Houston is America's Opportunity City



America’s Opportunity City
By Joel Kotkin and Tory Gattis
Summer 2014

“'What we are creating here is a place where business can grow and people can afford to live. This is the key to Houston[,' said developer David Wolff.] Indeed, the Houston model of development might be described as 'opportunity urbanism.'”

"Houston’s economic success over the past 20 years—and, more remarkably, since the Great Recession and the weak national recovery—rivals the performance of any large metropolitan region in the United States. For nearly a decade and a half, the city has been adding jobs at a furious pace—more than 600,000 since early 2000, and 263,000 since early 2008. The greater New York City area, by contrast, has added just 103,000 jobs since 2008, and Los Angeles, Chicago, Phoenix, Atlanta, and Philadelphia remain well below their 2008 levels in total jobs. In fact, Los Angeles and Chicago, like Detroit, have fewer jobs today than they did at the turn of the millennium."

"Houston now has the highest standard of living of any large city in the U.S. and among the highest in the world. Indeed, the average cost-of-living-adjusted salary in Houston is about $75,000, compared with around $50,000 in New York and $46,000 in Los Angeles. Personal household income has risen 20 percent since 2005 in Houston, compared with 14 percent in New York, 11 percent in Los Angeles, and less than 9 percent in Chicago. Former Federal Reserve economist Bill Gilmer notes that, except during the energy bust of the mid-1980s, Houston’s per-capita income growth has outpaced the nation’s since the late 1960s."


"Since 2001, the energy industry has been directly responsible for an increase of 67,000 jobs in Houston, and it now employs more than 240,000 people in the area. These jobs include many technical positions, one reason that the region now boasts the highest concentration of engineers outside Silicon Valley. Since 2001, Houston has seen a 24.1 percent growth in STEM (science, technology, engineering, and mathematics) employment, compared with less than 5 percent growth in New York and San Francisco. The jobs should keep coming: Gilmer estimates that $25 billion to $40 billion in new petrochemical facilities is on its way to Greater Houston."

"Houston has embraced not only the energy industry’s white-collar professional jobs but also its well-paying blue-collar industrial positions. The city has seen a surge in mid-skills jobs (usually requiring a certificate or a two-year degree) in fields such as manufacturing, logistics, and construction, as well as energy. Many of these jobs pay more than $100,000 a year, and since 2007, according to calculations derived from the Bureau of Labor Statistics by the Praxis Strategy Group’s Mark Schill, Houston led the 52 major metropolitan areas in creating them, at a rate of 6.6 percent annually. In contrast, these jobs have declined by more than 10 percent in New York, Los Angeles, Chicago, and San Francisco, which have not been friendly to such industries. 

"Trade is robust. The Port of Houston, connected with the Gulf of Mexico by the 50-mile Houston Ship Channel, is now the nation’s Number One export hub, feeding off the energy revolution and expanding economic exchange with Latin America. Mexico and Brazil are by far the port’s largest trading partners. Houston’s port business has grown almost fourfold since 2000—far faster than either New York’s or Los Angeles’s. Port officials estimate that the trade sector contributes $500 billion in economic activity and more than 1 million jobs to the state of Texas annually.

"Houston is also home to the Texas Medical Center, the largest concentration of hospitals and research institutions in the world and, by itself, the metro region’s third-largest source of jobs—employing 106,000 people, including 20,000 physicians, scientists, and other professionals. Fifty-two separate medical institutions are located on the campus, equal in size to Chicago’s Loop. It currently has over 28.3 million square feet of office space, more than the downtowns of both Houston and Los Angeles. By the end of 2014, TMC top officials predict, the area will be the nation’s seventh-largest business district."

“'Houston is getting very comfortable with itself and what it is,' says retired Harris County judge Robert Eckels. 'We are a place that has a big idea—supporting and growing through private industry, and that’s something everyone pretty much accepts.'”

"Low taxes are part of that idea.... A family of three making $150,000 moving from New York City to Houston would save upward of $8,000 in taxes, an analysis conducted by the District of Columbia found."

"An even bigger component of Houston’s growth, however, may be its planning regime, which allows development to follow the market instead of top-down government directives. The city and its unincorporated areas have no formal zoning, so land use is flexible and can readily meet demand. Getting building permits is simple and quick, with no arbitrary approval boards making development an interminable process. Neighborhoods can protect themselves with voluntary, opt-in deed restrictions or minimum lot sizes. Architect and developer Tim Cisneros credits the flexible planning system for the city’s burgeoning apartment and town-home development. 'There are a lot of people who come here for jobs.... We can respond to this demand fast because there’s no zoning, and approvals don’t take forever. You could not do this so fast in virtually any city in America. The lack of zoning allows us not only to do neat things—but do them quickly and for less money.'”

"The flexible planning regime is also partly responsible for keeping Houston’s housing prices low compared with those of other major cities. On a square-foot basis, according to Knight Frank, a London-based real-estate consultancy, the same amount of money buys you almost seven times as much space in Houston as it does in San Francisco and more than four times as much as in New York. (See “Houston, New York Has a Problem,” Summer 2008.) Houston has built a new kind of 'self-organizing' urban model, notes architect and author Lars Lerup, one that he calls 'a creature of the market.'”

"Houston’s explosive economic growth has engendered another kind of boom: a human one. Between 2000 and 2013, Greater Houston’s population expanded by 35 percent. In contrast, New York, Los Angeles, Boston, Philadelphia, and Chicago grew by 4 percent to 7 percent. These figures reflect emerging migration patterns. Texas once sent large numbers of people to California and the East Coast, but now, considerable numbers of New Yorkers, San Franciscans, and Los Angelenos are picking up stakes and heading for Houston...."

"A 2012 survey by Economic Modeling Specialists International (EMSI) of the city’s creative economy found 146,000 jobs, generating an annual economic impact of $9.1 billion. Houston is projected to have the largest gain in arts-related jobs by 2016 of any city in the study. Arts and culture expenditures totaled almost $1 billion per year in 2010, with total event attendance topping 16 million—numbers sure to grow, with almost 150,000 people per year moving into Greater Houston. The city boasts permanent professional resident companies in all of the major performing arts, including opera, ballet, symphony, and theater, and its theater district has more seats than any rival in the country, except for New York’s. Houston’s 18 museums attract 8.7 million visitors a year."

"[M]ost Houstonians see the city as a place that works—for minorities and immigrants, for suburbanites and city dwellers—and few want to fix what isn’t broken. 'The key to Houston’s future is to keep thinking about how to be a greater city,' notes David Wolff as he passes a new set of towers off the Grand Parkway. 'This road, it wouldn’t be built in many places. People might talk about these things, but in most places, they don’t get done. In Houston, we don’t just talk about the future—we’re building it.'”