Q&A with Jill Nesloney, director, Lee & Associates – Houston

Houston is notorious for undesirable traffic issues, infinite construction woes and the need for accessible public transportation throughout the city. Spanning 665 square miles, Houston’s vast space has a large impact on tenants and their employees. When deciding where a tenant should locate, traffic levels and easy access to public transportation are certainly strong items to consider.

With experience in all of Houston’s submarkets for a variety of industries, Jill Nesloney, director at Lee & Associates – Houston, shares her thoughts on various ways tenants are affected by public transportation and road congestion in Houston. Jill has represented both tenants and landlords over the last six years, handling over 450 lease transactions.

Q: How are tenants negatively affected by traffic issues? Are there any positive impacts?

A: Houstonians generally loathe sitting in traffic. Tenants tend to locate to office spaces that are convenient for their customers and employees. There are two main factors tenants take into consideration when deciding where to locate: 1) where their employees live, and 2) where their visitors are coming from. If a tenant has few visitors, they may be more concerned about helping their employees avoid fighting traffic. They could do this by locating in a suburban market where most of the employees live, so they can get to and from work easily. However, if a tenant has a high volume of daily visitors, it may be more important that they are in a location that benefits their visitors.

A tenant might be willing to drive further to work and battle traffic to be in a location near their customers and competitors. If a tenant has lots of visitors, then it is likely that ingresses and egresses to their location are important. This type of tenant might care more about quick accessibility to a major freeway than how long it takes to get home.

Q: Is the cost of office space impacted by public transportation or traffic issues?

A: The short answer is yes, and no. Submarket desirability is somewhat impacted by traffic changes. For example, US-290 has been under construction for what seems like an eternity and many tenants with upcoming expiring leases have decided not to renew out of frustration. This caused vacancy rates to rise in this submarket, and landlords had to get competitive with concession packages to get tenants to stay. We are seeing the same thing happen to properties along Post Oak Boulevard and I-610. After construction became unbearable, tenants soon realized that relocating might be worth the added headache. We have seen many tenants relocate out west or inside the loop, specifically to avoid I-610 traffic delays.

Public transportation has a strong impact on making submarkets more desirable as well. Tenants may consider downtown Houston over the Galleria area because of the Park & Ride options that are available for employees. Dedicated bus lanes are currently being added to Post Oak Boulevard to save on commuting time and mitigate traffic issues.

Q: Will the elevated bus-only lanes on the I-610 West Loop have a positive impact on tenants located in the Galleria area? Will this affect the prices of office space?

A: Tenants will have to wait and see how successful the dedicated bus lanes are before they can determine whether it offers added value for their employees and clients. If people like it and use it then yes, it could be a valuable addition for the Post Oak Boulevard and I-610 West Loop tenants. If it causes more traffic for drivers and isn’t well utilized, then it could have negative impacts on the submarket. Because this area has been under heavy construction for a while, we have already seen a negative impact on the Galleria submarket.

Q: Do you see this trend being adopted for more areas around Houston?

A: Our city has faced a public transportation issue for a very long time. Even though we are continuously improving and expanding our public transit, Houstonians still prefer to drive, and I don’t think this will change. Public transportation needs to be both convenient and safe for office employees to feel comfortable utilizing the various transit systems.

Q: Do tenants prefer to be located close to public transportation? If so, are they willing to spend a higher price for convenience?

A: If the office tenant is moving downtown then yes, close walking proximity to a bus stop is important. In other submarkets, public transportation is less utilized and access to plentiful parking is more important.

Q: Do tenants seem to avoid areas in Houston that are highly congested?

A: Tenants like being near major freeways with smooth ingresses and egresses. A tenant that needs to get around town quickly might not move to a building that’s located more than 1 mile from a major freeway. Congestion caused by construction is more of a deterrent than regular rush hour congestion.

Q: How does road construction and freeway expansion affect tenants? Are they often displaced and need to relocate?

A: It seems like Houston is always expanding and widening its freeways to accommodate the influx of people moving in from all over the nation. When US-290 and I-10 were redone, some tenants were required to relocate because their building was also being torn down in the process. In other cases, tenants became extremely frustrated with the slow construction progress and decided that relocating would help to alleviate traffic issues.