Plunging oil prices slam the brakes on 35-acre TX mixed-use project

Dive Brief:

PM Realty Group's Republican Square, one of the largest mixed-use projects planned for the Houston area's "Energy Corridor," is on indefinite hold due to a dive in oil prices, the Houston Chronicle reported.
Plans for the 35-acre development, which includes five high-rise office buildings (2.6 million square feet), two hotels, luxury residential buildings and retail space (100,000 square feet), has joined the 10 million square feet of available sublease office space currently in limbo awaiting a rebound in the energy sector.
An average of 500,000 square feet of sublease office space is opening up in the Houston area every month, according to a JLL report, and those totals could reach 11 million square feet by 2017.

Dive Insight:

Wade Bowlin, executive vice president and managing director of PM Realty's central division, told the Chronicle that "it doesn't make sense" to add 2 million square feet to Houston's office space market right now but that the company is ready to start the project as soon as oil prices rise enough to make it realistic.

Real estate development is not the only industry affected by the softening of the country's energy sector. The U.S. oil and gas industry began its upward march just in time to snag skilled construction workers smarting from the massive layoffs that came with the housing crash and Great Recession in 2007, but that out-migration of workers created a significant hole in the construction labor force once the building industry began to recover.

For a while late last year, however, as opportunities in the energy industry began to dry up, laid off workers began returning to the construction industry. Some industry experts believe this pumped up monthly construction employment numbers, making it appear as if the pool of available workers was plentiful and briefly masking the shortage of skilled workers.

The dive in energy sector activity has particularly hit the North Dakota and Texas real estate markets. As workers are vacating the heart of the last energy boom, home sales have been on the decline. However, unlike North Dakota, an overall business upswing in Texas has made up for much of the real estate losses in the more oil-reliant areas of the state.