Houston real estate expert shares why now's the time for the city's innovation ecosystem to emerge
Rand Stephens has been in Houston since the '80s, and he's seen the city evolve from having an economy heavily dominated by oil and gas to a city focused on diversification of industry.
Now, as a technology and innovation ecosystem is emerging with new startup and lab space being developed, Houston is on a good path — even in light of the effects of the pandemic.
"I think that Houston is a very vibrant place and it always has been. It's very entrepreneurial, and it will adjust to the new environment," says Stephens, who's principal at Avison Young and the founding managing director of the company's Houston office.
Stephens discussed the importance of new developments and the effect of the pandemic on the commercial real estate industry in an interview with InnovationMap.
InnovationMap: Why is the timing right for Houston's innovation ecosystem to emerge?
Rand Stephens: Since the '80s, there's been a real emphasis within the city to diversify. Trying to do new things is always difficult because a lot of it has to do with timing — it has to make sense economically. Innovation is a hot thing right now, more so than ever. As a city or company, if you're not constantly innovating, you're going to get left behind.
From a real estate standpoint, we've really had an abundance of low-cost space in an environment that is very entrepreneurial.
IM: Why are emerging innovation campuses like The Ion and Texas A&M Innovation Plaza near the Texas Medical Center so important?
RS: Houston is an incredible diverse city. We have unlimited talent from an engineering standpoint, and I think those types of projects bode well for keeping and attracting top tech talent. I think that's really the key.
You have to have this kind of infrastructure to support the innovation. The more that we can do to make the city walkable and to provide connectivity to the different parts of the city, is important. It's all about the experience. And, I don't think people like getting in the car and fight traffic — I think it's that simple.
IM: Has COVID-19 affected the momentum of innovation development?
RS: It has. But, what I've seen, and it's totally anecdotal, but people are coming to grips with COVID. They are coming to grips with the risks, and, as time goes on, they will see it as a less risky disease as a vaccine and treatment become available.
These innovation spaces are going to be important for collaboration. You lose the spontaneity of innovation and collaboration if you're not around people. But, we're already seeing people in Houston returning to work.
IM: In general, how is the pandemic affecting commercial real estate?
RS: COVID is impacting the office market the most — and I think it will long term as well. There's been a trend for a long time now to use less square footage per person. I think corporations have evolved from looking at their office spaces as a place to put people to work to really trying to create an experiential environment to use the office to re-enforce their culture and brand in order to recruit top talent. COVID has accelerated that trend now.
My gut feeling on that is it's going to depend on the business. Different types of industries function differently, and the size of the business is going to depend on that too. I think the trend of using less square footage per person isn't going to go up. I don't think we're going to see companies taking more space for social distancing. I think what they'll do is give people more flexibility. I think corporates are going to say, "let's ammenitize our space and put people in places where it's experiential and a cool place to work." And I think people are OK with that.
IM: What makes Houston a good city for innovation?
RS: There are three or four reasons off the top of my head, but one is the entrepreneurial spirit and that's pervasive everywhere. Then, we have amazing infrastructure here, with talent and education. Another thing that is key is affordability. Relatively speaking, it's a very affordable city to do business in. The fourth thing would be the diversity and inclusion we have here. Houston is one of the most diverse cities in the country — and a lot of people don't know that. And I have found it to be an incredibly inclusive city. I think if you move here and you have good ideas and work hard, there's nothing to hold you back here.
This conversation has been edited for brevity and clarity.