< Previous36 T E X A S E C O N O MI C DE V E L O P M E N T G U I DEAll of this means, quite simply, that Texas is on a huge roll — and it’s one that shows no signs of slowing. According to notable economist Dr. Ray Perryman, the Texas roll is being propped up by two major forces: fast-growing industries and some juggernaut metropolitan areas.“Energy is the fastest-growing industry,” he says. “Last year, employment in the mining and logging segment of the economy, which in Texas is largely oil and natural gas, grew by 18 percent. Construction employment expanded by 6.4 percent, and manufacturing and professional and business services were both up 4.5 percent. Thousands of jobs are being added in these sectors every month. The state’s largest numbers of new jobs are in the large leisure and hospitality and education and health-care segments, but clearly the strong expansion we’re seeing in goods-producing sectors of the economy is a crucial driver of overall expansion.”Add to that the unstoppable force of several large cities in Texas and you begin to see the big picture. “Texas cities are among the fastest-growing in the nation, which is particularly impressive given how much smaller they are than some population centers across the U.S.,” Perryman says. “Over the past year, the largest number of new jobs was added in Dallas-Fort Worth (about 116,000), with the Houston area a close second (108,100). The Austin area has also continued to see impressive gains, up 36,200 for the year. All of these Source: US Census BureauTEXAS BOASTS 3 OF THEFASTEST-GROWINGLARGE CITIES IN THE U.S.TOP 10 T E X A S E C O N O MI C DE V E L O P M E N T G U I DE metropolitan areas have seen job expansion of 3.0 to 3.5 percent or more, which is strong growth. Looking at the rate of growth in jobs, Midland tops the list, led by the energy industry, and other cities near production areas (particularly Odessa) have also experienced notable expansion.”Other measures confirm this. When the Milken Institute recently released its annual list of the Best-Performing Cities in America, Austin-Round Rock ranked third and Dallas-Plano-Irving ranked fifth. Construction employment, a harbinger of economic growth, was especially strong in Texas, with Houston-The Woodlands-Sugar Land leading all U.S. metro areas in construction jobs growth last year, according “When you consider that local communities are fl ush with cash, thanks to their local sales tax allocation earmarked for economic development, projects are going to chase those dollars.” — Dean Barber, Site Consultantgrowth, was especially strong economic development, projects are going to chase those dollars.— Dean Barber,38 T E X A S E C O N O MI C DE V E L O P M E N T G U I DEto the Associated General Contractors of America. And when you look at the fastest-growing large cities in America, Texas boasts three of the top 10: Austin (second), Fort Worth (fourth) and San Antonio (tenth) — per the U.S. Census Bureau.Even the ubiquitous U-Haul moving company confirms Texas’ growth. When the firm recently tracked the total number of U-Haul trucks pulling into each state versus the volume leaving, guess which state led the pack? You guessed it: Texas.Prominent site consultant Dean Barber of Dallas says he’s not surprised. “When you look at the extraction economy in Texas, it is now driving U.S. energy growth despite the low prices,” he says. “In the Permian Basin in West Texas, they are discovering more oil and gas every year. This gargantuan find will create jobs for decades. The U.S. is now the largest producer of oil and gas in the world because of this. But that’s not all. East Texas is more like the Southeast U.S. and is a good location for all kinds of manufacturing. And when you consider that local communities are flush with cash, thanks to their local sales tax allocation earmarked for economic development, projects are going to chase those dollars.”He points to the Dallas-Fort Worth Metroplex as a case in point. “The Metroplex now has 7.5 million people,” says Barber. “It is projected to grow to 10 million.”That means many more companies backing up their moving vans to locations in Texas. People line Congress Ave. Bridge in Austin to watch the world’s largest urban bat colony emerge at dusk.Photo by Heather Overman T E X A S E C O N O MI C DE V E L O P M E N T G U I DEVibePhoto courtesy of Hayman Advisors LLCf you thought that a premium business address in Houston was hard to fi nd and even harder to aff ord, think again. The Hobby Area District at William P. Hobby Airport in Houston has a solution for you.Contemporary, recently renovated offi ce space just minutes from the runway can be found in the Hobby Area District at a fraction of the cost tenants would face in premium locations like the Houston Central Business District and the Galleria.If you haven’t heard of the Hobby Area District, you’re not alone. Until recently, the special purpose management district within the City of Houston had kept a low profi le, but that is changing. A er adopting an ambitious strategic plan, the District’s leaders are now pursuing a mission to “establish the Hobby Area District as an a ractive, connected, talented and celebrated place to invest and live.” The plan also seeks to position the District as “a celebrated place where commerce and community thrive.”Thanks to the redoubled eff orts of many, commerce is already thriving. “Powell Industries is our largest employer, and Aviation Institute Maintenance is a school at Hobby that trains and produces airline mechanics and other technicians,” says Regina Lindsey, director of economic and community development for the Hobby Area District. “The District covers 15 square miles. We have Hobby Airport and land adjacent to rail. Businesses here tend to be manufacturing, MROs, retail and service, etc. And we are close to the Port of Houston. Our goal is to introduce the District, make people aware of it, and help businesses get established here.”Upward of 20,000 workers are employed daily in the District, and by 2040, there will be an estimated 35,000 jobs in the area. Manufacturing and transportation jobs will account for close to half of these positions. The primary Hobby Area District labor shed is an area with 700,000 residents, with projections for up to 743,419 residents by 2020.The District has identifi ed the following three sectors as primed for employment growth:• Gateway Operations: Distribution and logistics, Businesses needing access to the airport and Gulf ports increasingly call Hobby home.by RON STARNERIHouston, We Have a SolutionI N VE ST ME N T P R O F I LE :H O B B Y A RE A D I S T RI C THouston, We Have a SolutionT E X A S E C O N O MI C DE V E L O P M E N T G U I DE retail and hospitality, and related space users will be able to take advantage of access to the fastest-growing airport in the U.S.• Professional Services: Engineering and back-offi ce support operations have been growing steadily in recent years, with total employment rising by 13% from 2012 to 2017 in the District.• Advanced Manufacturing: Metalworking and machinery manufacturing are prime targets for the District. The Pew Research Center forecasts that domestic output in these sectors has increased 85% over the last 30 years, with these fi elds already exhibiting strength in the Hobby area.The good news is that the Hobby Area District has space to accommodate new tenants, and that space is aff ordable. “Hobby is one of the smaller submarkets in the southwest corridor of Houston,” says Robert Hayman, principal of Hayman Advisors LLC in Houston. “Most buildings are under 200,000 square feet and rents are in the $15 to $16 per-square-foot range — a good value compared to Houston CBD and the Galleria.”The 190,000-sq.- . Vibe Hobby building has been modernized and rehabbed for tenants seeking an upscale Hobby address. “The building has all new systems,” says Hayman. “We’re adding more landscaping for privacy. We’re redoing the interior. We also have some shared space, mostly executive suite space, that is fully leased now. But we’re considering adding more space. A new user could take up to 9,000 square feet upstairs.”Hayman adds that “the chief selling points of an address in the Hobby Area District are that it is conveniently located between Downtown and the Clear Lake area; there are lots of opportunities for tech companies and government users; you can save quite a bit of money on airport parking and rent; you can have the same style of offi ce product for a 20 to 30% discount; and you have the benefi t of close proximity to the Port of Houston and the Houston Ship Channel.”Liliana Rambo, general manager of Hobby Airport, says that when Southwest Airlines decided to have international fl ights going out of Hobby to Central and South America in 2015, it opened a whole new era for business travel in south Houston. “Southwest has also put a lot of eff ort into expanding their cargo operations going to Central and South America,” Rambo says. “We have six FBOs at Hobby, and because of our growth many more are looking to come to Hobby.”With recent upgrades and expansions at Hobby Airport, ge ing to your fi nal destination is easier than ever too. “Hobby Airport rivals Bush now,” says Hayman. “Within fi ve minutes of the Vibe Building, you can be at the drop-off gate at the airport. We are literally at the edge of the runway. You can’t get any closer than that.” This Investment Profile was prepared under the auspices of the Hobby Area District. For more information, contact Gabby Dirden at 832-982-2036 or by email at gdirden@hadistrict.org. On the web, go to www.hadistrict.org.“Within fi ve minutes of the Vibe Building, you can be at the drop-off gate at the airport. We are literally at the edge of the runway. You can’t get any closer than that.”— Robert Hayman, Principal, Hayman Advisors LLC“Within fi ve minutes of the Vibe Building, you can be at the drop-off gate at the airport. We are literally at the edge of the runway. You can’t get any closer than that.— Robert Hayman,ive Texas Gov. Greg Abbo a challenge to compete against 49 other states, and the odds are pre y strong that he won’t se le for second place.He’s demonstrated that consistently in his term as governor, winning the coveted Site Selection Governor’s Cup award every year he’s been in offi ce. But that doesn’t mean he’s content to stop there. In the following interview, he explains what drives him to push for even more economic development progress for his state’s 28 million citizens.Validation comes with multiple top rankings, but Texas’ governor wants more.G T E X A S E C O N O MI C DE V E L O P M E N T G U I DEPhotos courtesy of Office of the Governorby RON STARNERI N T E R V I E W W I T H G O V . G R E G A B B O T TTHE FORMULA FORWinning44 T E X A S E C O N O MI C DE V E L O P M E N T G U I DEWith another Governor’s Cup win under your belt — your seventh in a row — what does Texas do for an encore?GOV. GREG ABBOTT: Win again! And to do that, we are keenly focused on further developing the workforce that our employers are demanding. It’s not accidental that Texas leads in attracting capital investments and relocation and expansion projects. Innovation and a strong work ethic are deeply rooted in our young, growing and skilled workforce, 14 million strong. The nation’s leading CEOs know that Texas offers unmatched advantages for business success — access to talent, markets, and cost efficiencies — and the freedom to grow. Freedom is the intangible but very real promise of Texas that encourages businesses to grow here. Plus, with no personal or corporate income tax, lower energy costs, lower land costs, and fewer land-use restrictions, Texas offers lower operating costs for businesses. Texas also offers incentives such as tax exemptions on manufacturing machinery and equipment, on natural gas and electricity used in manufacturing, and on data center equipment. Texas businesses are also exempt from paying state sales and use tax on labor for new facility construction. While winning a record number of Governor’s Cups in a row, we are not complacent. To further unleash business growth during my first term, we cut taxes by nearly $4 billion, including a permanent 25 percent reduction in the gross margins tax. And we remain focused on speeding up permitting processes and reducing burdensome regulations that drive up business costs.We also celebrate and support a diverse art, music and cultural scene in our big cities and small towns. And across regions, whether rural, suburban or urban, Texas offers a higher quality of life and lower costs of living. Plus, we have the very best local economic development teams in both urban and rural areas of the state. And we are working to ensure that all regions are benefiting in our economic development growth. By way of example, we are seeing business interests growing in our smaller communities — in Paris, Lufkin and Temple — places people outside Texas wouldn’t be very familiar with. Just like Apple’s $1-billion expansion in Austin and McKesson Corporation’s headquarters relocation to Irving, the smaller projects in the smaller towns are just as important to them as the large projects are to our big cities.Already a tech mecca, manufacturing powerhouse, and financial services epicenter — and home to the world’s largest medical complex — recent relocations and new investments in Texas over the last four years include: • Corporate headquarters: CORE West, Jacobs Engineering, Kubota Tractor Corporation, McKesson Corporation, Pei Wei, PGA of America, OKIN Business Process Services.• New investments: Apple, Charles Schwab, Cognizant Technology Solutions, East Penn Manufacturing Co., Hulu, JSW Steel (USA), LyondellBassell, Merck & Co., Mitsubishi Heavy Industries, NTT Data, Smith & Nephew, Sterling Lumber Company, W.W. Grainger and more. They join giants like Amazon, Boeing, Dell Technologies, Lockheed Martin, Oracle, Samsung, Toyota and others with a strong and significantly expanding Texas presence. Attracted by our growing workforce and by synergies with leaders in technology, the U.S. Army also recently selected “I am committed to increasing the state’s share of education funding, prioritizing spending in classroom, and increasing teacher pay and providing incentives to ensure the most effective teachers are in the schools and classrooms where they are needed most.”—Gov. Greg AbbottNext >