DTZ In Situ 2014-15 - page 5

ALTERNATIVE/RENEWABLE ENERGY
Energy sources, such as solar and wind, could be viewed simplistically
as a threat to the major hubs, but in fact it may reinforce their
position. Renewable energy is dependent on technology and
infrastructure. The principal firms in traditional energy are also
well represented in renewables and it is these firms that have the engineering,
project development, legal and financial specialists ready and able to tackle the
many obstacles that projects such as off-shore wind turbine farms require.
Texas is already one of the largest producers of wind energy in the U.S. and a fast increasing
producer of solar energy. In Europe, Aberdeen is already the focal point for off-shore wind
technology so it is likely that they will continue to see robust economic growth as a result.
CALGARY
, CANADA
Calgary has the third largest
proven oil reserves globally and is
the epicentre for the industry in
the region. The city is part of the
economic area referenced as the
Calgary — Edmonton corridor and is
home to the majority (87%) of the
national and international energy
firms for the region. Like Houston,
following the oil price slump in the
early 1980s, Calgary diversified
its economy to be less reliant on
one industry, but energy is still
a dominating factor in terms of
contribution to local GDP.
The impact to real estate in these
markets is obviously not just to the
commercial markets. As can be seen
in the graph below, employment
in the oil and gas sector has risen
strongly in the last few years and
this is mirrored by city employment
in general. The combined impact
of this is having a knock-on effect
in terms of residential pricing and
rental increases are growing steadily.
Assuming oil-sands output and the
associated price remains high then
this trend is likely to be sustained.
HOUSTON,
UNITED STATES
Houston is the largest city in Texas
and the fourth largest in the U.S..
The energy sector is at its core
and despite diversifying after the
1980’s oil crash, the industry still
represents more than half of the
local economy. As can be seen from
the graph below, Houston’s economy
dipped in 2009 along with the rest
of the U.S. and this impacted office
take-up accordingly. However, actual
employment in the sector remained
strong through the wider down-turn
and as a result the local economy
and take-up rates of office space
rebounded at a considerable pace.
Concerns a few years ago regarding
the end of economically viable oil
production have proved unfounded
as shale gas and new technologies
have driven the industry on to ever
higher production. Evidence of this
can be seen in that more than half of
the largest 20 deals in 2013 were to
oil and associated services firms. At
the end of 2013, there were 71 office
projects under construction in the
Houston office market totaling close
to 12m sq ft. Of the space currently
under construction, approximately
75% is pre-leased. ExxonMobil alone
are constructing 4m sq ft over 20
buildings on 385 acres in North
Houston and Chevron is planning a
1.7m sq ft development, expected to
start in 2016.
CARACAS
, VENEZUELA
Venezuela’s economy is dominated by the petroleum sector, which accounts for roughly a
third of GDP, around 80% of exports, and more than half of government revenues. Caracas
is at the epicenter of the country’s energy sector. For example Petróleos de Venezuela,
S.A. (PDVSA), the biggest oil company in Venezuela, is headquartered at the Caracas Stock
Exchange. The company negotiates all the international agreements for the distribution and
export of petroleum, so it is not surprising that any national and international firm operating
in Venezuela establishes their own headquarters close to the centre of power for the
industry, and indeed, the country.
In Caracas both commercial and residential markets have seen prices increase
dramatically. Although no official statistics are published, the combined impact of demand,
lack of new supply and rampant inflation, which is over 50% in 2013/14, has had a dramatic
impact on all forms of residential property.
58
57
56
55
54
53
2007
2008
2009
2010
2011
2012
2013
700
800
900
1,000
1,100
1,200
1,300
Oil, gas and mining employment (000s) (LHS)
3 beds apartment rent ($/unit/month) (RHS)
1,200
Oil and gas employment (000s) (RHS)
Annual take-up (000s sq ft) (LHS)
1,000
800
600
400
200
2004
2005
2006
2007
2008
2009
2010
2011
2012
0
30
25
20
15
DTZ | In Situ
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