Houston - A World-Class City and Economic Powerhouse

Houston – the fourth largest city in the U.S. and the economic dynamo of Texas is also an international player in the future of global commerce.

The economy of the Houston region is one of America’s largest. Its industries include oil and gas, aeronautical and space, medical research and healthcare, technology, manufacturing, logistics and shipping.

The region includes America’s largest shipping port by international tonnage and the top rated logistics industry in the nation.

International passenger carriers and commercial cargo carriers are positioning themselves with direct routes to Houston airports as the city gains importance in global commerce and travel.

Last year, 6.4 million international passengers traveled through Bush Intercontinental Airport, a new record. The Houston Airport System expects the number of total passengers served by 2020 to be 80 million passengers a year.

International patients are an important segment of Houston's increasing stream of world travelers and contribute millions of dollars annually to the Houston economy. The renowned Texas Medical Center in Houston contains the world’s largest concentration of healthcare and medical research institutions. The Center includes 13 hospitals and numerous schools of medicine, nursing and dentistry. The city also has some 55 universities, colleges and academic research institutions.

On a play of words using one of Houston’s nicknames, “Space City,” referring to NASA’s Mission Control Center, Houston is using its real estate “space” to further a different mission. From skyscrapers to boutique hotels -- from the Museum District to the Theatre District -- from the Medical Center to its international port gateway -- from its stadiums to its world-class shopping malls -- from residential highrises to planned communities -- smart growth with a strategic purpose.

Construction

No longer susceptible to a homogeneous energy industry, Houston now boasts a diversified economy that has provided insulation from major economic interruptions. During the third quarter of 2007, Houston’s office space reached 90% occupancy of a 180 million square foot inventory. An additional 24 buildings currently under construction will add another four million square feet of Class A space to Houston’s office market, further pillaring the third-largest skyline in the United States.

Major development is also underway to augment Houston’s nationally eighth-ranked retail market. Current projects valued at roughly $3.4 billion will bring 12.3 million square feet of new high-end space that is targeted to capture quality corporate business as well as domestic and international travelers who are less sensitive to price tags. This amount of new retail space will shatter all records according to National Commercial Real Estate News released today on LoopNet.com.

While the bubble has burst in other cities and states, Houston has become the largest housing market in the United States, according to the U.S. Census Bureau during the 12 months from October 2006 through 2007. The three other major Texas cities (Dallas, Austin and San Antonio) ranked in the top 20 housing markets in the nation.

Convention, Sports, and Leisure

Convention, sports, and leisure patronage is up 130%. Houston’s tourist attractions are diverse and abundant. Houston is one of the few cities in the United States to offer four major performing arts disciplines (ballet, opera, symphony, and theatre) and five professional sports franchises.

Continued sales and job growth in 2008 are expected for the already cooking Texas' restaurant industry. Currently, Texas has the 2nd highest restaurant sales in the nation and the 2nd largest number of restaurant-industry employees. California is #1 in both categories. However, with Houston's lower cost of living and pro-business environment, California's inflated prices due to costs of doing business might account for their being #1 in the sales category instead of Texas.

The Houston Business Journal reported that four boutique hotels have opened since 2002. The emergence of these luxury boutique hotels is a logical consequence of Houston’s rebirth as an “international” city, capturing demand generated by increasing traffic from domestic and foreign travelers whose tastes lean to more upscale lodgings. This new room supply has been quickly absorbed.

Convention activity in Houston is also pushing record levels. In 2003, a $165-million expansion project nearly doubled the space of the George R. Brown Convention Center complex to 1.2 million square feet. According to the Greater Houston Convention and Visitors Bureau, the expansion led to a record high in conventions and delegates for 2006, with an economic impact of $1 billion for the year.

Industrial / Warehousing

Houston's Gulf Coast has long powered the growth in southeast Texas and has seen its trade activity more than double since 2003. With the opening of the Bayport Container Terminal expansion in January 2007, shipping activity at the Port of Houston is continuing its rise, as anticipated.

As for collateral construction, "We're definitely seeing an uptick," said Billy Gold, senior vice-president of CB Richard Ellis in Houston. "The expanded capacity at Bayport terminal facilities have fueled a lot of speculative construction in that vicinity. Local developers are putting up industrial complexes primarily for the petrochemical, agricultural, cotton, feedstock, and building materials markets. And, we are now starting to see national developers coming in to get a toe-hold in this market."

With the Panama Canal's expansion completion expected in 2014 and proposed port-of-entry interstate Trans-Texas corridors, the shipping through Texas ports is expected to rise even more. Houston ports, the largest in the nation, will be well-positioned and ready to incorporate increased traffic.

These new and existing developments demonstrate the city's commitment to keep in step with its ever-increasing population, international presence, and business growth. Houston hosts many leading market niches in the country and cannot be wholly defined by a single industry. With a dynamic economy that shows little signs of slowing, Houston has made its debut as a world-class city. Corporations and individuals alike looking to expand exisiting companies or to invest in their future through business ownership are looking to Houston as the place to be.

Houston Leads Future of Alternative Energy

Houston is the pacesetter in the race to a new-energy future -- Wind Energy, Biofuels, Hydrogen, Nanotechnology and Carbon-Free Energy.

As investment in alternative energy surges, scientists and entrepreneurs throughout the U.S. are trying to brew up remedies for the world's so-called petroleum addiction.

While it's too soon to say which of these efforts will thrive and which will wither, energy-industry veterans are increasingly confident they know where at least some of tomorrow's leaders in alternative energy will be: Houston, the home of big oil.

In California, Gov. Arnold Schwarzenegger is pushing ahead with efforts to keep his state among the leaders in the development of green energy. The Midwest continues to explore new ways to exploit its competitive edge in ethanol. And Northeastern universities are pumping big money into energy research. While Houston's economy has been long known as a top producer for oil and gas, the oil industry is no longer the only energy star in town. Alternative energy is on the rise here and continues to diversify.

Major oil companies have stationed key alternative-energy divisions here, newer ventures in wind energy and biofuels are emerging, and Texas universities are pushing hard to develop carbon-free energy.

Houston's emergence as an alternative-energy center is partly an outgrowth of the city's role as home to major players in the conventional-energy industry. "There's always been this sort of joke within biofuels, that when these technologies become real, the traditional oil companies will snap them up," says Nathanael Greene, a senior policy analyst with the Natural Resources Defense Council, a New York nonprofit environmental advocacy group.

As alternative energy moves "from the margins into the mainstream," the big, established energy companies will make more of a commitment to the market, and Houston "is going to play a role just because of its importance in the oil industry," Mr. Greene says.

But Houston also is playing host to newcomers in the energy business, thanks in part to a welcoming regulatory environment and efforts by the state government to encourage the production of alternative energies.

'Stuff Gets Built'

One advantage Houston offers alternative-energy companies is that the approval process for new facilities is far less onerous in Texas than in many other states.

"Texas creates a very positive environment to work in," says Jeff Trucksess, executive vice president of Green Earth Fuels LLC, a biodiesel company started a year ago that is based in Houston and is building a production facility along the Houston Ship Channel. "There are strict rules on what you have to do, but it's a very efficient process." The company's Houston site won permits last year and is expected to begin producing biodiesel in July.

"In Texas, things happen -- stuff gets built," says Michael Skelly,chief development officer for Houston-based Horizon Wind Energy, which will produce power from seven wind farms in six states, including Texas, by the end of this year.

In addition to seven-year-old Horizon, which is a unit of Goldman Sachs Group Inc., emerging players in wind power in Houston include subsidiaries of Babcock & Brown Ltd., BP PLC and Royal Dutch Shell PLC, and law firms like Baker Botts LLP.

"This was the natural place for this business," says Robert Lukefahr, president of BP Alternative Energy North America Inc., who emphasizes the city's wealth of knowledge of the energy business. "These are folks that know how to bend metal and put it in the ground and do it safely," he says.

Taking the Initiative

The wind-energy business boomed in Texas after the 1999 passage of a state law that requires a certain amount of the electricity sold by utilities in the state to be generated from renewable sources.

More recently, the state has again taken the initiative by easing the construction of transmission lines for wind farms, a crucial step if entrepreneurs are to continue to build turbines in the windiest corners of the state. Mr. Skelly enthuses about the new rules, which have set Horizon and other wind companies on a land grab to claim the best spots for turbines.

Houston also is emerging as a home for both start-ups and established energy companies entering the biodiesel business. These producers like the city in part because of its access to the huge Texas consumer market and its location at the center of a nationwide fuel-distribution network, with extensive storage facilities, pipelines and rail and water connections.

"Economically, it's always been our opinion that if you're in the heart of the distribution center...that's a great place to be," says Mr. Trucksess of Green Earth Fuels.

One unresolved issue with biodiesel is whether the fuel raises emissions of smog-causing nitrogen oxide, which is tightly regulated in Houston and other Texas cities. The state has granted the biodiesel industry until Dec. 31 to show proof the fuel meets Texas standards. The rules may require an additive to the fuel, but Mr. Trucksess doesn't expect the issue to impede the marketing of biodiesel in Houston or elsewhere in Texas.

Lots of Experience

The city also offers easy access to people experienced in every aspect of the energy business. For instance, Green Earth's plants initially will produce fuel mostly from soybean oils, but as different feedstocks come into use the company expects to tap into Houston's expertise in commodity trading, Mr. Trucksess says.

"It's already in the DNA of Houston to be energy-oriented," says Rick Zalesky Jr., a vice president of biofuels and hydrogen at Chevron Technology Ventures, a Houston-based unit of Chevron Corp. Chevron is conducting biodiesel research at a couple of laboratories in Houston that have been used for decades in the conventional energy business. And it is a partner in Galveston Bay Biodiesel LP, a start-up that is building a facility in nearby Galveston, Texas.

Houston also is home to research on hydrogen, nanotechnology and other areas that could have a dramatic impact on the energy picture in the years ahead. Research on alternative fuels is being done not only by big energy companies like BP, Shell, Chevron and General Electric Co., but also by nonprofit institutions like the Houston Advanced Research Center and Rice University, which has convened a number of recent conferences on alternative energy.

Promising Venture

One of the most potentially far-reaching research ventures at Rice involves work at the Carbon Nanotechnology Laboratory, the site where the late Richard Smalley, a late Nobel-laureate professor, oversaw landmark research on microscopic materials called carbon nanotubes.

Researchers are working on steps to align millions of nanotubes into carbon fibers. The hope is that one day, the fibers can be used in power transmission instead of aluminum, which has high resistance and wastes vast amounts of power.

This vision is still years away, Rice researchers say. But the university has garnered some $5 million in federal research funds for the project from a variety of sources, including the Pentagon and the National Aeronautics and Space Administration, says James Tour, the lab's director.


Article Source: Texas' New Tea By John M. Biers, February 12, 2007
John M. Biers is the Houston bureau chief for Dow Jones Newswires.

Houston Economy - Manufacturing and Transportation Sectors

Ayn Rand's John Galt could not have built a better machine than Houston's sturdy economic engine of today. In her epic novel, "Atlas Shrugged," published 50 years ago, manufacturing and transportation were Rand's focal points in the plot to stop the engine of the world. Rand understood the importance of business growth, entrepreneurialism, and free market capitalism as the sparks that empower commerce and economic health of a society. The same precepts are true today and are alive and well in Houston.

Houston's current standing as one of the "hottest cities for business in the nation" is due, in large part, to its business-friendly culture, its position as the No.1 manufacturing employer, having one of the most rapidly growing populations, and its strategic geographic location for conducting international commerce and transportation.

Between 1990 and 2005, a time frame long enough to encompass an entire business cycle, Texas' overall factory output eclipsed all other major manufacturing states and is currently the country's leading exporter of manufactured goods. A longer-run perspective shows that Texas’ share of the nation’s manufacturing base has been rising for over four decades. As a result, Houston is well-positioned to enjoy continued growth in its manufacturing sector and has significant advantages that favor this industry. Among them are a stragetic geographic location, excellent distribution facilities that include one of the world's largest seaports, a fast-growing and flexible labor market, economical land and construction costs compared with other parts of the country, as well as an affordable cost of living. In addition, the proximity of Mexico’s assembly-for-export plants, known as the maquiladora industry, has influenced many manufacturers to locate or expand their operations in the state in order to utilize these nearby partners as effective links in their highly efficient supply chains.

Houston's commitment to investing in research is clearing the way for continued prosperity for manufacturing as well. With more than 400 public research centers scattered throughout the state, Texas has a formidable scientific research base from which to feed. In May, the National Project on Emerging Nanotechnologies announced that Texas joins California and Massachusetts as the states with the highest number of nanotechnology entities. Why is this a boon to Houston? It is predicted that by 2014, 15 percent of all manufactured goods, roughly $2.6 trillion worth, will incorporate nanotechnology. This should help people realize that this "nano" thing is big and Houston's manufacturing presence is ready to play a strategic role in this emerging technology. Another windfall result of Texas' proactive approach to emerging technology, is its newly achieved position as the nation's top producer of wind energy, surpassing California. Evidenced by University of Houston's federal grant award for wind turbine research, Houston is positioned to play a leading role in this evolving sector that promises new manufacturing opportunites for the city. "This is the birth of a new industry here in Texas," said Texas General Land Office Commissioner, Jerry Patterson. "Once we build these test facilities, the wind turbine and blade manufacturers will come."

As with manufacturting, Houston's international commerce and transportation sector is trucking along in the speed zone and will not be putting on the brakes anytime soon. Houston's Gulf Coast has long powered the growth in southeast Texas and has seen its trade activity more than double since 2003. The Port of Houston is a primary port of entry for goods coming into the US market ranking first in the country in foreign tonnage, second in total tonnage, and is the sixth largest port in the world. Houston's upward movement as a major player in international commerce, continued influx of business relocations, increasing worldwide trade, the benefits and advantages associated with Houston's Foreign Trade Zone, and the city's ongoing investment in the expansion of port terminal facilities paves the path for continued acceleration to a lead position in international commerce.

Texas' business friendly slogan, "Open for Business," and Houston's pro-growth, no nonsense politics are major factors driving developers and other capitalistic-minded investors to Houston. The city's upward movement as a major player in international trade and transporation and its deep-rooted emergence as a top manufacturing hub, will keep Houston's economy a target of interest for those who are looking for acquisitions in these industries. Houston is already experiencing a high level of business transfer activity of privately-held enterprises as reported by area business brokers and is expected to continue for the foreseeable future as individuals, private equity groups, corporations, and business owners from other countries look to Houston, and Texas in general, in order to take part in its expanding economy and promising future outlook. In Wall Street Journal's May article, "The Realignment of America," the graphic used to illustrate the story looks like everybody is headed to Texas.

There is a Small Business 101 lesson to be learned from Rand's fictional village, Galt's Gulch, that she invented in "Atlas." It was a refuge for industrious, ambitious people -- the pistons that drive the engine of society -- to continue their chosen fields of endeavor without the yokes of over taxation or regulation. While Houston is not a hidden sanctuary as was the Gulch, it "is a land of buccaneering capitalism" (The Economist, 2002) and embodies practical principles by which to realize the same ideals in today's global marketplace.

Texas Ranks In Top 10 Richest Economic States In The U.S.

Texas in top 10 best economic outlook rankings in the U.S. according to a new publication, Rich States/Poor States - State Economic Competitiveness Index 2007.

This economic rating of the 50 states shows that those states with the lowest taxes, government spending, and regulatory burdens attract the most newcomers.

Houston has long understood the precepts purported in this study. I found an interesting article published June 14, 1916 (yes, 1916!) by the New York Times, Houston Tax Plan Brings Prosperity. The article quoted J. J. Pastoriza, Tax and Finance Commissioner of Houston:

"Never tax anything which is produced by the industry, enterprise, or ingenuity of man, because to do so will tend to decrease the sum and increase the cost of such products. The fewer restrictions, both as to taxes and regulation, which a city places upon business or products, the faster, greater, and wealthier will that city grow. The power to tax is the power to destroy as well as the power to build up. Houston decided to use this power to construct and build a great city, rather than to retard or destroy one."

Over the past decade, the 10 states with the highest taxes and spending, and the most intrusive regulations, had half the population and job growth, and one-third slower growth in incomes, than the 10 most economically free states.

In 2006 alone 1,500 people EVERY DAY moved to the states with the highest economic competitiveness from the states with the lowest competitiveness.

Of all the policy variables examined, two stand out as perhaps the most important in attracting jobs and capital. The first is the income tax rate:

States with the highest income tax rates -- California and New York, for example -- are significantly outperformed by the nine states with no income tax, such as Texas and Florida.

The other factor for attracting jobs and capital is right-to-work laws: States that permit workers to be compelled to join unions have much lower rates of employment growth than states that don't.

Many companies say they will not even consider locating a factory in a state that does not have a right-to-work law.

The study also finds that states with antigrowth tax and spending policies don't just lose people. Noncompetitive states like New York, Michigan, Pennsylvania, Illinois and New Jersey are also plagued by falling housing values, a shrinking tax base, business outmigration, capital flight and high unemployment rates, and less money for schools, roads and aging infrastructure.

As you will note by reading the full report, which can be accessed using the link below, the "Poor States," those that are declining and are the bottom dwellers of the competitive index rankings are all led by liberal democrat governments. Those that claim to represent the poor and disenfranchised, hurt their own constituents the most.

Source: Rich States, Poor States
State Economic Competitiveness Index 2007
American Legislative Exchange Council(ALEC)
By Arthur B. Laffer, president of Laffer Associates, and Stephen Moore, senior economics writer for the Wall Street Journal.

Buying A Small Business - Get Prequalified For Financing

Get Reviewed and Prequalified For Financing So You Can Leverage Your Business Purchase.

Getting prequalified for financing by lenders is very important for two specific reasons.

1) 90% of all small businesses sold have some form of financing involved.

2) One of the biggest reasons that deals falls through is because the buyer could not obtain financing.

While some sellers are willing to provide partial financing to a qualified buyer, they would much rather the buyer be able to get third party financing so they can receive their cash up front at closing. Wouldn't you? The seller takes a considerable risk on a buyer he doesn't know too well and can only hope that the buyer will be successful in running the operation.

The usual cash injection (down payment) required by SBA and other lenders in the purchase of a small business is generally around 20% to 30% and the rest is financed. This, of course, is based on your personal financial standing and background. You will need to submit personal financial information and a work resume.

By having a lender review your financeability and background upfront, the lender can then give you valuable Intel on the types of businesses they would take into consideration for financing based on your skill sets and what they would deem to be transferable to different types of businesses or industries. Not only can you narrow the scope of the types of business you research, you would also know exactly what price range to target.

All of this adds up to the serious, prepared, perfect buyer! A rare species in the land of business brokerage. You'd get the red carpet treatment for sure by business brokers and sellers alike.

Keep in mind that the business you choose must also be financeable. The business must pass the lenders test. For instance, the company's financials must be reviewed by the lender so they can determine if the business can produce the income required for you to make a living after making payments on the loan that they will be providing.

The point to be made here is that you, as a person looking for the "perfect" business to buy, will be ready to pull the trigger when it appears. There are more buyers than sellers in today's business transfer marketplace. You will have an advantage, you will be a step ahead of the rest of the crowd.

Houston - A Family-Friendly City On The Rise

The following article is a another report evidencing Houston's dynamic economic future as one of the best in the country. For those who are looking to invest in their own future through buying a business, Houston is the place to bank on.

The Rise of Family-Friendly Cities
It's lifestyle, not lattes, that our most productive workers want.

BY JOEL KOTKIN
Tuesday, November 27, 2007

For much of the past decade, business recruiters, cities and urban developers have focused on the "young and restless," the "creative class," and the so-called "yuspie"--the young urban single professional. Cities, they've said, should capture this so-called "dream demographic" if they wish to inhabit the top tiers of the economic food chain and enjoy the fastest and most sustained growth.

This focus--epitomized by Michigan Gov. Jennifer Granholm's risible "Cool Cities" initiative--is less successful than advertised. Cincinnati, Baltimore, Cleveland, Newark, Detroit and Memphis have danced to the tune of the hip and the cool, yet largely remain wallflowers in terms of economic and demographic growth. Instead, an analysis of migration data by my colleagues at the Praxis Strategy Group shows that the strongest job growth has consistently taken place in those regions--such as Houston, Dallas, Charlotte and Raleigh-Durham--with the largest net in-migration of young, educated families ranging from their mid-20s to mid-40s.

Urban centers that have been traditional favorites for young singles, such as Chicago, Boston, New York, Los Angeles and San Francisco, have experienced below-average job and population growth since 2000. San Francisco and Chicago lost population during that period; even immigrant-rich New York City and Los Angeles County have shown barely negligible population growth in the last two years, largely due to a major out-migration of middle class families.

Married people with children tend to be both successful and motivated, precisely the people who make economies go. They are twice as likely to be in the top 20% of income earners, according to the Census, and their incomes have been rising considerably faster than the national average.
Indeed, if you talk with recruiters and developers in the nation's fastest growing regions, you find that the critical ability to lure skilled workers, long term, lies not with bright lights and nightclubs, but with ample economic opportunities, affordable housing and family friendly communities not too distant from work. "People who come here tend to be people who have long commutes elsewhere, and who have young children," notes Pat Riley, president of Alan Tate company, a large residential brokerage in Charlotte, N.C. "They want to be somewhere where they don't miss their kids growing up because there's no time."

There is a basic truth about the geography of young, educated people. They may first migrate to cities like New York, Los Angeles, Boston or San Francisco. But they tend to flee when they enter their child-rearing years. Family-friendly metropolitan regions have seen the biggest net gains of professionals, largely because they not only attract workers, but they also retain them through their 30s and 40s.

Advocates of the brew-latte-and-they-will-come approach often point to greater Portland, Ore., which has experienced consistent net gains of educated workers, including families. Yet most of that migration--as well as at least three quarters of the region's population and job growth--has been not to the increasingly childless city, but to the suburban periphery. This pattern holds true in virtually every major urban region.

Contrary to popular belief, moreover, the family is far from the brink of extinction. Most Americans, notes the Pew Research Center, still regard marriage as the ideal state. Upwards of 80% still marry, and the vast majority end up having children. Brookings demographer Bill Frey notes that the number of married couples with children has actually been on the rise after decades of decline. Mr. Frey traces this to changing attitudes among the native born, as well as the growth of a largely family-oriented immigrant population.

The rapidly increasing percentage of college educated women, a group that places a high value on marriage and children, are emerging as critical shapers of the future skilled workforce. Two decades ago, these women were less likely than other women to marry. Today, a single, 30-year-old woman with a graduate degree has about a 75% chance of getting married, compared with a single 30-year-old woman with less education, who has about a 66% chance. Overall, reports The Center for Economic and Policy Research, women in their late 20s and early 30s who are in the top 10% earning bracket are just as likely to be married as other women who work full-time.

True, today's American family does not mirror the narrowly defined unit of the 1950s, but it does reflect, ironically perhaps, aspects of our earlier social structures. As Stephanie Coontz at the Council on Contemporary Families has pointed out, the 1950s were an anomaly; a period of high birthrates, low divorce rates and remarkable social stability, with a preponderance of nuclear families. Earlier generations of American families tended to be more ad hoc, or as we would say today, "blended," with uncles, aunts, grandparents, stepparents and domestic employees often playing major roles in child-rearing. These patterns were reinforced by the dislocations of immigration and westward migration.

Today's families are similarly expansive. With a majority of wives now working, and more having their children at a later age, child-raising roles have tended to extend beyond the biological parents. It may not take a "village," as Hillary Clinton has asserted, to raise a child, but families are becoming more complex. For example, many ostensibly single and childless households include "empty nesters," grandparents or divorced fathers, who, although not living with their progeny, are still deeply involved family members.

This web of relationships affects where people live and work. The presence of a familial network has long been known as one reason for immigrants to cluster. Similarly, grandparents tend to follow grandchildren, and sometimes vice-versa, since they offer the prospect for low-cost help with childcare.

The family's enduring supremacy is also apparent in the attitudes of young people, the so-called millennials. As Morley Winograd and Michael Hais suggest in their upcoming book, "Millennial Mainstream," this new generation is twice as numerous as Generation X, and far more family-oriented. They display markedly less proclivity for teen pregnancy, abortion and juvenile crime. They also tend to have more favorable relations with their parents, with half staying in daily touch and almost all in weekly contact.

The evidence thus suggests that the obsession with luring singles to cities is misplaced. Instead, suggests Paul Levy, president of Philadelphia's Center City district association, the emphasis should be on retaining young people as they grow up, marry, start families and continue to raise them.

Mr. Levy notes that the remarkable transformation of once sedate Center City--the area's population has grown to over 90,000--has indeed been due primarily to young singles, childless couples and a few "empty nesters." The proliferation of clubs, restaurants and bars has created an almost Manhattan ambiance. But he suggests that the district is reaching the limits of its success. The flourishing singles-bar scene has not compensated for the continued movement of middle- and working-class families--as well as jobs--to the region's burgeoning suburbs. Amid a much-hyped boom, Philadelphia has lost population, and its share of the region's wealth has dropped to 17% from 22% since 1990.

Only 14% of Center City residents have children, Mr. Levy says, and roughly half its young people depart once they enter their mid-30s. "If you want to sustain the revival you have to deal with the fact that people with six year olds keep moving to the suburbs," Mr. Levy suggests. "Empty nesters and singles are not enough."

Boosters such as Mr. Levy look increasing towards reviving the traditional family neighborhoods which surround Center City. His organization has worked closely with local public and private schools, church and civic organizations to build up the support structures that might convince today's youthful inner city urbanites to remain as they start families. "Our agenda," Mr. Levy says, "has to change. We have to look at the parks, the playgrounds and the schools."

Such a shift in emphasis could mark a new beginning for many long-neglected urban neighborhoods across the country. It's time to recognize that today, as has been the case for millennia, families provide the most reliable foundation for successful economies.

Mr. Kotkin, Presidential Fellow at Chapman University, is the author of "The City: A Global History" (Modern Library, 2006).

Houston Banks On Small Business Strength

Houston-based banks feel less subprime pain -- Credit harm not as severe as in other regions

By PURVA PATEL
Dec. 5, 2007 Houston Chronicle

National banks that were heavy into the mortgage market in parts of the country where the credit crunch has taken its toll have taken billions in write-offs related to loan defaults.

Wells Fargo is taking a $1.4 billion fourth-quarter charge for expected losses related to home loans. Citigroup, Bank of America and Wachovia have also announced mortgage-related write-downs of $1 billion or more.

But most Houston-based banks have been bolstered by the area's relatively strong economy and have been spared major damage from loans sold to people in the subprime market with weak or bad credit. That's because most of the banks focus on servicing small businesses.

Some cutbacks -- Yet not all have escaped unscathed.

A couple of local banks — Encore Bank and Franklin Bank — have cut staffs, and stock prices for some have taken hits by the overall market pessimism. But few local bank officials say they have had direct issues with problem loans.

"The economy there continues to be better than anywhere else," Brad Milsaps, an equity analyst with Sandler O'Neill in Atlanta, said of Texas. "In the other parts of the Southwest, like Arizona, Nevada and California, as well as the Southeast, we certainly have seen more credit-related issues coming out."

Encore Bank, which went public in July, is cutting staff and expenses, though company officials say the move is being made to improve efficiency.

The bank is eliminating 17 positions, or 5 percent of its staff, which the company expects will save it about $2 million in 2008.

The bank saw its noninterest income drop 4.6 percent during the third quarter to $7.5 million from the third quarter of 2006. The bank credited the drop to reduced mortgage banking income, most of which was related to second mortgages.

Because of smaller loans and lower pricing, Encore has decided to keep many of its mortgage loans on the books for a while instead of selling them.

"We have very few loans with borrowers with credit scores that would be considered subprime," said James S. D'Agostino, Jr., Encore Bank's CEO. "Those that we have are related to our community reinvestment act efforts."

The bank continues to cautiously make home loans to consumers and construction loans to builders, he said.

More commercial loans

Houston-based Franklin Bank has had a strategy in place to move out of home loans and into commercial loans, including to builders, since 2003, the company has said.

The bank closed 12 of its mortgage offices outside of Texas and cut staff during the third quarter of 2007.

"We've made adjustments on the mortgage side to make it more efficient and profitable," said Glen Mealey, executive vice president.

Bank officials say Franklin has no exposure to the subprime market and has only made high-end loans. It does, however, have a sizable presence in areas of the country hit hard by the mortgage meltdown.

About 34 percent of Franklin's loan portfolio is composed of credit lines and loans to home builders and mortgage brokers across the U.S., with about 40 percent concentrated in Phoenix, Las Vegas and the states of Florida and California, according to a report by JP Morgan.

"In light of a notably 'below peer' reserve level and exposure to homebuilders and mortgage brokers across the U.S., we expect credit trends to come under pressure at Franklin over the next several quarters," according to the JP Morgan report in late October. But, the report notes, the bank's nonperforming assets and net charge-offs were contained during the third quarter.

Late last month, the bank noted that after conducting a review of its loan portfolio, it would set aside $20 million more for potential credit losses. It estimates losses to range between $5 million and $7.5 million in 2008.

Franklin said it increased the allowance to remove "perceived risks" in light of "unprecedented" market conditions, such as the deteriorating housing market, increased Chapter 11 filings by national home builders and liquidity issues in the mortgage markets.

Franklin posted improved earnings during the third quarter of $7.5 million, or 30 cents a diluted share, compared with $5.1 million, or 21 cents a diluted share, during the same period last year.

"Our focus is to grow and expand the community bank in Texas," said Andy Black, the bank's president. "We're bullish on Texas."

No exposure -- Other locally-based banks have been spared.

Dale Andreas, head of Amegy Mortgage Co., said the bank dodged the mortgage turmoil because it never made subprime loans.

Officials at Sterling Bancshares and Southwestern National Bank also said they've seen little effect because of their focus on small business.

Houston-based Sterling has no exposure to subprime or the slightly better Alt-A loans, CEO Downey Bridgwater said.

The bank sold its mortgage business to RBC Mortgage Co. in 2003 and has since focused on small-business lending.

Today, less than 2 percent of its loan portfolio is consumer-related and less than 5 percent is residential-construction-related, Bridgwater said.

"Just by the fact that we're in Houston and Texas in general, we'll have much less of a difficult time dealing with the issues a lot of other major metropolitan areas are facing," he said.

Looking For A Business to Buy in Houston? Who Do You Call?

If you want to be successful in making a business acquisition, you want to work with a brokerage firm with a large inventory of businesses for sale and an experienced staff of professionals who are focused ONLY on selling businesses and have the training and experience to successfully close the deal.

While most first-time buyers may initially think it is a simple undertaking, they quickly find out that it is not. It is definitely not simple, and it is not similar to searching for a home. Except for the fact that there are Brokers to help you and market trends involved to assist in valuations, there is no comparison between buying a business and buying a home. So don't make the mistake of using a Real Estate Broker to buy a business.

Real Estate Brokers sometimes mislead a not-so-savvy business owner into thinking that they know how to price and sell a business, then lock them into a six month contract, and then hope a gullible buyer comes by to purchase the business.

Whether selling or buying a business, don’t be that victim. Again, this is not like selling or buying a house so stick to a Business Broker to buy or sell a business. They are specifically trained in structuring business sales and have an extensive network of professionals, such as attorneys, accountants, and SBA and other lending institutions, who are experienced in business transfer transactions.

It is important that you have performed a self assessment and are aware of the sequence of steps involved in the process of buying a business before beginning the search. Try to concentrate your efforts on businesses that you can realistically afford to purchase and fit your specific needs and goals.

Finding Possible Business to Buy - Research the Opportunities

The internet is a great place to start. You may also want to glance at your local newspaper's classified section under "business opportunities" to gather a list of brokerage firms that have a large presence in your area.

Concerning dealing directly with Sellers in a For Sale By Owner ad in the classifieds, it is a rare instance that this is ever a good experience. The pricing is normally unrealistic and way off the mark and the information is very often inaccurate. If you get past that, then the negotiating will often be very unpleasant.

Diving Into The Process - Taking Action

If you see something you like, take the next step in getting more information from the Broker. You will need to sign a non-disclosure form, also known as a confidentiality agreement. Respect this short but very legally binding document. It basically states that you will be receiving confidential information about a business for sale and you agree to keep it confidential. Confidentiality means not exposing the for-sale status of the business to any employees, vendors, customers or to the general public. This agreement also has a circumvention clause that states if you try to go around the Broker after you have this vital information, you and the Seller will owe the commission fee to the Brokerage company, including any legal fees incurred in taking action to collect said commission.

Doing the Homework - Information Gathering

Once you have signed the non-disclosure for a business of interest and asked for further information, you will receive a packet of vital information. In most cases you are not going to get tax documents or even P&L reports for that matter. You can ask for it, but the odds are slim on getting it. That’s too much information at this point to give to a semi-committed Buyer.

What you will get is a profile which will give the latest 12 months of revenues, expenses and cash flow information. Other provided information may be whether inventory is included in addition to its value, the value of furniture, fixtures and equipment (FFE), an extended business description, and lease or property purchase information.

At this point the address and name of the company may be given to you, but is sometimes done after you have reviewed the information and request to see the business. Again, this avoids giving tire-kickers vital information and the location when they are really not serious Buyers.

Research - Q&A

Once you have the vital information and performed your analysis, it is time to ask questions. However, it is not the time to start negotiating.

If you are interested in a business in which you are not very knowledgeable, do some research and construct a list of pertinent questions to ask. For instance, you may want to know if their are specific licenses or certifications required or if there are employees already working at the business that perform certain technical duties in which you have no expertise.

There is nothing wrong with going into a fairly unfamiliar business, but asking the right questions with help from a Business Broker will become essential in this type of circumstance. Asking nothing at all, whether you know the industry or not, is also not a good idea. Brokers like to receive feedback from you so they can begin to narrow down the types of businesses that would fit your criteria and goals.

Taking a Tour - See the Business/Seller Meeting

Once you have performed your preliminary analysis, your questions have been answered satisfactorily, and things still look interesting, this is the time to request a viewing of the business and/or a meeting with the Seller.

A meeting with the Seller will not be made to negotiate price when dealing with a Broker. This is neither the time nor the place. Negotiation is done using the Broker as the intermediary on a one-to-one basis. The Seller specifically engages a Broker to perform this function, which serves as a buffer between the buyer and seller during preliminary Q&A gathering and negotiations. Most Brokers will remind you that the purpose of the initial visit to the business premises is to view the operations and to ask the Seller additional questions that may help you determine if you are still interested in further pursuing the possible purchase of the business.

Walk away with the additional information you learned after seeing the business and meeting the owner and decide if you can envision yourself wearing the owner's shoes.

Crunching the Numbers - Evaluate the Business & Make an Offer

In order to make an initial offer, which is a non-binding offer at this point, you need to be able to take all of the financial and historical information you gathered and value the business. An accountant may come in handy at this point to help you in deciphering the financial data. If you do not have an accountant, a reputable business broker has a list of transaction-experienced accountants that you can contact.

When you attain a comfort level with the financial data, then you are prepared to make an offer that the Broker will present to the Seller. In all likelihood, you will review more than just a few businesses before you get to this point. But once an offer is made and is accepted by the seller, the due diligence phase begins with the hope that a closing date will be scheduled and a successful sale is consummated.

Houston Economy is Predicted to Flourish for the Forseeable Future

Houston's economy will continue to flourish for the forseeable future, despite the nation's credit crisis (Houston Business Journal 11/19/07).

The TrendLines report, researched by Transwestern affiliate Delta Associates, projects an average of 60,000 new jobs in the Houston area each year through 2009. Job growth will cause office vacancy to decline and office rental rates to increase through the end of 2008, the local commercial real estate firm predicts.

On the industrial side, TrendLines shows demand for distribution and warehouse space will remain strong as the declining dollar helps boost exports. New industrial space will begin to accommodate demand, which will cause an increase in vacancy and the rise in rental rates to slow by year-end 2008.

Chip Clarke, president of Transwestern's Gulf Coast and Mountain regions, said the growth in the energy sector and diversity among other sectors puts Houston in a good position to weather uncertainties in the financial markets.

The TrendLines Group researches markets to look for opportunities, build industry maps, and explore the competitive landscape to see the “bigger picture.” They analyze strengths and weaknesses to develop an understanding of markets, industries, players, and key competitive advantages.