Windy City Windfall Of High-Rises

[ricco67]

According to this article, it seems that there is a massive buildup going on there with 40 towers built with 50 storey's or higher since 2000, and including one in the works that will top the sears tower and a few of them are condos as well!

My thing is, while I understand that people come from outside of chicago proper to work, it is my understanding that that particular region's population is actually decreasing. Would they be able to have enough of a population to support such works?

Considering Houston (to put it in a chicago gansta' kinda' way) bumped off chicago in the #3 spot in population (unofficially), perhaps we should see this type of building over the next few years?

[dalparadise]

According to this article, it seems that there is a massive buildup going on there with 40 towers built with 50 storey's or higher since 2000, and including one in the works that will top the sears tower and a few of them are condos as well!

My thing is, while I understand that people come from outside of chicago proper to work, it is my understanding that that particular region's population is actually decreasing. Would they be able to have enough of a population to support such works?

Considering Houston (to put it in a chicago gansta' kinda' way) bumped off chicago in the #3 spot in population (unofficially), perhaps we should see this type of building over the next few years?

I think population has something to do with it (particularly in the condo realm) but business climate is also a huge factor. Houston always touts its number of Fortune 500 companies, but they are largely industrial companies that have HQs here, but must go outside this market for large operations. They don't seem to attract as much support services (and the large offices that come with them) like consumer brands do. These are things like advertising agencies, PR firms, Web design, sign companies, print houses, broadcast production companies, distribution facilities and the like. With these kinds of support businesses also come the "creative class" so many cities court.

The industrial companies here do bring in a lot of lawyers and data processing -- which is good for rounding out our economy and our skylines.

Chicago is more of a consumer brand city and is one of the last real bastions of the advertising and marketing industry in the US. Houston is more on par with a city the size of Milwaukee in this regard. Dallas is much closer to Chicago's playing field. In fact, the two metro areas' business models are remarkably similar.

[houstonmacbro]

According to this article, it seems that there is a massive buildup going on there with 40 towers built with 50 storey's or higher since 2000, and including one in the works that will top the sears tower and a few of them are condos as well!

My thing is, while I understand that people come from outside of chicago proper to work, it is my understanding that that particular region's population is actually decreasing. Would they be able to have enough of a population to support such works?

Considering Houston (to put it in a chicago gansta' kinda' way) bumped off chicago in the #3 spot in population (unofficially), perhaps we should see this type of building over the next few years?

i think we are already starting to see these types of condos going up in houston. just look at the galleria. most of the new development there (officially 'the west end') seems to be condos, with many of them coming in pairs.

[RedScare]

I think population has something to do with it (particularly in the condo realm) but business climate is also a huge factor. Houston always touts its number of Fortune 500 companies, but they are largely industrial companies that have HQs here, but must go outside this market for large operations. They don't seem to attract as much support services (and the large offices that come with them) like consumer brands do. These are things like advertising agencies, PR firms, Web design, sign companies, print houses, broadcast production companies, distribution facilities and the like. With these kinds of support businesses also come the "creative class" so many cities court.

The industrial companies here do bring in a lot of lawyers and data processing -- which is good for rounding out our economy and our skylines.

Chicago is more of a consumer brand city and is one of the last real bastions of the advertising and marketing industry in the US. Houston is more on par with a city the size of Milwaukee in this regard. Dallas is much closer to Chicago's playing field. In fact, the two metro areas' business models are remarkably similar.

Clearly, you did not look at Houston and Chicago's largest employers before you made this observation. You also did not look at job creation statistics. FWIW, I didn't see a single web design company among either city's largest employers. The largest employers in both cities are government, education, health care, airlines and retail. You might be a bit surprised just how many people work for those industrial companies in Houston, too.

[TheNiche]

Clearly, you did not look at Houston and Chicago's largest employers before you made this observation. You also did not look at job creation statistics. FWIW, I didn't see a single web design company among either city's largest employers. The largest employers in both cities are government, education, health care, airlines and retail. You might be a bit surprised just how many people work for those industrial companies in Houston, too.

Yeah, that was my initial reaction as well...but then I realized that highrise condos are a niche market that aren't generally driven by jobs in govt, education, airlines, or retail. I could see it coming somewhat from healthcare, but even then, only a relatively small part of it. Even the formal notion of 'creative class' must be pared down to a subgroup of people that have a particular desire for urban living. Engineers, for example, seem to gravitate to the suburbs more often than to highrises. Houston has a whole lot of engineers...not quite so many graphic designers per capita as I would intuitively expect Chicago to have.

Come to think of it, I have data... [sEE NEXT POST]

Edit: I think it comes down to the fewer number of FIRE jobs. Those are the highly-paid office worker folks that I'd see as most likely to go for a highrise product. We may have O&G extraction jobs and a whole lot of related types of jobs, but they just seem to be of a different culture, even if they do work in primarily office environments.

[TheNiche]

If the total employment base of the Houston and Chicago MSAs were taken to be equal (they're not, but for the sake of comparison of what kind of jobs are more prevalent, I'll use this assumption), Houston would have:

92% as many jobs in Agriculture and Natural Resources industries (excluding NR extraction)

554.09 times as many jobs in Oil & Gas Extraction

We have a whole lot of Construction workers:

154% as many General Building Contractors

197% as many Heavy Construction Contractors

134% as many Special Trade Contractors

Among all Manufacturing industries, Houston would have 76% as many jobs as Chicago

-Houston leads Chicago in Lumber & Wood Products (107%), Chemical Products (186%), Petroleum & Coal Products (377%), and Non-Electrical Machinery (105%)

-Houston lags behind Chicago in Food & Kindred Products (56%), Textile Mill Products (52%), Apparel & Textiles (53%), Furniture & Fixtures (46%), Paper & Allied Products (33%), Printing & Publishing (44%), Rubber & Plastic Products (75%), Leather Products (27%), Primary Metal Industries (38%), Fabricated Metal Products (93%), Electric and Electronic Machinery (45%), Transportation Equipment (53%), Instruments & Related Products (61%), and Misc. Mfg. (73%).

Among the Transportation and Utilities sector, Houston beats Chicago, with 114% as many jobs.

-Houston leads in Trucking & Warehousing (109%), Water Transportation (430%), Non-gas Pipelines (1897%), Transportation Svcs. (111%), and Electric, Gas, Sanitation (283%).

-Houston lags in Railroad transportation (21%), Local & Interurban (77%), US Postal Svc. (42%), and Air Transportation (93%).

Houston leads in the Wholesale Trade Industries, with 111% as many jobs. We're particularly strong in the Non-Durable goods sector (114%) as opposed to the Durable Goods sector (104%).

Altogether, Houston and Chicago would have about the same number of retail jobs.

-Houston is particularly strong in Auto Dealers and Gas Stations (148%), Furniture & Home Furnishings (111%), and General Merchendise Stores (107%).

-Houston lags in Building & Garden Supplies (82%), Misc. (90%), Apparel & Accessory Stores (95%), and Food Stores & Eating & Drinking Places (96%).

Within the FIRE industries comprised of Finance, Insurance, and Real Estate, Houston is almost completely licked. We have 83% as many jobs as Chicago. The one sunny spot is Real Estate (112%).

-Houston lags in Banking (83%), Non-bank Credit Agencies (76%), Security & Commodity Brokers (74%), Insurance Carriers (70%), Insurance Agents & Brokers (65%), and Holding Companies (67%).

Within the Services industries, Houston has 96% as many jobs as Chicago.

-Houston leads in Misc. Svcs. (279%), Misc. Repair Svcs. (131%), Engineering & Management (122%), Auto Repair & Garages (118%), and Personal Services (110%).

-Houston lags in Amusement & Recreation (66%), Social Services (78%), Museums, Botanical Gardens, Zoos, etc. (82%), Educational Svcs. (87%), Membership Organizations (93%), and Health Svcs. (96%).

-Houston and Chicago are nearly equal in terms of Hotels, Business Svcs., Motion Pictures, and Legal Svcs.

Houston has 85% as many Government employees.

Of Non-Classifiable employees, Houston has only 92% as many.

[Gary]

I think population has something to do with it (particularly in the condo realm) but business climate is also a huge factor. Houston always touts its number of Fortune 500 companies, but they are largely industrial companies that have HQs here, but must go outside this market for large operations. They don't seem to attract as much support services (and the large offices that come with them) like consumer brands do. These are things like advertising agencies, PR firms, Web design, sign companies, print houses, broadcast production companies, distribution facilities and the like. With these kinds of support businesses also come the "creative class" so many cities court.

The industrial companies here do bring in a lot of lawyers and data processing -- which is good for rounding out our economy and our skylines.

Chicago is more of a consumer brand city and is one of the last real bastions of the advertising and marketing industry in the US. Houston is more on par with a city the size of Milwaukee in this regard. Dallas is much closer to Chicago's playing field. In fact, the two metro areas' business models are remarkably similar.

Do you Dallas guys ever stop ( see last paragraph)?

Thanks to Red and TN for setting the record straight.

[MidtownCoog]

They don't seem to attract as much support services and the large offices that come with them

Houston does. Not everybody works in an office.

I'd say Big-D's #1 industry is Debt Collection Agencies. Uberglam.

It pays to be close to your base.

[dalparadise]

Do you Dallas guys ever stop ( see last paragraph)?

Thanks to Red and TN for setting the record straight.

I am not a "Dallas guy" and never have been. I was trying to speak to the notion of what might drive highrise construction in either condo or commercial sectors. I am fully aware that many are employed in Houston's industrial F500 companies, but that those companies don't seem to generate the additional employment by companies that occupy giant highrises -- at least not like some others seem to.

That said, Houston has much more impresseve highrise buildings than Dallas, though it seems Dallas is more open to the idea of expansion -- even when they seem to have trouble filling up what they have. Why they never seem to take the economic hits Houston has in the past for such an attitude, I don't know.

The basis for my idea was an admittedly limited take on the creative advertising and broadcast production industries. In Houston, these industries are almost nonexistant now. Chicago and Dallas still have healthy markets for these professions. These jobs themselves are high-paying and attract that "creative class" we hear so much about. Their presence also reflects a larger business culture that I believe is not as healthy in Houston as it is in Dallas and Chicago. Consumer brands that advertise to people, not other corporations enable these companies to thrive. We just don't have a lot of that kind of business here. What's worse -- our big consumer brands go outside this market for their advertising.

Continental uses a Dallas agency. So does Reliant. HP uses about 90% New York agency work and 5% Houston and 5% other. Halliburton is all in-house. Shell uses a local branch of a worldwide agency for some of its work, but NY is pulling the strings. There are a number of other examples.

In a nutshell, advertising here is in real trouble. Even tiny Austin has a more vibrant advertising community.

I simply tried to draw a conclusion based on this observation. Companies that advertise to consumers spend in excess of $100,000,000 per year each. Companies that advertise to other companies, like the majority of those here in Houston, may spend a tenth or much less than that per year. I think that must have some correlation to building highrises.

Doesn't it?

[Guest danax]

I'd say Big-D's #1 industry is Debt Collection Agencies. Uberglam.

It pays to be close to your base.

Right!

Editor, it sounds pretty nifty there in Chicago. Guess we need about another 100 years or so to get to that level....geez.

Some interesting posts micro-analyzing the possible reasons for our lack of Downtowners but isn't it just simply that, until about 2000, Downtown offered no reasons to want to live there and it's still sort of a pioneering venture?

As Editor mentioned, I think the ability to live without a car is a major reason DT Chicago is so desirable. If we could ever achieve even a basic level of that, we might see a building boom too, and people from all professions might come out of the woodwork scrambling to live there.

[editor]

Right!

Editor, it sounds pretty nifty there in Chicago. Guess we need about another 100 years or so to get to that level....geez.

Some interesting posts micro-analyzing the possible reasons for our lack of Downtowners but isn't it just simply that, until about 2000, Downtown offered no reasons to want to live there and it's still sort of a pioneering venture?

As Editor mentioned, I think the ability to live without a car is a major reason DT Chicago is so desirable. If we could ever achieve even a basic level of that, we might see a building boom too, and people from all professions might come out of the woodwork scrambling to live there.

Actually, nobody can see that post but the mods. I made it invisible after I wrote it because it seemed too much like bragging, but I wrote so much I didn't feel like just deleting. it.

[TheNiche]

I simply tried to draw a conclusion based on this observation. Companies that advertise to consumers spend in excess of $100,000,000 per year each. Companies that advertise to other companies, like the majority of those here in Houston, may spend a tenth or much less than that per year. I think that must have some correlation to building highrises.

Doesn't it?

I would think that yes, it would have a weak correlation...but advertising is only one industry.

Anecdotally, I've encountered the same kinds of trends around town, with local advertising firms not getting any respect. I've even heard of local firms trying desperately to compete with NYC firms and not getting the deal despite having better presentations and offering lower prices.

I don't know what's going on here...maybe its the crummy ads from local companies like Carpet Giant and Hilton Furniture that are ruining our reputation, but local ad-men get no respect.

[editor]

I would think that yes, it would have a weak correlation...but advertising is only one industry.

Anecdotally, I've encountered the same kinds of trends around town, with local advertising firms not getting any respect. I've even heard of local firms trying desperately to compete with NYC firms and not getting the deal despite having better presentations and offering lower prices.

I don't know what's going on here...maybe its the crummy ads from local companies like Carpet Giant and Hilton Furniture that are ruining our reputation, but local ad-men get no respect.

From what I've read lately, it's not too surprising. I've been told that if you're not New York, L.A., London, or Chicago (in that order) then you don't rank. I think ad agencies from Dallas to Miami to Denver are in the same boat as Houston.

It makes sense that NY, LA, and London are big advertising headquarters. But Chicago? It's historic. For years and years and years most of the national magazines were printed in Illinois, and many still are. For two reasons: 1, because being at the center of the nation saves on transportation costs; and 2, because there is a particular type of clay in some portions of the state (cented around Effingham) that is used to coat the pages and make them nice and shiny. In the days before stuff could be moved around by internet, the ad agencies would have to physically transport their ads to the printing plants. It's a lot shorter and cheaper trip from Chicago to Effingham than it is from New York or L.A., especially if you're on a last-minute deadline, as many ad agencies are.

[TheNiche]

From what I've read lately, it's not too surprising. I've been told that if you're not New York, L.A., London, or Chicago (in that order) then you don't rank. I think ad agencies from Dallas to Miami to Denver are in the same boat as Houston.

Aside from Chicago, is there any particular reason why this is the case for other cities? The U.S. has an incredibly mobile labor force and the advertising design industry is no longer constrained so much by geographic proximity to their clientele. You'd think that ad agencies would look to save money by moving to cities with lower overhead costs...

[editor]

Aside from Chicago, is there any particular reason why this is the case for other cities? The U.S. has an incredibly mobile labor force and the advertising design industry is no longer constrained so much by geographic proximity to their clientele. You'd think that ad agencies would look to save money by moving to cities with lower overhead costs...

They started out on the coasts because that's where the people were (New York) and the production companies (LA). They stay there because of the deep talent pool in production and advertising and because birds of a feather tend to stay together.

There's also the prestige factor. An ad company could save millions each year by moving to Iowa. But then they'd be an ad company in Iowa, not an ad company in New York. It would affect the bottom line in a seriously negative way.

[dalparadise]

They started out on the coasts because that's where the people were (New York) and the production companies (LA). They stay there because of the deep talent pool in production and advertising and because birds of a feather tend to stay together.

There's also the prestige factor. An ad company could save millions each year by moving to Iowa. But then they'd be an ad company in Iowa, not an ad company in New York. It would affect the bottom line in a seriously negative way.

That's somewhat true, but NY continues to see an exodus to places like Philadelphia, New Jersey and such. Many major companies are also looking to in-house agencies, where the creative work is done away from the home office (meaning away from NY).

Through the 80s and 90s and even today, Minneapolis has been a major center of national and international advertising. Fallon McElligott put them on the map (they won the Porsche account, among others) and major agencies followed. Now, there are many production companies, marketing companies, design shops and more in Minneapolis.

Tiny Portland, Ore. has Wieden and Kennedy, the agency that built the Nike brand and turned that town into an advertising hotspot.

Miami lives on the tourism industry for its rank and file agencies and the strength of a great creative agency in Crispin, Porter and Bogusky. They do Burger King, Mini and a lot of others. Their ad climate is very strong.

How about Richmond, Va.? The Martin Agency there is huge, doing national creative work for UPS, Volkswagen and more. They have no problem recruiting talent.

Denver has never been a hotspot for advertising.

San Francisco was a tiny advertising backwater in the early 80s. Goodby Silverstein and Partners changed all that. Now, even after a huge downturn in the tech industry, many agencies, including Goodby are still going strong.

With GSD&M, Austin is even a player. GSD&M just added the BMW USA account to their roster. GSD&M is part of a worldwide conglomerate and probably bills in the $700-$800 million range iself, if not more. There are a couple other agencies of note, even in this tiny town

Dallas has some major agencies, led creatively by The Richards Group. Incidentally, Richards is eyeing local shop, Rives Carlberg for purchase. Rives has been wilting on the vine for about 8-9 years now. Dallas also have a few outposts from some major national agencies and a couple that bill in excess of $400 million. I even worked in an in-house agency in Ft. Worth whose individual yearly budget equalled the billings of the largest total agency in Houston.

Houston has nada. The largest agency here is Fogarty Klein Monroe, a $250 million per year shop, but one that is known for account service, not creative product. After that, they fall off to a hispanic agency that bills about $150 million doing largely unoriginal creative and then, lowly Rives Carlberg, doing seemingly NOTHING, as their clients all run off to greener pastures. JWT has a branch office here, doing Texas Ford Dealers and the rest are really small-time players. Our dying ad community is probably on par with Des Moines, Iowa in terms of size and ability to attract national creative work.

[Guest danax]

Our dying ad community is probably on par with Des Moines, Iowa in terms of size and ability to attract national creative work.

Nice expose' on the US ad industry, dal.

We must have little talent, since Houston's done such a poor job of advertising itself.

[dalparadise]

Nice expose' on the US ad industry, dal.

We must have little talent, since Houston's done such a poor job of advertising itself.

There are and have been a few very talented advertising people in this market. It's kind of a chicken-and-egg thing -- you have to attract the kinds of clients who do the kind of work that lets you attract the kind of creative talent to win those kinds of clients.

Houston is full of industrial business-to-business clients and not many business-to-consumer ones. It's hard to recruit the hottest talent here to do brochures and flyers for El Paso Energy or Stewart and Stevenson. If you were a hot ad team looking for a job and your next One Show Pencil, would you want to come to Houston and do training videos for Waste Management, or go to Austin and shoot BMW TV spots on location in Germany? Or, go to Dallas and do nationwide Chik-fil-A billboards and store design work?

When I worked at even an in-house agency in Ft. Worth, we shot TV all over the country and went to Canada on location for a couple of shoots. This was for a major consumer brand. That's just how it works.

I love living in Houston, but our ad community stinks. My team, at a very small agency here is working to make it better and having some success, but there is a long way to go. I wouldn't want to work at any of the large (really medium-sized) agencies here, in their current state. They are so screwed up, top-heavy, antiquated and out of it, they can't dig themselves out.

The key in Houston is flying under the radar at a small shop and doing great work. One day, maybe someone will notice. that's really sad for a city of this size.

[TheNiche]

Houston is full of industrial business-to-business clients and not many business-to-consumer ones.

Ah, so that's the root of it?

Now I can't help but wonder why there are so few consumer-oriented corporations in town.

[MidtownCoog]

Now I can't help but wonder why there are so few consumer-oriented corporations in town.

Or why other cities don't have the engineering (aerospace, O&G exploration, production) presense that Houston has.

And the engineering firms employ a lot more people than a Madison Ave. firm.

Consumer products come and go. Look at Compaq/HP. Both are a shell of their former selves. Even Dell is having a hard time trying to figure it out.

Not to mention 2/3's of economic activity is driven by consumers. Even Madison Ave. feel upon hard times a few years back during the slump when people stopped spending.

[ricco67]

I think our saving grace is the fact that we don't cater to one particular industry like we've done in the past.

There are certain logistical reasons as to why some of the industries are located in various parts of the country, so I won't hit on Boeing, steel, and such.

Dal brought up a good point that as these advertising agencies are so large, that they may eventually implode out of their being so top heavy, that it could very well be within the next few years that a major shakeup in the industry might occur soon.

[MidtownCoog]

vs.

No need to be ashamed of who we are.

[dalparadise]

vs.

No need to be ashamed of who we are.

I'm not ashamed of who we are in the least. I just wish our advertising industry could regain some of its former self, as it has in other cities. I didn't really intend to hijack this thread, either...sorry about that.

One more thing -- how much of Houston is really roughnecks working on rigs? I'd say if you took a pole everywhere west of I-45, for 100 miles north or south, you'd be hard-pressed to find many roughnecks. That's more Houston of the 60s-70s.

[MidtownCoog]

That rig is meant to illustrate a big part of Houston's services industries. Oil field services.

It's not like Shell builds and invents every part on a rig.

So many parts of a rig are built in Houston by different companies.

Companies that create many jobs.