In bustling Houston, it's a case of 'Build, baby, build!'

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With Texas one of the few bright spots in the U.S. economy, the skyline of swaggering Houston is where the action is as builders and global oil companies, from Phillips 66 to Exxon Mobil Corp, look past previous busts and spend billions on gleaming new buildings...

Demand is so hot that Houston is one of the few places where banks - including Wells Fargo & Co, which is seen as one of the more conservative big banks - will loan money for a new building without demanding developers first have a tenant.

"Houston is booming and bar none the strongest market in the United States of America," said Joseph Sitt, chief executive of Thor Equities, which has two projects underway in Houston.

There are some 56 office buildings totaling at least 11 million square feet under construction in and around Houston, according to real estate services firm CBRE Group Inc. That is equivalent to 190 football fields.

 

 

 

http://www.reuters.com/article/2013/08/25/us-houston-skyscrapers-idUSBRE97O06C20130825

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The most interesting comments came at the end of the story.

 

Another risk is overbuilding. Houston, a sprawling 8,778-square-mile metropolis, has no zoning restrictions, a fact that has some investors including New York-based GreenOak Real Estate Advisors, looking elsewhere to buy.

Owners in areas where building is constrained can reap big rewards when demand for space rises, fueling rent spikes of sometimes 20 percent. That rarely happens in Houston, where developers can easily build.

"When you're dealing with a market like Houston, there's nothing to hold developers back," Ryan Severino, Reis senior economist said. "You can literally can go next door and put up a building."

 

 

Some investors like zoning because it stifles growth. It allows them to jack up rents while other developers are trying to get permission to build.