A new report from a real estate firm has Houston high on its list for emerging life science hubs. Photo by Dwight C. Andrews/Greater Houston Convention and Visitors Bureau

Houston is moving up the life sciences ladder.

In October, commercial real estate services company CBRE ranked Houston second on its list of the top emerging clusters for life sciences in the U.S. Pittsburgh took the No. 1 spot, while Austin sat at No. 3.

Now, commercial real estate services company JLL also is giving Houston's life sciences sector some love. JLL recently issued a report identifying Houston as one of the top emerging markets in the U.S. for life sciences.

Among the markets covered in the JLL report, Houston ranked seventh for the number of STEM degrees among people 25 and older (409,354). The gives Houston an edge in terms of life sciences talent.

JLL puts Houston at No. 8 in another life sciences category: wage positioning. This refers either to wages above the industry average that entice life sciences talent or wages below the industry average that attract cost-conscious employers.

"Traditional top life science markets will likely retain their positions; however, it's encouraging that Houston, home to one of the world's largest medical centers, continues to rise on the list of markets for further advancements in the life sciences sector," JLL says.

According to the Greater Houston Partnership, Houston has more than 1,760 life sciences companies, hospitals, health care facilities, and research institutions with a workforce exceeding 320,000. Houston's major corporate employers in life sciences include Abbott, Bayer, Fisher Scientific, Merck, Mylan, Novartis, and Philips.

Of course, the Texas Medical Center — the world's largest medical complex — plays a critical role in the region's life sciences sector. The medical center's TMC3 life sciences hub, set to open in 2022, promises to lift Houston's life sciences profile even more. The 30-acre, 1.5-million-square-foot TMC3 campus is projected to create 30,000 jobs and generate an economic impact of $5.2 billion.

Houston-based real estate developer Hines also is getting in on the life sciences game. It is leading establishment of a 52-acre life sciences hub, Levit Green, adjacent to the Texas Medical Center.

In February, commercial real estate firm NAI Partners pinpointed these as the Houston area's current and potential hotspots for life sciences:

  • 1,345-acre Texas Medical Center complex
  • 4,200-acre Generation Park mixed-use development
  • Katy
  • League City
  • New Caney
  • Pearland
  • Sugar Land
  • The Woodlands

NAI Partners noted that life sciences clusters ranking above Houston in the CBRE report sit on the East Coast or West Coast. That makes Houston "the essential location for top-tier, forward-thinking life sciences companies interested in expanding into new geographies," says Holden Rushing, senior vice president of NAI Partners and a member of its life sciences and health care team.

NAI Partners says Houston has affirmed its reputation as one of the most appealing places in the U.S. for life sciences properties.

"Between its highly educated talent pool, nationally regarded health care industry, and business-friendly environment — including being one of the few states without a personal, state, or corporate income tax — Houston's cost-effective tax structure makes it a choice location for any company looking to establish a presence or expand its current footprint," says Travis Rodgers, chief operating officer and executive vice president of NAI Partners.

Fuse Workspace is the latest coworking concept for the west side of town. Photo courtesy of Fuse

Dallas coworking company to open its first location in Houston

new to hou

Dallas-based Fuse Workspace is gearing up to open the first of what could be several coworking spaces in the Houston area as various coworking providers ramp up their Bayou City presence.

Fuse will unveil its first Houston location March 2 at CityCentre, a 47-acre, mixed-use development on the former site of Town & Country Mall in the Memorial City district. The grand opening is set for April 30.

Included in the 29,000-square-foot Fuse space, at 12848 Queensbury Ln., will be Houston's first showroom for Varidesk, a Coppell-based provider of standing desks and other office equipment.

John Herring, brand manager and director of operations at Fuse, says Houston, Austin, and Dallas are the company's target markets. A Fuse space is scheduled to open in July in the Austin suburb of Bee Cave.

"We love Houston and see a great future for our brand here, with multiple locations," Herring tells InnovationMap. "We don't have definitive plans to announce yet, but we have several strategic locations in the area that on our list."

Fuse is a division of DPG Partners LLC, a developer, owner, and operator of coworking spaces in Texas, as well as Hilton and Marriott hotels in Texas and Arkansas.

Fuse Workspace is the latest coworking concept for the west side of town. Photo courtesy of Fuse

The Fuse location at CityCentre will feature about 23,000 square feet of Class A office space, along with about 6,000 square feet of outdoor space. Highlights include:

  • 90 private offices
  • Three specialty suites, including one already leased by Varidesk
  • Four terraces
  • Seven conference rooms, including a podcast studio
  • Event space accommodating up to 100 people

"Our goal is to create an outstanding experience in the office through décor, amenities, programming, conference space, and our concierge staff," Herring says.

Fuse is joining a number of coworking providers that have set up shop in and around Memorial City. For instance, Life Time Work, affiliated with a nearby Life Time Fitness gym, opened last year at City Centre. Memorial City also is home to The Cannon, a 120,000-square-foot coworking campus.

Commercial real estate services provider JLL predicts 30 percent of the U.S. office market will be "flexible" space, such as coworking setups, by 2030. That compares with less than 5 percent in early 2019.

In the Houston market, 1.9 percent of office space was considered "flexible" in early 2019, according to JLL, versus 2.8 percent in Austin and 1.7 percent in Dallas.

"Our research, and our conversations with corporate executives across the globe, indicate that flexible work is not just a passing trend — it's woven into the fabric of the future of work," Scott Homa, senior vice president and director of U.S. office research at JLL, said in a 2019 release. "Even though some markets are better positioned for rapid growth, this still leaves significant runway for expansion across all U.S. office markets."

An October 2019 report from Yardi Matrix, a provider of real estate data, shows the Houston market with 113 coworking spaces encompassing more than 2.2 million square feet. By comparison, Dallas-Fort Worth had 159 coworking spaces exceeding 3.5 million total square feet, and Austin had 47 spaces surpassing 1.2 million total square feet.

"The penetration of coworking is highest in markets with new-market economies and tight vacancy rates," the Yardi Matrix report states.

According to JLL, the office vacancy rate in the Houston market stood at 22.8 percent in the fourth quarter of 2019. But office occupancy is improving, according to a JLL report, as more than 1.85 million square feet of space was absorbed in the Houston market during the fourth quarter of 2019. For Houston, that marked a 20-year high for positive net absorption in a single quarter, the report states.
Houston's industrial development has grown, and a contributing factor is the rise of e-commerce activity. Getty Images

E-commerce growth is sparking some changes in Houston's industrial real estate market

Making moves

With retail e-commerce sales in the U.S. projected to soar from $501 billion in 2018 to $740 billion in 2023, it's no wonder that Houston's industrial market is expanding faster than Santa's bag of toys.

E-commerce is one of the main drivers of an upturn in industrial construction in the Houston area. Estimates from four commercial real estate services companies show that during the third quarter, anywhere from 13.3 million square feet to 18.5 million square feet of industrial space was under construction in the region. That volume is up considerably from the second quarter of 2019 and from the same period in 2018.

Around the country, the "need for speed and choice" to appease shoppers is driving a lot of the increased demand for industrial space, Hamid Moghadam, chairman and CEO of industrial REIT Prologis, recently told Wall Street analysts. That, he said, is because "the more choices you want and the quicker you want them, the more inventory you need to position near the customers."

Rob Stillwell, executive managing director in the Houston office of commercial real estate services company Newmark Knight Frank, says many of the local industrial facilities geared toward e-commerce are being built in and around pockets of residential growth. This includes a swath from I-10 West in Katy to I-45 North toward The Woodlands. Among the facilities popping up in that corridor are massive projects for Amazon, FedEx, and UPS, according to Stilwell.

"E-commerce is likely a contributing factor to many distribution operations in Houston, but not the sole reason for the strong demand seen in the market," Stilwell says. Many new or expanding industrial tenants in the market do have an e-commerce component, he adds, yet won't be leasing space just for e-commerce purposes.

In Houston, e-commerce-fueled construction of industrial space is especially prevalent near George Bush Intercontinental Airport, according to commercial real estate services company Cushman & Wakefield. However, Houston's northwest submarket is seeing the most industrial construction in the area, with 5.5 million square feet underway in the third quarter.

Commercial real estate services company JLL pegs the southeast submarket as the hottest, with its third-quarter report showing 3.5 million square feet of new industrial projects underway there.

Aside from e-commerce, the Port of Houston and the petrochemical sector are propelling industrial construction in the area, Cushman & Wakefield says.

Around the Houston area, nine of the 89 industrial spaces under construction in the third quarter exceeded 500,000 square feet, Cushman & Wakefield says. Several of those lack a specific e-commerce element. This includes a 1 million-million-square-foot manufacturing facility for Coca-Cola, a more than 770,000-square-foot distribution center for Home Depot, and a nearly 550,000-square-foot distribution center for Costco.

Cushman & Wakefield warns that Houston's industrial market could suffer from an oversupply of space, as well as from a drop in shipping activity prompted by ongoing trade disputes and a decline in oil prices. Although industrial vacancy is expected to rise slightly through 2021, the company says, "demand continues for more modern, state-of-the-art facilities and market fundamentals remain healthy."

During the third quarter, only one-fourth of the space under construction in the Houston area was preleased, according to commercial real estate services company Colliers International. However, another 10 percent to 25 percent of that inventory should be preleased before the facilities are completed, the company says.

The area's industrial vacancy rate rose to 7.7 percent in the third quarter as new projects came online, Cushman & Wakefield says. Once more supply arrives, the vacancy rate is expected to tick up.

"Low interest rates and robust investor demand are expected to continue generating strong interest for Houston industrial assets. On the fundamentals side, the market is closely watching new inventory additions," JLL says.

The MKT expects to revolutionize the live-work-play model with everything from retail and restaurant to office and coworking space. Courtesy of The MKT

Massive mixed-use project to bring creative office and coworking space to the Houston Heights

Meet The MKT

On a stroll or a spin down the Heights Hike and Bike Trail, you might not notice a complete transformation is eminent. The MKT — a mixed-use renovation and build out project — is getting ready to break ground.

The five-building, 200,000-square-foot project will bring 30 retail and restaurant concepts, and 100,000 square feet of office space together along with four acres of green space, parking, and an outdoor venue alongside 1,000 linear feet of the trail between North Shepherd Drive and Herkimer Street. The MKT name comes from the Missouri-Kansas-Texas railroad — later known as the Katy Railroad — that was transformed into the Heights Hike and Bike Trail.

MKT is a joint partnership between Houston-based Radom Capital, which is behind Heights Mercantile down the street, and Triten Real Estate Partners with capital partner, Long Wharf. The architect behind the project is Austin-based Michael Hsu Office of Architecture. Shop Companies is doing the retail leasing, and JLL's Houston office is coordinating the office leasing space.

"There's nothing in Houston that's like this that's upscale creative office space with a huge retail and restaurant component that's located on a major hike and bike trail right in the city," Russell Hodges, managing director of agency leasing at JLL, tells InnovationMap.

Ultimately, the project, which will break ground in the next 60 to 90 days, is a renovation, as the five industrial buildings that make up The MKT currently exist and were built in the '70s. The transformation will include redoing the facades of the buildings and incorporating green space.

The creative office space, which will be in three of the buildings, is doing something a little different than most office buildings in Houston. Originally, Hodges says they expected interest from TAMI tenants — which stands for technology, advertising, media, and information companies — but the interest they have had so far has been diverse.

"The project caters to the tenant that's looking for something different — looking for, honestly for lack of a better word, cool space," Hodges says. "Someone looking for something to help differentiate their business to leverage their office space to recruit and retain talent."

Another unexpected interested party — coworking tenants. Hodges says the project could house anywhere from 20,000 to 50,000 square feet of coworking space if the right coworking operator comes around.

"I don't think we were necessarily looking for coworking, per say," Hodges says. "But, we've had significant interest from coworking operators. Based on that level of interest, we think that there's demand for coworking in the area. We're looking for the right operator who's brand aligns with the brand of the project. I don't think that's every coworking brand, necessarily."

The team behind The MKT are also planning a second phase of the project for a large space just east of phase one. That concept has yet to be designed, and there aren't any specifics currently available.

Big picture

Courtesy of The MKT

On the project's website, this rendering can be interacted with to see 3D designs and before and after shots.

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ExxonMobil announces $100B carbon-capture hub for Houston area

greener thinking

In a move that would be a gamechanger for Houston, oil and gas giant ExxonMobil envisions creating a $100 billion carbon-capture hub along the Houston Ship Channel.

ExxonMobil foresees the Houston Ship Channel being the site of an "innovation zone" for carbon capture and storage. In a blog post on the ExxonMobil website, Joe Blommaert, the Houston-based president of ExxonMobil Low Carbon Solutions, says Houston would be "the perfect place" for the project because:

  • The ship channel is home to dozens of refineries and petrochemical plants.
  • The geological formations in the Gulf of Mexico could "safely, securely, and permanently" store tons of carbon emissions under the sea floor, according to the blog post. The U.S. Department of Energy estimates the storage capacity along the U.S. Gulf Coast could handle 500 million metric tons of CO2.

Irving-based ExxonMobil, which employs more than 12,000 people in the Houston area, says the project could capture and store about 50 million metric tons of CO2 annually by 2030. By 2040, that number could rise to 100 million metric tons.

"We could create an economy of scale where we can reduce the cost of the carbon dioxide mitigation, create jobs, and reduce the emissions," Blommaert tells the Reuters news service.

In a news release, Houston Mayor Sylvester Turner applauds the ExxonMobil plan.

"This proposal by ExxonMobil is the type of bold ambition and investment we will need to meet our climate goals and protect our communities from climate change," Turner says. "ExxonMobil's proposal represents a significant step forward for the energy industry, and I hope it brings more companies to the table to help Houston lead a global energy transition."

Turner notes that the Houston area is home to some of the largest emitters of carbon in the U.S., adding that everyone has "a responsibility and role to play in decarbonization."

Blommaert says the project would require public and private funding, along with "enhanced regulatory and legal frameworks that enable investment and innovation." According to Politico, ExxonMobil wants the federal government to kick in tax breaks or to set carbon-pricing policies to help get the project off the ground.

Politico reports that the Biden administration isn't considering ExxonMobil's idea as it prepares a climate-change package.

"Meanwhile, environmental groups and many Democrats have slammed carbon-capture proposals as a climate strategy, saying the only way to permanently reduce greenhouse gas pollution is a wholesale switch away from fossil fuels," Politico says.

Meanwhile, the International Energy Agency maintains that carbon capture and storage "are critical for putting energy systems around the world on a sustainable path." Achieving net-zero goals "will be virtually impossible" without carbon capture and storage, the group says.

ExxonMobil announced creation of its Low Carbon Solutions business unit in February as part of its push to invest $3 billion in lower-emission energy initiatives through 2025. Low Carbon Solutions initially will focus on technology for carbon capture and storage. The business unit is exploring opportunities along the Gulf Coast, as well as in Wyoming, Belgium, the Netherlands, Qatar, Scotland, and Singapore.

Last year, ExxonMobil hit the pause button on a $260 million carbon-capture project in Wyoming due to fallout from the COVID-19 pandemic, according to the Bloomberg news service.

In a December report, the Global CCS Institute, a think tank, said 65 commercial carbon-capture projects were in various stages of development around the world.

"Climate ambition, including efforts to decarbonize industry, has not been curtailed despite the adversities faced in 2020," Brad Page, CEO of the institute, says in a news release about the report. "We're continuing to see an upward trajectory in the amount of CO2 capture and storage infrastructure that is being developed. One of the largest factors driving this growth is recognition that achieving net-zero emissions is urgent yet unattainable without CO2 reductions from energy-intensive sectors."

Newly appointed innovation leader calls for more health care collaboration in Houston

HOUSTON INNOVATORS PODCAST EPISODE 80

Allison Post is a professional dot connector for the Texas Heart Institute. Located in the Texas Medical Center and founded in 1962, THI has long had a history of innovation — from Denton Cooley, THI's founder, performing the first artificial heart implementation in 1970.

Now, Post — who was appointed to a newly created position of manager of innovation partnerships — is focused on working with THI's latest generation of cardiac health innovators. She works internally to foster and support THI's brightest inventors as well as externally to make sure the institute is bringing in the best new technologies out there to its patients.

"The whole mission of the Texas Heart Institute is to help our patients. If that means that someone else has an incredible idea we want to jump onboard and bring it to people," Post says in this week's episode of the Houston Innovators Podcast.

Post, who has a bioengineering background and has worked on both sides of the table as an entrepreneur and a startup mentor, is looking to support breakthrough cardiac innovations within stem cells, pharmaceuticals, medical devices, and more. And unfortunately, the cardiac health space has an increasing need to develop new health care solutions.

"Because of the growing burden of heart disease, heart failure, coronary artery disease, the unfortunately long list of things that can go wrong with someone's heart means the pressing need for therapies is just growing," she says on the show. "We're trying to keep up and break into things that people haven't done a lot of work on, such as women's heart health."

Another factor in Post's role, which she's had since last fall, is to bring THI further into both the TMC's innovation efforts as well as the greater Houston innovation ecosystem — as well as beyond. To her, Houston has a huge opportunity to lead health care innovation.

"It makes no sense that we aren't the health care leaders yet in med tech development. It should not be Boston, San Francisco, or Minneapolis. It should be Houston," Post says. "We have everything we need to do it. We just need to bring it all together."

The key to getting there, she says, is further collaboration. If there's one thing the world has learned about health care innovation from COVID-19, it's that when experts are rallying behind and collaborating on solutions, the speed of development is much faster.

"The more minds we have the better the solutions I going to be," she says.

Post says that she hopes her work at THI can inspire other institutions to collaborate ‚ since everyone has the same goal of helping patients.

"I only see just phenomenal things for Houston, and what I really want is for the Texas Medical Center to become even more interconnected. We've got to be able to transfer ideas and thoughts and intentions seamlessly between these institutions and right now there are a lot of barriers," Post says. "And I really think Texas Heart is hopefully going to serve as an example of how to take down those barriers."

Post shares more about what she's focused on and where THI is headed on the episode. Listen to the full interview below — or wherever you stream your podcasts — and subscribe for weekly episodes.

New Houston accelerator supporting BIPOC in aerospace announces inaugural cohort

out of this world

A new accelerator program that is focused on aerospace innovation and supporting entrepreneurs who are Black, Indigenous, and people of color has announced its first cohort.

The Ion's Aerospace Innovation Accelerator for Minority Business Enterprises, or AIA for MBEs, has named the four companies that well be a part of its inaugural cohort. The 12-week program will guide the entrepreneurs through the development of their innovations, the growth of their businesses, and the development of relationships with mentors, corporate partners, and stakeholder networks.

"Aerospace contains a myriad of dimensions and by demystifying the industry in the form of the AIA for MBEs, we are able to build a more inclusive innovation ecosystem," says Christine Galib, senior director of programs at The Ion, in a news release. "It's our goal to not only support participants to be successful, but to open the playing field for other minority business enterprises hoping to enter the space."

The program's existence was possible through a partnership with NASA's Johnson Space Center, DivInc, and The Ion — as well as a $1.4 million grant from the U.S. Department of Commerce's Minority Business Development Agency.

Here are the four companies to take part in the cohort, according to the release:

  • Axialnics Systems Inc., led by Vincent Mbuvi, is an aerospace technology platform developing a Disc-wing Rotor Aircraft Concept, which takes-off as a helicopter, carries as much payload as an airplane and flies just as fast beyond the range of typical helicopters. The innovation solves runway inefficiencies and enhances military efficiency.
  • Boozed Beverages LLC, led by Damyanna Cooke and Jim Luu, specializes in intelligent vending in the liquor industry. The company provides a contactless, AI-driven cocktail making and dispensing vending machine, for locations such as weddings and events, sporting venues, festivals, restaurants, and nightclubs and lounges.
  • NANCo Aero, led by Shern Peters, provides urban air vehicles and drones to commercial, small business, government, and nonprofit organizations. It is working to develop the first Hybrid Personal Air Vehicle capable of transporting a family over the city of Houston.
  • Stratos Perception LLC, led by Rube Williams, develops artificial intelligence solutions for space systems to benefit human productivity, safety, and enterprise. It is also developing an intelligent transducer, a tool that can monitor and control multiphase flow, for use in space such as lunar water extraction and waste processing.

The hub and its associated accelerator will be housed at The Ion when it opens up later this year — along with the organizations other accelerators — but the program is being launched virtually on Wednesday, April 21, at noon.

"The Aerospace Innovation Hub came from the idea that the aerospace industry is well-known in Houston but for many people, particularly underrepresented communities, there have been barriers in entering the aerospace industry," says Jan E. Odegard, executive director of The Ion, in the release. "By offering mentorship, introduction to capital and training opportunities, with significant backing from Microsoft, The Ion is working to remove the barriers."