The ExxonMobil Effect
February 1, 2014 Updated: February 3, 2014 9:40pm
Construction cranes clustered alongside Interstate 45 at the Hardy Toll Road carve a startling, wide swath through the trees just south of The Woodlands.
Placards staked around the planned community advertise commercial land for sale, and billboards promote multiple new subdivisions - all indicators of a region undergoing furious transformation.
Come next year, this will be home to some 10,000 people who work for Exxon Mobil Corp., which is building a campus the size of a small city on 385 forested acres north of Houston. The project is so massive that it was initially given a code name: Project "Delta," the mathematical term for change.
Long before the first employees arrive, the development is reshaping the region in vast ways that might be called the Exxon effect, solidifying Greater Houston's place as the nation's energy capital while testing the limits of its unbridled exurban growth.
No less than 20 buildings are underway at the energy giant's future home, a real estate development thought to be the largest in the country. The project, which was announced a little more than two years ago, has triggered a real estate boom that some say is just beginning.
Other companies have followed in announcing moves northward, and the local economic development council is swamped with inquiries from businesses. Developers are seizing on the opportunity to build more apartments, offices and shopping centers.
"We describe it as the tsunami headed this direction," said Virgil Yoakum, general manager of Woodforest, a master-planned community between The Woodlands and Lake Conroe.
Yet even as the many business leaders and Woodlands residents herald the economic windfall, the rapidity of the growth is creating a sense of unease about whether the region can absorb the waves of people and businesses soon to arrive.
I-45 is already carrying more traffic than it was designed to handle, even before the first new employee arrives. New highway construction likely will accelerate the cycle of sprawl that has defined Houston and the surrounding region for decades.
Some schools say bond referendums will be needed to make room for the influx of families and children, and the promise of an affordable home is fading quickly.
"Exxon is a regular topic of conversation wherever you go - over dinner, at church, around the neighborhood and at school," said Petri Darby, a longtime resident of The Woodlands.
Billboards, site stakes
On approaching The Woodlands, Texas' most famous planned community, every other billboard beckons to motorists in search of a house. KB Home, Perry, Darling, Avanti - the builders boast of homes at all prices. In residential developments with names like Timarron Lakes and Creekside Park, home sites are staked with orange flags.
The biggest impact from Exxon Mobil's impending arrival may well be on the housing market, where property values are soaring and builders are confidently breaking ground on thousands of new homes.
Joe Robles, a manager at the new Morton's Grill in The Woodlands Town Center, is glad he bought when he did.
A few years ago, Robles purchased a five-bedroom house in Harper's Preserve. At the time, it was the seventh house in the brand-new subdivision near Texas 242 and I-45. Now "we're surrounded by 100-plus new homes," Robles said. "It's grown by leaps and bounds."
Housing inventory has fallen sharply. Existing home prices are rising and a buyer would be pressed to find a new house in The Woodlands for less than $250,000. A few years ago, new homes could be found in the high $100,000s. The median price here has jumped nearly $100,000 in three years, from $260,000 in December of 2010 to $355,000 this past December.
Dan Taylor, another local resident, describes a Darwinian scenario of bidding on properties sight unseen and making offers above asking price to even be considered by sellers with multiple cash buyers already lined up. He looked at 20 and made offers on three before buying one in the Indian Springs section last summer.
"I felt like when I sent over my contract it was like a resume," Taylor said. "They're going to receive 10 or 12 in the first day or two, so how do you get yours to the top?"
Grand Parkway nearby
Meanwhile, builders are scouring the region for untapped acreage. Last year, Toll Brothers acquired hundreds of acres in southern Montgomery County for a development of about 900 luxury homes.
"We actively are looking for land opportunities to buy, not only in north Houston but around Houston … to do the next Woodlands," said Paul Layne, executive vice president of master-planned communities for the Howard Hughes Corp., the parent organization of The Woodlands Development Co.
Johnson Development even struck a deal to buy a 2,000-acre Boy Scout camp in Montgomery County from the Sam Houston Area Council of the Boy Scouts. For seven decades, Camp Strake had served as the Scouts' flagship campground.
Developers are getting an assist from another portentous undertaking near the rising Exxon Mobil campus, a new segment of the Grand Parkway, Houston's next major ring road beyond Beltway 8.
It has the potential to cut commute times for those who live in such neighborhoods as Bridgeland, Fairfield and Kingwood, while opening new areas for development that weren't previously viable because they lacked convenient access to major freeways.
Business leaders herald the boom, contending that it is putting Houston on the national radar screen while bringing jobs and prosperity to the region.
"Landing all these great employers in a concentrated area raises the whole tide in the area," said Keith Simon, executive vice president of CDC Houston, a subsidiary of Coventry Development of New York. The company owns Springwoods Village, a planned community under development west of I-45 that encompasses the Exxon Mobil campus.
Not all the enthusiasm is as unabashed. Some worry about the long-term effects of runaway growth in a region long defined by sprawl.
The Woodlands College Park High School was designed to look like an old-time schoolhouse, but the parking lot belies the sepia-toned imagery. It's a concrete prairie, vast enough to be a park-and-ride lot at a major airport.
School districts bracing
The wave of children of Exxon Mobil and other companies' employees will put even more cars in lots and on the roads, and more stress on the schools themselves.
Springwoods Village is expected to add more than 100 students a year - enough to fill four new classes - through 2024 to the Spring Independent School District, a district-commissioned analysis shows. Current enrollment is about 36,500 students.
"The district is preparing for this growth by ensuring that land is available for future schools and by planning for future bond referendums," spokeswoman Karen Garrison reported.
Conroe Independent School District, the main district serving The Woodlands, is projecting growth of about 1,100 students next year, pushing enrollment to about 56,100, said spokeswoman Lisa Meeks.
But nothing strikes fear in the hearts of Houston-ians than the specter of an even longer commute and there is little doubt that roadways will feel the brunt of the Exxon effect.
Already, I-45's southbound lanes form a ribbon of headlights in the morning from commuters headed for the big town. The reverse commute - to The Woodlands - can be slow, as well, and that is also likely to grow as residents who live in Houston drive north to their jobs at Exxon.
Projections made before the Exxon Mobil campus was announced show traffic almost tripling on the expanded segments of the Grand Parkway adjacent to the project. An influx of 10,000-plus new workers and their families will only add to the congestion.
"The projections are off the charts," warned David Crossley, president of Houston Tomorrow, a nonprofit that works on quality-of-life issues.
"The No. 1 issue of a community that's growing this fast is mobility, no doubt," said Paula Lenz, executive director of the North Houston Association.
Roads are 'maxed out'
The Houston-Galveston Area Council is involved in several new transit analyses of what all the new development will mean to the area's transportation needs.
"I-45 is one of our region's most congested roadways," said Alan Clark, H-GAC's director of transportation. "Although it was reconstructed in recent years through Montgomery County and the northern part of Harris County, it is still very heavily congested in morning and evening peak periods and increasing in both directions, especially as The Woodlands becomes more of a destination for people to come to work."
Consider the stretch between Spring Creek and Texas 242, which is carrying 253,000 cars a day, said Thomas Gray, H-GAC's chief transportation planner. That's at least 10 percent more than it was designed to handle.
By 2030, Gray said, that figure could hit 400,000, based on Texas Department of Transportation estimates.
"The bottom line is, the roads up there are pretty much maxed out," he said.
The Woodland's residents are circumspect. Knowing that the tidal wave of change is inevitable, they hope Exxon brings more than just higher home prices and heavier traffic.
"On a personal level," Darby said. "I hope that big corporate moves like this will bring more independent ethnic restaurants and cultural arts offerings, like blues and jazz clubs, for those folks who don't want to have to trek downtown for such things."
The magnitude of the Exxon effect comes as no surprise to local government and economic officials, who grasped the significance of the coming project long before the first crane arrived.
"We didn't want to jeopardize anything," said Gil Staley, CEO of The Woodlands Area Economic Development Partnership, who helped shepherd the project from the earliest meetings when it was dubbed Project Delta, to the announcement of the project in June 2011.
To Staley, and the state's political leaders, it posed a once-in-a-lifetime opportunity to create an economic synergy that would spread to other sectors of the economy. For better of for worse, that vision is coming to fruition; Exxon's choice of a new home has spawned scores of other businesses to take a close look at The Woodlands, promising additional growth for some years to come.
Offices and retail, too
A year after the energy campus broke ground, the developer of The Woodlands announced Hughes Landing, a large-scale project on 66 acres that would include as many as 11 office buildings, hundreds of apartments and retail shops. The first completed building is fully leased to a variety of tenants.
Developers have started or are planning smaller office projects in anticipation of additional demand from companies that want to be near Exxon Mobil.
Some 2.3 million square feet of office space are under construction or renovation in and around The Woodlands, said Jones Lang LaSalle, a commercial real estate firm. Another 8 million square feet are proposed for the area, defined by the company as north of Cypresswood between Aldine Westfield and Kuykendahl.
Last year, Staley's economic development agency received twice as many formal inquiries from companies considering expanding or moving to the area. The potential projects, which represent around 4,800 jobs, range from corporate headquarters to light manufacturing operations.
"The requests," Staley said, "are at numbers we've not seen before in our 16 years."
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