Seaports Magazine - Fall 2014 - (Page 50)

HOuSTON THINKS OuTSIDE THE BOX WITH NON-TRADITIONAL LINES OF BuSINESS By R.D. Tanner Managing Director of Real Estate Port of Houston Authority P orts looking to expand their business opportunities can start with something they've already got - properties and existing relationships with clients, tenants and developers. Examine those, then start getting creative and think outside the box. The Port of Houston Authority has done just that through its dedicated and experienced Real Estate Department. The creativeness has taken on a multi-faceted and strategic approach. Focusing on the removal of antiquated improvements on strategically located properties in recent years, the port authority has taken steps to breathe new life into them through redevelopment in some cases, but also by making an effort to simply look for opportunities for a higher and better use. The result has been a significant increase in high-quality, usable property and an uptick in what can be offered to developers and users that can benefit both parties. THE BOTTOM LINE Redevelopment of strategic real estate owned by the port can be a source of added long-term revenue and jobs. 50 AAPA SEAPORTS MAGAZINE An added benefit to this approach of improving property that's already in place is the elimination of any existing health, liability and safety issues, while increasing cargoes, resulting in more tariff revenue and port authority rental property and more jobs and commerce. The strategic plan for the demolition and redevelopment project was pretty simple: to optimize the value and functionality of targeted real estate assets owned by the port authority. When the plan was kicked off more than two years ago, the total approximate cost was estimated at about $14 million over a projected three-year period. Those costs included planning and design, asbestos abatement and demolition, net of credits for materials recycling and recovery. It was estimated to have an internal rate of return of more than 25 percent. The payback or break-even period was calculated at seven years - or less. Those calculations remain pretty much ahead of estimates. While demolition initially can seem expensive, not taking action can prove to be even pricier. In Houston in recent years, the focus has been on the conversion of non-producing real estate assets into producing assets, which is expected to provide multiple benefits for many years in the future. In some cases, it is anticipated that some property that has been unused for years can be turned into revenue-producing properties for the next 50 or 60 years. For those familiar with what is taking place currently along the Houston Ship Channel, that's not pie-in-the-sky wishing. A recent survey conducted by the Port Authority by the Greater Houston Port Bureau showed that an estimated $35 billion in expansion and new investment is projected to occur between 2012 through 2015 alone. While much of that expansion is tied to the energy sector - Houston hosts the largest petrochemical complex in the country and second-largest in the world, next to Rotterdam - other sectors are expected to benefit as well. That includes the port authority. The frantic pace of development has led to a dearth of jobs in some areas, but also new commerce for the port authority and the region. For example, if you are a welder, you can get a job right now in Houston because there is a high demand for welders, along with other types of skilled jobs. So with that kind of development, the time is right for undertaking the real estate growth program we have put in place at the port authority. One big project that will be built on the Houston Ship Channel is being done by Enterprise Products Partners, which will build the world's largest ethane export facility. Enterprise signed a long-term agreement with the port authority for use of its

Table of Contents for the Digital Edition of Seaports Magazine - Fall 2014

AAPA Seaports Magazine
From the President’s Desk
The Big Ship Race – Is Bigger Better?
Shipping Lines Partner to Stay Afloat
Cruise Lines Set Sail for Growth
Bulk Cargo Ports Valuable to the Community
Crafting Funding Solutions for Port Projects
Sister Agreements Spread Cultural Wealth
Strong Financial Ratings Open the Door of Opportunity
Customer Service a Key to Strong Bottom Line Results
Plug in to the Fuel of the Future: Electricity
Houston Thinks Outside the Box With Non-Traditional Lines of Business
Ohio Port Authorities Know How to Rock Economic Development
XXIII Congress of Latin American Ports
Index of Advertisers

Seaports Magazine - Fall 2014

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