010

46.3

2012

2011

59.2

55.1

57.5

2013

51.7

58.4

53.9

YTD Average - October ’15

56.5

55.8

47.0

52.0

Note: The PMI has a possible range from zero to 100. Readings above the neutral point of 50 indicate likely growth in production over the next three to four months; readings below 50 suggest contraction.

The Houston and U.S. Purchasing Managers Indexes are conceptually similar but not identical.

Source: Institute for Supply Management-Houston

December 2015

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Oil and Natural Gas Prices Surging oil produc tion and weak global demand have pushed oil prices to $40 a barrel in November ’15.

SPOT CRUDE AND NATURAL GAS PRICES Monthly Averages Natural Gas

140

14

120

12

100

10

80

8

60

6

40

4

20

2 ’05

’06

’07

’08

’09

’10

’11

’12

’13

’14

’15

Natural Gas, $ /MMBtu

WTI, $ barrel

WTI

’16

Source: U.S. Energy Information Administration

18

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The spot market closing price for a barrel of West Texas Intermediate (WTI), the benchmark U.S. light crude, fell from $108 in June ’14 to $40 in November ’15, a 62 percent decline. The drop in prices resulted from expanding U.S. domestic production coupled with weak global economic growth.

•

A brief moment of optimism was felt in May and June of this year when oil prices hovered around $60, but news of the Iran nuclear deal and the prospect of Iranian oil hitting the market resulted in additional downward pressure on prices.

•

The spot price for natural gas followed that of oil, falling from its recent peak of $6 per million British thermal units (MMBtu) in February ’14 to $2 in November ’15.

•

In its November Short-Term Energy Outlook, the U.S. Energy Information Administration forecasts WTI spot prices to average $49.88 per barrel in ’15 and $51.31 in ’16. Henry Hub natural gas spot prices are projected to average $2.77 per MMBtu in ’15 and $3.09 in ’16.

•

Gulf Coast petrochemical manufacturers, unlike many of their counterparts elsewhere, rely heavily on natural gas as a feedstock. As a rule of thumb, Gulf Coast plants can compete on the world market so long as the ratio of oil price to gas price exceeds 6. The ratio is expected to stay above that level over the next several decades. As a result, U.S. and foreign companies have announced a major expansion of chemical plants. The American Chemistry Council has identified 246 chemical industry investment projects valued at $153 billion that have been publicly announced; approximately $50 billion will be spent on projects in the Houston area.

Partnership Research

December 2015

Oil and Natural Gas Prices Spot Market Prices for West Texas Intermediate Crude Oil and Henr y Hub Natural Gas 52-WEEK AVERAGE OF CLOSING PRICES Spot Market Crude Oil Price ($/bbl)

2005

$56.64

2006

$8.69

2008

$99.67

$8.86

$6.73

$61.95

$4.00

$94.05

$72.34

$6.97

2010

$3.94

2012

2014

$93.17

$66.05

2007

2009

2011

$94.88

Spot Market Natural Gas Price ($/MMBtu)

$79.48

$4.37

2013

$2.75

$97.98

$3.73

2015 - October 52-week average

$4.37

$53.14

$2.92

Source: U.S. Energy Information Administration

December 2015

Partnership Research

19

Drilling Activity and Oil Prices Paralleling the drop in oil prices, the Nor th American rig count has fallen 60 percent from its previous peak.

RIG COUNT AND OIL PRICE Monthly Average Active Domestic Rigs

Monthly Oil Price

2,500

$160 $140 $120 $100

1,500

WTI $/BBl

Active Domestic Rigs

2,000

$80 1,000

$60 $40

500 ’05

’06

’07

’08

’09

’10

’11

’12

’13

’14

’15

’16

Source: Baker Hughes, Inc.; U.S. Energy Information Administration

20

•

North American oil producers have become a victim of their own success. The shale revolution stimulated tremendous oil and gas production, increasing supply on the world market. However, global energy demand has been weak and unable to absorb the new production.

•

Oil prices have fallen dramatically—from $108/bbl at the June ’14 peak to $40/bbl in November ’15. Drilling activity responded swiftly, and the rig count dropped from a high of 1,931 in September ’14 to 757 as of mid-November ’15, a 60.8 percent decline.

•

Strong growth in the rig count is unlikely in ’16. A Barclays survey of 175 oil companies found that their capital spending will be cut by another 10 to 15 percent, or $12.6 billion to $18.9 billion, in North America in ’16. These cuts come on top of the $68.3 billion reduction this year. Capital spending by these same companies totaled $194.1 billion in ’14, $125.8 billion in ’15 and is projected to be as low as $106.9 billion in ’16.

Partnership Research

December 2015

Drilling Activity and Oil Prices Ac tive Domestic Rotar y Rig Count and Price of West Texas Intermediate Crude ANNUAL AVERAGE Active Domestic Rotary Rigs

2005

1,381

2006

$56.64

2008

1,877

$99.67

$66.05

1,767

1,086

$94.88

1,919

$72.34

2010

$61.95

1,544

2012

2014

1,838

1,648

2007

2009

2011

1,874

Spot Market Crude Oil Price ($/bbl)

$79.48

2013

$94.05

1,762

$97.98

2015 - October 52-week average*

$93.17

1,118

$53.14

*The rig count did not fall below 1,000 until April ’15 and has dropped to 767 as of mid-November.

Sources: Baker Hughes Incorporated, Energy Information Agency

December 2015

Partnership Research

21

Foreign Trade The value of foreign trade passing through Houston has nearly doubled over the decade.

HOUSTON-GALVESTON CUSTOMS DISTRICT TRADE Value, Billions Imports

Exports

$268.0

$274.3

119.4

127.1

$251.9

$240.9 $211.5 $185.3

89.9

$162.2 $136.5

58.1

47.0 89.4

’05

104.1

’06

72.3

151.0

$167.7

$212.4 128.9

130.6

94.7

115.9 148.6

75.2

147.1 122.9

116.8

113.0

$252.5

121.9 96.5

92.4

’07

’08

’09

’10

’11

’12

’13

’14

’15*

* 12-months ending September '15 The Houston-Galveston Customs District includes the ports of Houston, Galveston, Freeport, Texas City, Corpus Christi, Port Lavaca, Bush Intercontinental Airport and Sugar Land Regional Airport.

Source: Wiser Trade

22

•

The Houston-Galveston Customs District handled $252.5 billion trade in ’14, ranking it as the fifth busiest district behind Los Angeles ($417.8 billion), New York ($386.8 billion), Laredo ($279.8 billion), and Detroit ($261.8 billion).

•

Forty-one countries logged more than $1 billion in trade through the customs district in ’14. The 10 largest, which accounted for 51.3 percent of all trade, included Mexico ($28.7 billion), China, ($16.6 billion), Brazil ($15.7 billion), Venezuela ($12.9 billion), Saudi Arabia ($10.9 billion), Colombia ($10.8 billion), Germany ($9.9 billion), the Netherlands ($8.9 billion), South Korea ($8.4 billion), and Russia ($6.8 billion).

•

Imports totaled $121.9 billion in ‘14. The top five imports were oil and oil products ($57.5 billion), industrial machinery ($11.5 billion), articles of iron and steel ($9.5 billion), organic chemicals ($6.0 billion), and electrical machinery ($5.9 billion).

•

Exports totaled $130.6 billion in ’14. Leading exports included refined oil products ($52.9 billion), industrial machinery ($19.8 billion), organic chemicals ($15.9 billion), plastics ($7.0 billion), and electrical machinery ($5.2 billion).

•

The strong U.S. dollar and drop in oil and gas prices have led to a decline in Houston’s total trade through the first three quarters of ’15. Exports are down 14.7 percent from $99.8 billion in September ’14 YTD to $85.2 billion in September ’15 YTD. Imports dropped 27.1 percent from $93.9 billion in September ’14 YTD to $68.5 billion in September ’15 YTD.

•

Despite the decline in total trade value, total vessel weight increased 2.4 percent, from 184.7 billion kilograms to 189.1 billion kilograms.

Partnership Research

December 2015

Foreign Trade Houston– Galveston Customs Distric t ANNUAL TOTALS IN FOREIGN TRADE Dollar Value, Billions Imports

Exports

Totals

2005

89.444 47.006 136.451

2006

104.086 58.091 162.178

2007

112.979 72.329 185.309

2008

150.997 89.905 240.903

2009

92.425 75.233 167.659

2010

116.77 94.684 211.456

2011

148.629 119.399 268.028

2012

147.146 127.117 274.263

2013

122.911 128.944 251.855

2014

121.868 130.589 252.457

2015

12-months ending September

96.473 115.925 212.398 Source: Adapted from WISERTrade: International Trade Database, WISER LLC, Copyright 2004.

No Claim to Original United States Government Works. All Rights Reserved.

December 2015

Partnership Research

23

Air Passengers Total air passenger volume has grown by eight million passengers since ’05.

DOMESTIC AND INTERNATIONAL PASSENGERS Houston Airport System (000,000)

Domestic

48.0

51.1

51.8

7.4

7.7

43.7

44.1

6.9 41.1

’05

’06

’07

50.5 8.0

42.5

’08

International 50.2

50.9

8.6

8.8

9.0

41.0

41.4

41.6

41.9

’10

’11

’12

’13

49.5

50.0

7.8

8.5

40.7

’09

48.5

53.2

54.3

9.8

10.3

43.4

44.0

’14

’15*

* 12-months ending Sep '15 Source: Department of Aviation, Houston Airport System

24

•

In the 12 months ending September 15, the Houston Airport System (HAS) handled 54.3 million passengers, 44.0 million domestic and 10.3 million international. Passenger traffic increased 13.1 percent since ’05.

•

International traffic has been the fastest growing segment of HAS passenger activity, rising at a 4.4 percent compound annual growth rate during the past 10 years compared to a 1.2 percent for domestic passenger traffic. Nearly one in every five HAS passengers is traveling internationally.

•

Thirty-two airlines provide scheduled passenger service from Houston to 124 domestic and 74 international destinations in 35 countries.

•

HAS reached a milestone in October ’15 when Southwest Airlines launched international air service from Hobby Airport, making Houston one of only five U.S. cities with dual international air hubs, the other cities being Chicago, New York, Orlando, and Washington, D.C.

•

The Houston airport system already ranks as the nation’s eighth busiest international gateway. With Hobby expected to eventually handle a million or more international passengers each year, HAS could potentially overtake San Francisco and Atlanta to become the nation’s sixth busiest global gateway.

Partnership Research

December 2015

Air Passengers Houston Airpor t System– Domestic and International Air Passengers ANNUAL TOTALS Domestic (000)

International (000)

Total (000)

2005

41,065.0 6,909.1 47,974.0

2006

43,688.4 7,411.0 51,099.4

2007

44,094.6 7,723.0 51,817.0

2008

42,524.2 7,960.1 50,484.4

2009

40,695.9 7,809.9 48,505.8

2010

41,025.7 8,507.9 49,533.6

2011

41,393.4 8,637.3 50,030.70

2012

41,564.5 8,764.6 50,329.1

2013

41,922.6 8,986.3 50,908.9

2014

43,384.2 9,810.4 53,194.6

2015

September 12-month Total

43,971.80 10,288.90 54,260.7 Source: Houston Airport System

December 2015

Partnership Research

25

Residential Real Estate Houston’s housing market benef ited from pent-up demand and has remained resilient through ’15.

HOUSTON MSA RESIDENTIAL HOUSING MARKET Thousands 100

Average Listings (12-Month Total)

Sales (12-Month Total)

90

80

70

60

50

40

30

20 ’05

’06

’07

’08

’09

’10

’11

’12

’13

’14

’15

’16

Source: Houston Association of Realtors®

26

•

The moving 12-month total of Houston-area property sales has remained above 90,000 since October ’14 and reached a record 91,305 units sold in December ’14. (Property sales include single-family homes, townhomes, condominiums, duplexes, high-rise units, and lots.)

•

The median sales price of single-family homes also reached historic highs, averaging $209,754 for the 12-months ending October ’15, a 7.8 percent increase from $194,566 a year ago.

•

Housing inventory averaged 3.0 months for the 12-months ending October ’15, up from 2.8 months for the same period in ’14. The national housing supply is at 4.8 months of inventory. A six-month inventory is considered a balanced market.

Inventory is measured by the estimated number of months it would take to deplete the current active housing inventory based on the previous 12 months of sales.

•

Since the April ’10 census, Houston has added nearly 570,000 residents, the largest gain of any U.S. metro over that period. Approximately 320,000 residents, or 65 percent of the total population growth, came from new residents moving to the region from elsewhere in the United States or abroad.

Partnership Research

December 2015

Residential Real Estate Houston Multiple Listing Ser vice Data HISTORICAL CLOSINGS, SALES PRICES AND LISTINGS

Total Closings

2005

79,012 $142,659 43,379

2008

69,336 $150,724 50,946

2011

63,606 $153,618 48,800

2014

91,305 $197,462 28,363

Median Sales Price*

2006

87,799 $148,350 44,032

2009

63,801 $150,963 45,286

2012

74,116 $162,502 40,247

2015 Oct 12-mo total/avgs

Average Active Listings

2007

83,736 $151,706 50,643

2010

61,004 $153,330 51,097

2013

88,080 $179,737 32,101

90,051 $209,754 30,312

* Average of monthly medians Source: Houston Association of Realtors速

December 2015

Partnership Research

27

Office Market Houston’s of f ice market has yet to feel the full impac t of the energy downturn.

OFFICE OCCUPANCY RATES Percent of Completed Space Leased CBD

Suburbs

92

90

88

86

84

82

80

78 ’05

’06

’07

’08

’09

’10

’11

’12

’13

’14

’15

'16

Source: CBRE

28

•

In Houston―the nation’s fifth-largest office market with 207.2 million square feet (msf) of net rentable area―overall occupancy at the end of the third quarter of ’15 stood at 86.8 percent (91.1 percent in the Central Business District (CBD) and 85.7 percent in the suburbs). Houston’s 107.7 msf of Class A space was 90.2 percent leased.

•

Third quarter ’15 Class A asking lease rates ranged from $46.27 per square foot in the CBD to $34.73 in the suburban submarkets. Overall asking lease rates for Class A space averaged $37.07, Class B $24.05, and Class C $16.15.

•

A total of 10.7 million square feet of office space across 32 buildings was under construction as of Q3/15, with 52.4 percent of the space preleased. According to CBRE, 13 buildings are speculative developments and 9.2 percent are preleased. More than 580,000 square feet of new construction was delivered in the third quarter.

•

Sublease space has nearly doubled in the past year, from 3.6 million square feet in Q3/14 to 7.1 msf in Q3/15. Thus far published asking rates have not been impacted. However, negotiated effective rents have declined and concessions are on the rise.

Partnership Research

December 2015

Office Market Of f ice Occupancy: Houston Metropolitan Statistical Area (MSA) CENTRAL BUSINESS DISTRICT AND SUBURBAN OFFICE OCCUPANCY RATES Percent of Completed Space CBD

2005

2007

2009

2011

2013

2015

Q1

Q2

Q3

Q4

79.7 85.1

81.4 85.6

81.1 86.2

81.9 86.7

Q1

Q2

Q3

Q4

87.5 88.5

88.7 89.0

89.9 89.2

91.1 88.4

Q1

Q2

Q3

Q4

91.5 86.2

91.0 84.6

90.8 83.0

90.2 82.4

Q1

Q2

Q3

Q4

88.3 82.8

85.9 83.0

88.8 83.3

89.3 82.6

Q1

Q2

Q3

Q4

90.3 86.7

91.2 87.0

88.8 87.9

90.8 87.5

Q1

Q2

Q3

Q4

91.3 86.4

91.2 85.4

91.1 85.7

-

Suburbs

2006

2008

2010

2012

2014

Q1

Q2

Q3

Q4

82.2 86.5

82.9 87.3

84.3 87.6

87.5 88.1

Q1

Q2

Q3

Q4

91.1 87.4

91.2 87.4

91.4 87.3

91.7 87.1

Q1

Q2

Q3

Q4

89.9 82.0

89.6 82.0

89.5 82.1

89.8 82.0

Q1

Q2

Q3

Q4

89.3 84.5

89.2 85.2

87.9 86.4

90.3 86.2

Q1

Q2

Q3

Q4

90.7 87.3

90.8 87.2

91.3 87.2

92.1 87.4

Source: CBRE

December 2015

Partnership Research

29

Hotels Hotel ac tivit y rebounded af ter the Great Recession, but slower ac tivit y is expec ted as the energy downturn impac t s occupancy, room rates, and RevPAR. HOUSTON HOTEL DATA Four-Quarter Moving Average Occupancy (%)

RevPAR ($)

Room Rate ($) 110

75

105

%, Average Occupancy, 4-Qtr Avg

100 95

65

90 85

60

80 75

55

70 65

50

60 55

45

50 40

$, Average Room Rate and RevPAR, 4-Qtr Avg

70

45 ’05

’06

’07

’08

’09

’10

’11

’12

’13

’14

’15

’16

RevPAR = Revenue per available room ($/day) Source: PKF Hospitality Research, LLC

30

•

Houston’s hotel market, home to 77,000 rooms, averaged 70.5 percent occupancy in the four quarters ending Q2/15.

The average daily room rate during this period was $108.10 and revenue per available room (RevPAR) averaged $76.25 per day.

•

During the Great Recession, the four-quarter average for occupancy fell as low as 53.9 percent, average room rates ran $88.24, and RevPAR dropped to $48.00. Houston hotels began their recovery in ’11 as business and leisure travel resumed.

•

Hotel activity peaked at the end of ’14 and early ’15. The four-quarter average for occupancy reached a high of 71.9 percent in Q4/14 and RevPAR hit a historic high of $77.20 in Q1/15. Average room rates set a record of $108.10 in the four quarters ending Q2/15.

•

PKF Hospitality Research expects a decrease of 3.5 percent in RevPAR by the end of ’15. The decline is a result of an estimated 4.4 percent drop in occupancy. Both the upper, and lower-priced segments of Houston’s hotel market are expected to report a decline in RevPAR by year-end.

Partnership Research

December 2015

Hotels Occupancy, Average Room Rates and Revenue Per Available Room ANNUAL AVERAGES Occupancy

2005

67.3% $79.07 $53.29

2008

67.6% $104.75 $70.92

2011

59.8% $90.49 $54.13

2014

71.9% $106.90 $76.93

Average Room Rate

2006

66.2% $88.16 $58.34

2009

55.4% $91.64 $51.00

2012

65.4% $94.10 $61.47

2015

Average of Four Quarters ending Q2/15

Revenue Per Available Room

2007

66.2% $95.75 $63.44

2010

55.0% $88.24 $48.57

2013

69.0% $101.27 $69.94

70.5% $108.10 $76.25

Source: PKF Hospitality Research, LLC

December 2015

Partnership Research

31

Retail Sales Houston MSA retail sales reached a record $126 billion in Q3/14, but dropped in Q1/15 due to lower gas prices.

HOUSTON MSA GROSS RETAIL SALES Four-Quarter Moving Totals - $ Billions Nominal

2006 Constant U.S. Dollars

$140

$120

$100

$80

$60 ’07

’08

’09

’10

’11

’12

’13

’14

’15

Source: Texas Comptroller of Public Accounts

32

•

The Houston metro area’s nominal gross retail sales reached a record of $126.3 billion in the four quarters ending Q3/14, according to the Texas Comptroller’s Office. Retail sales decreased to $119.1 billion in Q1/15, the most recent data available. The decline over this period is attributed to a 64.5 percent decrease in gas station retail sales.

•

The top three retail sales categories in Q1/15 were motor vehicles ($4.5 billion, 19.0 percent share), food and beverage ($3.8 billion, 16.0 percent share), and general merchandise ($3.3 billion, 14.0 percent share). Gas station sales are typically in the top three, but its share of total sales dropped to 11.7 percent in Q1/15, down from a 28.0 percent share in Q3/14.

•

The majority of the region’s retail sales occurred in three counties: Harris County (75.2 percent of Q1/15 sales), Fort Bend County (8.2 percent), and Montgomery County (7.0 percent).

•

In the third quarter of ’15, CBRE reported a total of 213.4 million square feet of rentable retail space and a vacancy rate of 5.9 percent in the Houston market. New retail space under construction totaled 2.4 million square feet.

Partnership Research

December 2015

Retail Sales Houston-The Woodlands-Sugar Land MSA Gross Retail Sales ANNUAL TOTALS Nominal Sales ($000,000)

2006

$76,207.9

2007

$76,207.9

2008

$101,402.1

$96,418.4

$84,100.5

$87,864.5

$83,125.2

$100,872.9

$90,879.6

2013

$95,524.1

2014

$122,952.5

$82,591.2

2011

2012

$108,257.6

$84,056.8 2009

2010

$90,404.1

Constant 2006 Dollars ($000,000)

$116,366.8

$101,263.8

2015 - 4 Quarters ending Q1

$104,090.3

$119,067.8

$100,887.5

Source: Texas Comptroller of Public Accounts

December 2015

Partnership Research

33

New Car, Truck and SUV Sales Sales of trucks and SUVs bolstered the Houston-area vehicle market in ’15.

NEW CAR, TRUCK AND SUV SALES - HOUSTON MSA Units (000), 12 Mo Ending Cars

Trucks and SUVs

230

210

190

170

150

130

110

90 ’05

’06

’07

’08

’09

’10

’11

’12

’13

’14

’15

’16

Source: TexAuto Facts Report, InfoNation, Inc., Sugar Land, TX

34

•

Houston-area vehicle sales reached a historic high with a record 377,705 vehicles sold in the 12 months ending October ’15, surpassing the previous peak of 376,598 vehicles sold in the 12 months ending January ’15.

•

Low oil prices have encouraged consumers to purchase more trucks and SUVs than cars during the past 12 months.

Truck and SUV sales accounted for all of the growth in vehicle sales. Car sales declined 5.1 percent from 160,383 in the 12 months ending October ’14 to 152,208 in the 12 months ending October ’15. During the same period, truck and SUV sales rose 6.5 percent from 211,824 to 225,497. The market share of trucks and SUVs reached an all-time high of 62.4 percent in October ’15, far above the 10-year average of 56.6 percent market share.

•

Strong truck sales bumped up the average retail sales price per vehicle to $35,470 for the Houston region, the highest since February ’15. The average retail sales price for the truck/SUV segment was $38,760 in October ’15 compared to $29,890 for cars.

Partnership Research

December 2015

New Car, Truck and SUV Sales Houston Metropolitan Statistical Area ANNUAL TOTALS Houston-Sugar Land-Baytown MSA* Cars

Trucks and SUVs

Totals

2005

140,737 181,331 322,068

2006

153,058 196,580 349,638

2007

149,677 209,093 358,770

2008

140,088 166,772 306,860

2009

100,129 118,581 218,710

2010

105,753 134,601 240,354

2011

107,552 147,444 254,996

2012

143,061 182,027 325,088

2013

153,210 194,649 347,859

2014

158,899 214,099 373,998

2015

Average of Four Quarters ending Q2/15

152,208 225,497 377,705

* Austin, Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery, San Jacinto and Waller counties. Austin and San Jacinto counties were added in January 2007, but the series may be treated as continuous because those counties have a negligible impact on the totals.

Source: TexAuto Facts Report, InfoNation, Inc., Sugar Land, TX

December 2015

Partnership Research

35

Inflation Low energy prices helped suppress inf lation in ’15.

INFLATION, 12-MONTH CHANGE

Houston CPI-U

U.S. CPI-U

6% 5% 4% 3% 2% 1% 0% -1% -2% ’05

’06

’07

’08

’09

’10

’11

’12

’13

’14

’15

’16

Source: U.S. Bureau of Labor Statistics, not seasonally adjusted

36

•

The cost of consumer goods and services as measured by the Consumer Price Index for All Urban Consumers (CPI-U) rose 0.2 percent nationwide from October ’14 to October ’15, according to the U.S. Bureau of Labor Statistics. The annual change in the U.S. CPI-U has tracked below one percent for the past 11 months. Over this same period, core inflation (all items less the volatile food and energy categories) recorded annual increases between 1.6 percent and 1.9 percent.

•

From October ’14 to October ’15, consumer prices in the Houston-Galveston-Brazoria metro area (Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery and Waller Counties) slipped 0.1 percent. Core inflation rose 2.9 percent over the year.

•

In the 12 months ending October ’15, Houston’s energy index fell 26.5 percent as all subcomponents registered declines. Motor fuels experienced the largest drop, falling 33.3 percent. Electricity decreased 16.5 percent and natural gas 11.8 percent.

•

Houston’s food prices rose 1.1 percent from October ’14 to October ’15. The cost of dining out increased 2.7 percent while grocery prices decreased 0.2 percent, the grocery component’s first annual decline since September ’03. During the same period, the cost of shelter rose 6.2 percent, the fastest annual growth in housing since the year ending August ’09. Renters’ costs advanced 7.7 percent and owners’ equivalent rent rose 6.1 percent. (“Owners’ equivalent rent” is the amount a homeowner would pay to rent or would earn from renting his or her home in a competitive market.)

Partnership Research

December 2015

Inflation

CONSUMER PRICE INDEX ANNUAL PERCENT CHANGE Houston CPI-U

2005

4.24

2006

3.42

2008

-0.17

0.09

2.54

2.69

2.96

1.00

3.93

4.08

2010

2.72

2012

2014

1.12

1.13

2007

2009

2011

3.08

U.S. CPI-U

1.86

1.50

2013

1.74

3.62

1.50

2015 - October YOY Change

0.76

-0.10

0.17

Source: U.S. Bureau of Labor Statistics

December 2015

Partnership Research

37

Cost of Living Comparison Houston of fers a low cost of living while maintaining a high qualit y of life with the amenities expec ted in a world- class cit y.

COST OF LIVING COMPARISON - 20 MOST POPULOUS U.S. METROS % Below/Above U.S. Average 64.3

San Francisco, CA 56.3

New York, NY 49.2

San Diego, CA

45.7

Boston, MA

43.9

Los Angeles, CA

40.2

Washington, DC 21.1

Seattle, WA 14.9

Baltimore, MD

12.5

Miami, FL

11.6

Philadelphia, PA

9.2

Chicago, IL Minneapolis, MN -1.0 -2.4 -3.6 -5.3

5.8 Dallas, TX Phoenix, AZ Detroit, MI Atlanta, GA

-7.2

Houston, TX

-7.3

St. Louis, MO

-10.1

Tampa, FL Note: Riverside, California is one of the 20 most populous MSAs, but did not submit COLI data for Q3 2015.

Source: Council for Community and Economic Research (C2ER), Cost of Living Index, Q3 2015 (Data based on a survey of 265 urban areas, published October 2015).

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The C2ER Cost of Living Index for Q3 2015 shows Houston has the third lowest cost of living among the nation’s 20 most populous metropolitan areas. Houston’s overall after-taxes living costs are 7.2 percent below the average for all 265 urban areas participating in the survey, partly due to housing costs that are 7.7 percent below the national average.

•

Houston’s housing costs are 37 percent below the average for the 20 most populous U.S. metros, and its overall costs are 21.2 percent below the average for this group. If one excludes the five most expensive housing markets—San Francisco, New York, San Diego, Washington, D.C., and Los Angeles—which tend to skew the average, Houston’s housing costs are still 19.9 percent below the major metro average.

Partnership Research

December 2015

Cost of Living Comparison

COST OF LIVING COMPARISONS – 20 MOST POPULOUS U.S. METROS* RANKED FROM MOST TO LEAST EXPENSIVE (AVERAGE FOR 265 URBAN AREAS = 100) Composite

Groceries

Housing

Utilities

Transportation

Healthcare

Misc Goods & Services

San Francisco-Oakland-Hayward, CA

164.3 130.2 277.9 107.3 128.1 115.8 118.4

New York-Newark-Jersey City, NY-NJ-PA

156.3 118.2 252.9 124.5 114.2 109.4 121.1

San Diego-Carlsbad, CA

149.2 109.5 243.3 123.8 138.1 108.3 102.0

Boston-Cambridge-Newton, MA-NH

145.7 101.1 200.9 149.8 108.0 135.5 131.5

Los Angeles-Long Beach-Anaheim, CA

143.9 107.1 215.6 117.9 151.5 107.5 107.6

Washington-Arlington-Alexandria, DC-VA-MD-WV

140.2 111.3 222.8

Seattle-Tacoma-Bellevue, WA

121.1 112.7 135.9 101.5 117.5 121.8 119.4

Baltimore-Columbia-Towson, MD

114.9 120.6 144.0

92.5 103.8

Miami-Fort Lauderdale-West Palm Beach, FL

112.5 106.5 138.0

91.9 109.1 102.6 101.9

Philadelphia-Camden-Wilmington, PA-NJ-DE-MD

111.6 110.6 120.4 115.6 100.7 100.1 108.9

Chicago-Naperville-Elgin, IL-IN-WI

109.2 112.5 119.3 101.6 113.0 103.6 100.8

Minneapolis-St. Paul-Bloomington, MN-WI

105.8 107.4 107.8

99.2 110.3

90.7 111.8

87.5 102.2

92.8 102.5 106.0 109.0

Dallas-Fort Worth-Arlington, TX

99.0

94.2

95.2

97.3 106.0 101.3 102.0

Phoenix-Mesa-Scottsdale, AZ

97.6

92.5

96.3

98.7 107.7

97.0

96.8

Detroit-Warren-Dearborn, MI

96.4

89.9

89.7 104.4 111.3

94.1

97.2

Atlanta-Sandy Springs-Roswell, GA

94.7 103.3

82.8

90.1

97.1 103.2 100.7

Houston-The Woodlands-Sugar Land, TX

92.8

92.3

95.7

91.2

96.7

96.5

St. Louis, MO-IL

92.7 105.9

71.5 119.4

99.9

96.7

93.7

Tampa-St. Petersburg-Clearwater, FL

89.9

77.5

95.3

90.7

94.0

83.3

98.7

92.1

*Riverside, California is among the 20 most populous MSAs, but did not submit COLI data for Q3 2015.

Note: Data are unweighted averages for all reporting places in each metropolitan area.

Source: Council for Community and Economic Research (C2ER), Cost of Living Index, Q3 2015 (Data based on a survey of 265 urban areas, published October 2015).

December 2015

Partnership Research

39

Housing Cost Comparison Houston’s housing cost s are among the lowest of the major U.S. metro areas.

HOUSING COST COMPARISON - 20 MOST POPULOUS U.S. METROS % Below/Above U.S. Average 177.9

San Francisco, CA 152.9

New York, NY

143.3

San Diego, CA 122.8

Washington, DC

115.6

Los Angeles, CA

100.9

Boston, MA 44.0

Baltimore, MD

38.0

Miami, FL

35.9

Seattle, WA Philadelphia, PA

20.4

Chicago, IL

19.3 7.8

Minneapolis, MN -3.7

Phoenix, AZ

-4.8

Dallas, TX

-7.7 -10.3 -17.2 -22.5 -28.5

Houston, TX Detroit, MI Atlanta, GA Tampa, FL St. Louis, MO

Note: Riverside, California is one of the 20 most populous MSAs, but did not submit COLI data for Q3 2015.

Source: Council for Community and Economic Research (C2ER), Cost of Living Index, Q3 2015 (Data based on a survey of 265 urban areas, published October 2015).

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The C2ER Cost of Living Index for Q3 2015 shows that Houston’s housing costs are 7.7 percent below the nationwide average and 37 percent below the average for the 20 most populous U.S. metros. Lower housing costs are one of the reasons Houston’s overall living costs are 7.2 percent below the nationwide average for places of all sizes and 21.2 percent below the large-metro average. (This housing index is based 73.8 percent on homeownership and 26.2 percent on rental occupancy.)

•

Even if Houston home values continue to appreciate and the apartment market continues to grow, Houston’s housing should remain inexpensive in the context of many other major metro areas.

Partnership Research

December 2015

Housing Cost Comparison

HOUSING COST COMPARISON – 20 MOST POPULOUS U.S. METROS* (AVERAGE FOR 265 URBAN AREAS = 100) Percent Above or Below the Nationwide Average

Housing Cost Index**

Average Price for New 2,400-Square-Foot House***

San Francisco-OaklandHayward, CA

New York-Newark-Jersey City, NY-NJ-PA

San Diego-Carlsbad, CA

277.9

252.9

243.3

177.9%

$902,084

152.9%

$827,997

143.3%

Washington-ArlingtonAlexandria, DC-VA-MD-WV

Los Angeles-Long BeachAnaheim, CA

Boston-CambridgeNewton, MA-NH

222.8

215.6

200.9

122.8%

$735,108

Baltimore-ColumbiaTowson, MD

144.0

44.0%

115.6%

$635,359

Miami-Fort LauderdaleWest Palm Beach, FL

$465,384

138.0

38.0%

100.9%

$417,294

135.9

35.9%

Chicago-Naperville-Elgin, IL-IN-WI

Minneapolis-St. PaulBloomington, MN-WI

120.4

119.3

107.8

$383,496

19.3%

$571,760

Seattle-Tacoma-Bellevue, WA

Philadelphia-CamdenWilmington, PA-NJ-DE-MD

20.4%

$802,495

$366,231

7.8%

$416,014

$339,612

Phoenix-Mesa-Scottsdale, AZ

Dallas-Fort Worth-Arlington, TX

Houston-The WoodlandsSugar Land, TX

96.3

95.2

92.3

-3.7%

$294,656

-4.8%

$281,334

Detroit-Warren-Dearborn, MI

Atlanta-Sandy Springs-Roswell, GA

89.7

82.8

-10.3%

$267,249

-17.2%

Tampa-St. Petersburg-Clearwater, FL

St. Louis, MO-IL

77.5

71.5

-22.5%

$222,464

-28.5%

-7.7%

$266,788

$243,123

$209,306

* Riverside, California is one of the 20 most populous MSAs, but did not submit COLI data for Q3 2015. ** Index is based 73.8 percent on homeownership costs and 26.2 percent on apartment rent. *** Approximately 2,400 square foot home with 4 bedrooms, 2 baths, family-room (or equivalent), 2-car garage and 8,000 square foot lot. Neighborhoods are typical for corporate middle-management transferees.

Source: Council for Community and Economic Research (C2ER), Cost of Living Index, Q3 2015 (Data based on a survey of 265 urban areas, published October 2015).

December 2015

Partnership Research

41

Houston Region Population Houston has a sustained histor y of strong population grow th.

HOUSTON REGION POPULATION MILLIONS City of Houston

7

Harris County

Houston-The Woodlands-Sugar Land MSA

6 5 4 3 2 1 0 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2013 2014 Source: U.S. Census Bureau

42

•

From the first census in Texas in 1850 through the 2014 intercensal estimates, the Houston-The Woodlands-Sugar Land Metropolitan Statistical Area—has averaged a compound annual growth rate of 3.4 percent.

•

The Houston-The Woodlands-Sugar Land MSA is the nation’s fifth most populous metropolitan area. As Houston’s population has grown, the region has climbed in the rankings. In ’70, Houston was the nation’s 14th most populous metro.

Today, Houston is the nation’s fifth. Over that period, three metros—Cleveland, Detroit and San Francisco—have slipped from the top 10 and three metros—Atlanta, Miami and Houston—took their places.

•

Between July 1, 2010 and July 1, 2014 (the period for which the Bureau of the Census released its most recent population estimates), metro Houston added 569,690 residents, the largest gain of any U.S. metro over that period. About 45 percent of Houston’s growth comes from natural increase (births minus deaths) and around 55 percent comes from net in-migration (more residents moving in than out).

Partnership Research

December 2015

Houston Region Population POPULATION TOTALS

Houston-The Woodlands-Sugar Land Metropolitan Statistical Area*

27,984 1850

1890

1930

1970

Harris County

55,317

4,688

1860

City of Houston

80,866

9,070

1870

112,053

17,375

1880

27,985

2,396

4,845

9,332

16,513

137,800

202,438

252,066

348,661

37,249

1900

63,768

1910

115,693

1920

186,667

27,557

44,633

78,800

138,276

545,547

752,937

1,083,100

1,594,894

359,328

1940

528,961

1950

806,701

1960

1,243,158

292,352

384,514

596,163

938,219

2,195,146

3,135,806

3,750,411

4,693,161

1,741,912

1980

1,233,505

2,409,544 1,595,138

5,920,416 2010

1990

4,092,459 2,099,451

2,818,199 1,630,553

6,313,158 2013

4,336,853 2,195,914

2000

3,400,578 1,953,631

6,490,180 2014 **

4,441,370 2,239,558

* Census numbers for the 2013 MSA definition, which includes the nine counties of Austin, Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery and Waller. ** As of July 1, 2014 Source: U.S. Census Bureau

December 2015

Partnership Research

43

Foreign-Born Population Nearly one in four Houstonians was born outside the U.S. PLACE OF BIRTH OF FOREIGN-BORN POPULATION Houston-The Woodlands-Sugar Land MSA 2014

25.2%

Mexico

Asia

41.0%

15.7%

Other

Central America

5.1% 3.7% 4.6% 4.7% Europe

Africa South America

Source: U.S. Bureau of the Census, 2014 American Community Survey

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•

In 2014, the Houston Metropolitan Statistical Area (MSA) contained an estimated 1.5 million residents born outside the United States, according to the Census Bureau’s American Community Survey (ACS). This figure represents 23.1 percent of all residents, up slightly from 2013.

•

Mexico accounts for forty percent of all foreign-born Houston residents (613,978). El Salvador was the birthplace of the next largest of this group (126,387), followed by Honduras (58,215), Guatemala (37,388) and Colombia (23,825).

•

More than one in four foreign-born Houstonians—an estimated 377,829 persons—were born in Asia. Asian nations that are the birthplaces of the largest numbers of Houstonians are Vietnam (82,227), India (81,843), China (54,979), Philippines (41,564), Pakistan (27,996), Korea (12,821) and Iran (8,291).

Partnership Research

December 2015

Foreign-Born Population Houston is a magnet for international migration.

PERCENT OF METRO POPULATION FOREIGN-BORN 20 Most Populous Metro Areas 39.2

Miami, FL 33.7

Los Angeles, CA 30.4

San Francisco, CA

28.8

New York, NY San Diego, CA

23.2

Houston, TX

23.1 22.6

Washington, DC

21.9

Riverside, CA Dallas, TX

17.9

Chicago, IL

17.6

Boston, MA

17.6

Seattle, WA

17.2 14.5

Phoenix, AZ Atlanta, GA

13.4

Tampa, FL

13.0

Philadelphia, PA

10.2

Minneapolis, MN

10.1

Baltimore, MD

10.1 9.4

Detroit, MI St. Louis, MO

4.2

Source: U.S. Census Bureau, 2014 American Community Survey

•

In ’14, nearly one in four Houstonians was foreign-born, versus one in eight nationwide, according to the Census Bureau’s 2014 American Community Survey.

•

In only five of the nation’s 20 most populous metropolitan areas—Miami, Los Angeles, San Francisco, New York and San Diego—do foreign-born residents represent a larger share of total population than in Houston.

•

Houston’s foreign-born population of 1.5 million is greater than the total populations of 11 states and the District of Columbia.

December 2015

Partnership Research

45

Most Populous Metropolitan Areas Houston is the f if th most populous metro in the nation.

POPULATION ESTIMATES U.S. Metros Residents July 1, 2014 20,092,883

New York-Newark-Jersey City, NY-NJ-PA

Dallas-Fort Worth-Arlington, TX Houston-The Woodlands-Sugar Land, TX

90,797

13,262,220

Los Angeles-Long Beach-Anaheim, CA Chicago-Naperville-Elgin, IL-IN-WI

Residents added 7/1/13 to 7/1/14

9,554,598

86,371 9,802

6,954,330

131,217

6,490,180

156,371

Philadelphia-Camden-Wilmington, PA-NJ-DE-MD

6,051,170

Washington-Arlington-Alexandria, DC-VA-MD-WV

6,033,737

66,561

Miami-Fort Lauderdale-West Palm Beach, FL

5,929,819

66,361

Atlanta-Sandy Springs-Roswell, GA

5,614,323

Boston-Cambridge-Newton, MA-NH

4,732,161

San Francisco-Oakland-Hayward, CA

4,594,060

Phoenix-Mesa-Scottsdale, AZ

4,489,109

Riverside-San Bernardino-Ontario, CA

4,441,890

Detroit-Warren-Dearborn, MI

4,296,611

14,942

88,891 34,112 64,406 84,980 51,628 1,217

Seattle-Tacoma-Bellevue, WA

3,671,478

57,857

Minneapolis-St. Paul-Bloomington, MN-WI

3,495,176

San Diego-Carlsbad, CA

3,263,431

40,873

Tampa-St. Petersburg-Clearwater, FL

2,915,582

41,428

St. Louis, MO-IL

2,806,207

Baltimore-Columbia-Towson, MD

2,785,874

33,742

4,620 11,824

Source: U.S. Census Bureau

•

46

Between July 1, 2013 and July 1, 2014 (the period for which the U.S. Census Bureau released its most recent population estimates), the Houston-The Woodlands-Sugar Land Metropolitan Statistical Area (MSA) added more residents than any other U.S. metro area.

Partnership Research

December 2015

Most Populous Cities Houston is the four th most populous cit y in the nation.

POPULATION ESTIMATES U.S. Cities Residents July 1, 2014 8,491,079

New York, NY

52,700

3,928,864

Los Angeles, CA

30,924

2,722,389

Chicago, IL Houston, TX

Residents added 7/1/13 to 7/1/14

82

2,239,558

35,752

Philadelphia, PA

1,560,297

Phoenix, AZ

1,537,058

24,616

San Antonio, TX

1,436,697

24,931

San Diego, CA

1,381,069

21,225

1,281,047

20,322

Dallas, TX San Jose, CA Austin, TX

4,245

1,015,785

11,964

912,791

Jacksonville, FL

853,382

San Francisco, CA

852,469

Indianapolis, IN

848,788

Columbus, OH

835,957

Fort Worth, TX

812,238

Charlotte, NC

809,958

Detroit, MI

680,250

El Paso, TX

679,036

Seattle, WA

668,342

25,667 9,368 11,331 5,413 12,421 18,183 16,007 -6,424 2,245 14,938 Source: U.S. Census Bureau

•

Between July 1, 2013 and July 1, 2014 (the period for which the U.S. Census Bureau released its most recent population estimates), only New York City added more residents than the city of Houston.

December 2015

Partnership Research

47

Most Populous Counties Harris Count y is the third most populous count y in the nation.

POPULATION ESTIMATES U.S. Counties Residents July 1, 2014

Residents added 7/1/13 to 7/1/14 10,116,705

Los Angeles County, CA

5,246,456

Cook County, IL

62,710

-179

4,441,370

Harris County, TX

88,618

4,087,191

Maricopa County, AZ San Diego County, CA

3,263,431

Orange County, CA

3,145,515

74,027 40,873 23,661

Miami-Dade County, FL

2,662,874

21,008

Kings County, NY

2,621,793

19,420

Dallas County, TX

2,518,638

Riverside County, CA

2,329,271

Queens County, NY

2,321,580

32,555 32,315 17,587

San Bernardino County, CA

2,112,619

King County, WA

2,079,967

Clark County, NV

2,069,681

Tarrant County, TX

1,945,360

Santa Clara County, CA

1,894,605

23,498

Broward County, FL

1,869,235

23,842

Bexar County, TX

1,855,866

Wayne County, MI

1,764,804

New York County, NY

1,636,268

19,313 33,011 40,365 31,417

33,712 -10,899 4,263 Source: U.S. Census Bureau

•

48

Between July 1, 2013 and July 1, 2014 (the period for which the U.S. Census Bureau released its most recent population estimates), Harris County added more residents than any other county in the nation.

Partnership Research

December 2015

The Work Ethic in Houston The work ethic is alive, well, and f lourishing in Houston.

THE WORK ETHIC IN HOUSTON “IF YOU WORK HARD IN THIS CITY, EVENTUALLY YOU WILL SUCCEED.” Percent Who Agree 89.3 87.9

88.4

86.8 85.6

85.1 83.0 81.5

81.1

80.6

79.6

79.5 78.2

78.2 76.7

76.4 75.3

74.7

’82

’83

’84

78.3

’85

’86

’87

’88

’89

75.8

76.0

’91

’93

’95

’97 ’99

’01

’03

’05

’07

’09

’11

’13

’15

Source: Kinder Institute, Houston Area Survey

•

Houston’s business success appears related, at least in part, to the overwhelming prevalence of the work ethic here and to confidence that Houston provides an environment in which individual initiative will be rewarded.

•

According to Rice University’s annual Houston Area Survey, a large majority of Houstonians agree that “if you work hard in this city, eventually you will succeed.” In March 1982, when employment in Houston stood at what was then the all-time peak, 81 percent of respondents agreed. In February 1987, when Houston was at the bottom of its recession and unemployment stood above 10 percent, 75 percent of respondents still shared this view. In 1999, 83 percent of Houstonians accepted this statement—a record at the time. In 2001, agreement soared to 88 percent. (By 1990, it had become clear that Houstonians’ responses to this item barely shifted, thus the question is only asked every other year.)

•

In contrast to Houston’s strongly positive attitude, agreement with this same statement in national samples over the same period has ranged only from 58 to 63 percent. The difference between Houston and the nation as a whole is statistically significant and has endured through the entire range of the regional business cycle.

•

The confidence that personal effort will be rewarded in Houston transcends racial and ethnic categories. Over the past six surveys, on average 85 percent of Anglos, 82 percent of Blacks, 88 percent of U.S.-born Latinos, and 94 percent of U.S.-born Asians agreed with the statement.

December 2015

Partnership Research

49

Gross Area Product Forecast Real Gross Area Produc t in Houston shows sustained grow th over the nex t quar ter centur y.

REAL GROSS AREA PRODUCT FORECAST: HOUSTON-THE WOODLANDS-SUGAR LAND MSA Billions - ’09 Constant Dollars $1,154.1

$1,022.1

$887.2 $754.0 $627.4 $504.1 $380.9 $333.9

’05

’15

’10

’20

’25

’30

’35

’40

Source: The Perryman Group, Summer 2015

50

•

Real (i.e., net of inflation) Gross Area Product (GAP) in the Houston region is expected to grow at an average annual rate of 3.37 percent from ’15 to ’40 in The Perryman Group’s forecast.

•

The Houston MSA’s real gross area product is projected to more than double between ’15 and ’40.

•

Compound annual growth rates of real gross area product from ’15 to ’40 are highest in services (3.9 percent); manufacturing (3.8 percent); mining (3.3 percent); and finance, insurance, and real estate (3.1 percent).

Partnership Research

December 2015

Gross Area Product Forecast Real Gross Area Produc t: Houston-The Woodlands-Sugar Land Metropolitan Area ESTIMATES AND FORECASTS Real Gross Area Product ($ Billions) Constant ’09 Dollars

2005

Compound Annual Growth Rate (Percent), 5 Years Ending

2010

$333.907

-

2015

$380.944

2.67%

2020

$504.067

5.76%

2025

$627.351

4.47%

2030

$753.996

3.75%

2035

$887.155

3.31%

2040

$1022.069

2.87%

$1154.096

2.46%

Source: The Perryman Group, Summer 2015; Growth rate calculations by the Greater Houston Partnership

December 2015

Partnership Research

51

Population and Employment Forecast The Perr yman Group forecast s Houston's population and employment to grow faster than the state's and the nation's over the nex t 25 years.

POPULATION AND EMPLOYMENT: HOUSTON-THE WOODLANDS-SUGAR LAND MSA Millions Population

Employment 9.9 9.2 8.4

7.7

7.1

6.5

3.0

’15

’20

4.0

3.7

3.4

’25

’30

4.6

4.3

’35

’40

Source: The Perryman Group, Summer 2015

•

From ’15 to ’40, The Perryman Group sees population growth averaging 1.69 percent annually in the Houston region.

Over the same period, the Texas-based economic forecasting firm expects wage and salary employment to rise at a 1.62 percent annual rate.

•

The Houston–The Woodlands–Sugar Land Metro Area will add 3.4 million residents between ’15 and ’40. Perryman also forecasts that Houston will add an additional 1.54 million jobs and account for one-fourth of Texas job growth during that time frame.

The Perr yman repor t states: "As a major center for the oil industry and related activity, Houston has been hit by lower oil prices. While the end of the oil surge will affect performance in the near term, the Houston area’s economy is far more diversified than in decades past and the downturn in oil prices is not likely to derail economic performance for an extended period of time.

Despite weakness from the lower energy prices and the ripple effects through the economy, expansion in other sectors is expected to moderate the overall negative impact and generate growth in the years to come."

52

Partnership Research

December 2015

Population and Employment Forecast Houston-The Woodlands-Sugar Land MSA ESTIMATES AND FORECASTS Population

2015

6,458,000

2020

3,040,000

2025

7,734,000

7,092,000

3,384,000

2030

3,706,000

2035

9,159,000

Payroll Employment

8,422,000

4,018,000

2040

4,312,000

9,946,000

4,576,000

Source: The Perryman Group, Summer 2015

December 2015

Partnership Research

53

Top Metro Areas by Gross Domestic Product Houston has the four th largest metro GDP in the nation.

GROSS DOMESTIC PRODUCT —TOP 20 METROS $Billion 11

1

20

9

$1,558,518

14 13

3

6

19

8

New York-NewarkJersey City, NY-NJ-PA

1

2

7 16

Los Angeles-Long BeachAnaheim, CA

$866,745 18

3

2 17

10

15

Chicago-NapervilleElgin, IL-IN-WI

$610,552

5

4

4 12

5

Dallas-Fort WorthArlington, TX

$504,358 9

Boston-CambridgeNewton, MA-NH

$382,459 13 Detroit-WarrenDearborn, MI

$236,500 17 San Diego-

Carlsbad, CA $206,817

6

Washington-ArlingtonAlexandria, DC-VA-MD-WV

$471,584 10 Atlanta-Sandy SpringsRoswell, GA

$324,881 14 Minneapolis-St. PaulBloomington, MN-WI

$235,733 18 Denver-AuroraLakewood, CO

$187,111

7

San Francisco-OaklandHayward, CA

$411,969 11 Seattle-TacomaBellevue, WA

$300,827 15 Phoenix-MesaScottsdale, AZ

$215,214 19 Baltimore-ColumbiaTowson, MD

$173,516

Houston-The WoodlandsSugar Land, TX

$525,397 8

Philadelphia-CamdenWilmington, PA-NJ-DE-MD

$391,118 12 Miami-Fort LauderdaleWest Palm Beach, FL

$299,161 16 San Jose-SunnyvaleSanta Clara, CA

$213,819 20 Portland-VancouverHillsboror, OR-WA

$159,328

Source: U.S. Bureau of Economic Analysis, 2014 GDP by Metropolitan Area, current dollars

54

•

The U.S. Bureau of Economic Analysis (BEA) estimates Houston’s gross domestic product (GDP) reached $525.4 billion in ’14, ranking it as the nation’s fourth largest metro economy. The Houston region has a gross domestic product greater than 41 states.

•

If Houston were an independent nation, the region would have the 26th largest economy in the world, placing it behind Belgium ($527.8 billion) and ahead of Norway ($511.6 billion).

Partnership Research

December 2015

Publication underwritten by:

Patrick Jankowski, CCR

Jenny Philip

Senior Vice President, Research

Senior Manager, Economic Research

Follow me on Twitter: @pnjankowski

Read my blog: houston.org/economy/blog

Connect with me: linkedin.com/in/pnjankowski