Houston’s economic environment is tops — Real estate, demographic, economic factors combine to make Houston a desirable place to do business

Houston is known for many things: rockets, energy, the Astrodome and Beyoncé. It is also one of the top-performing U.S. metropolitan areas as measured by nearly any business or economic indicator, making it a cost-effective and internationally competitive business environment.

Houston is the fourth largest city and fifth largest Metropolitan Statistical Area (MSA) in the nation. Between 2000 and 2010, the Houston MSA increased its population by an impressive 26.1 percent, from 4.7 million residents to 5.9 million. Demographers agree that population growth will remain strong into the foreseeable future as domestic and international migration trends favor Houston’s geographical, cultural and economic strengths.

Smart Business spoke with Lisa R. Bridges, Director of Market Research at Colliers International, to learn more about the strengths of Houston’s business environment.

Ideal Workforce

It’s not just quantity, but also quality of the workforce that attracts companies to Houston. Area residents are well-educated with the majority of the population over 25 years of age holding a high school diploma and residents with college/graduate educational studies outnumbering those with less than a high school education.

Educational prowess among Houston residents can be attributed to the area’s nationally recognized colleges and universities, as well as technical and trade schools, including Rice University, University of Houston, Texas Southern University, Houston Baptist University, Baylor College of Medicine, University of St. Thomas, San Jacinto College, and Houston Community College.

The high level of educational achievement translates to higher average income levels. The median household income in 2014 is projected to be $63,857 and the average household income level is pegged to be $85,409, both significantly over the national average.

Companies that do business in Houston not only have access to an educated workforce, but also a population able to spend money on their products and services. Houston’s employment sector has weathered the recession better than most major metro areas. The downturn was short-lived in the area and the Houston MSA began recovering jobs sooner than most.

Diversified Portfolio

Bolstered by above-average demographic trends and a strong base of diverse industries, Houston is well positioned to compete in today’s global markets. Long recognized as the energy capital of the world — with every major energy company represented locally — Houston now stands as a global example of economic diversity. The area is home to a thriving stable of industries including medical/biomedical technology, aeronautics, plastics manufacturing, electronics, software design, integrated power and global trade.

Houston’s strong economic base is a key factor in driving both domestic and international migration trends. In fact, Houston ranks third among U.S. cities with the most Fortune 500 companies with 23, trailing only New York and Chicago. Notably, Houston surpassed other major metros on the Fortune 500 list including Los Angeles, Dallas and Atlanta.

Houston has long been recognized as one of the most competitive U.S. cities for corporate relocation and expansion activity. Recently, Houston ranked No. 2 in the country for Site Selection Magazine’s Tier One New and Expanded Facilities for MSA’s with a population of more than 1 million. Chief Executive Magazine — for seven straight years — named Texas as the No. 1 state for Best Business, in which Houston’s energy industry played a huge role.

Favorable Business Climate

In addition to its diverse growth industries, and the skill and education of its workforce, a key factor underscoring Houston’s business appeal is that it is one of the least expensive major cities in which to conduct business. Significant benefits include the absence of state or city income taxes, no state property tax, as well as an exceptionally low cost of living index.

As a major transportation hub with two major airports, a world-renowned port, and superior rail and road infrastructure, Houston facilitates the interconnection of global business locations. Business alliances with major U.S. and international markets is further enhanced by the presence of 94 foreign consulate offices in Houston.

Houston’s ability to foster continued expansion in future-growth industries responsible for generating high quality, well-paid jobs across all business sectors has placed it in the top tier among U.S. cities. With its numerous business advantages, Houston is well positioned to successfully compete in today’s global marketplace.

Lisa R. Bridges is Director of Market Research at Colliers International. Reach her at (713) 830-2125 or [email protected].