Storm Clouds Clear From Houston’s Economy : Economy: The city has gained white-collar jobs and industry. Oil-bust land prices have drawn new business and stimulated building.

Greg Cornett left Houston when the work dried up in the ‘80s and found himself chasing boom-town construction projects, first to Ohio, then to Seattle. A few weeks ago, he got a call from a former supervisor.

“He offered me a job and said ‘It looks like Houston’s coming back,’ ” Cornett said. “I said ‘I’m in.’ ”

Indeed, Houston is back. The city that went from the pinnacle of the ‘80s boom to the bottom of the oil bust is on top again.

There is still a glut of office and retail space and house values haven’t fully recovered, but Houston, after losing one of every eight jobs between 1982 and 1987, now has one of the highest employment growth rates in the country--although only during a nationwide recession would a 3.5% annual increase seem like a boom.

In the first quarter of this year, housing prices in Houston inched up 1% while they were falling in New York, Los Angeles, Chicago, Dallas and elsewhere. Apartment occupancy, which fell to 79% in 1984, now exceeds 92%.

Foreclosures have just about disappeared. The unemployment rate, once over 11%, is now among the lowest in the nation, below 6%. More people are employed now than were working at the peak of the oil boom in 1982.

“Houston clearly is one of the new boom towns,” said Ron Witten, president of M-PF Research. “It’s a ‘90s-version boom town, though, not as hot as the ‘70s or ‘80s.”

The new boom is fueled in part by deals springing out of the bust. Prices were driven so low that cheap commercial space is attracting tenants and cheap land prices are encouraging development.

Trammell Crow Residential bought a piece of land that had been foreclosed on twice--once by a savings and loan and once by a bank. The company bought it for half the early-’80s price and built 221 apartments. The $15-million, year-old CityWalk complex is 96% leased and, with the average rent at $800, exceeding its financial projections.

“Rents in Houston are now at an all-time high,” said Trammell Crow divisional partner John Rippel. “The economy is really better now, more solid, than in 1982.”

CityWalk and CityScape, a larger complex still under construction, cater to young professionals making more than $60,000 a year. The apartments are near downtown and Houston’s vast medical center, the world’s largest, which economists say has helped to stimulate Houston’s revival.

Rather than to oil, this renaissance has been attributed to young people in business, medical and professional services, such as law and engineering.

While mining and manufacturing have added 42,000 jobs to traditionally blue-collar Houston, about 100,000 jobs have been created in the white-collar business, medical and professional services fields, Federal Reserve Bank economist Bill Gilmer said.

“So far, we have sailed right through this recession,” he said.

Ironically, oil, which plunged below $10 a barrel in the ‘80s and devastated the Houston economy, has been part of the recovery. Relatively stable prices around $18 a barrel have helped. The Persian Gulf War gave the Houston economy a jolt, too, as oil sold for more than $30 a barrel for several months.

Petrochemicals and refineries have benefited from the relatively low oil prices of the ‘80s. Demand for chemicals and plastics has sparked a building boom on the Gulf Coast nearby. Construction of $7-billion worth of industrial plants has been announced.

“Houston is still the Oil Capital--it’s still an enormous business here,” Gilmer said. “It’s just shrunk back to a manageable scale.”

To be sure, this boom is nothing like the go-go days of the early ‘80s, when oil was $30 a barrel and people thought the price would go to $50, when savings and loans offered building funds at inflated rates, when everyone seemed sure that the good times would never end.

The thrifts’ free-lending ways helped developers build 40,000 apartments in 1982. Even after the economy started to recede, overanxious developers built another 40,000 units in 1983 and 1984. Millions of dollars’ worth of housing sat empty through the downturn.

Last year 3,000 apartments were built in Houston, and building permits indicate that about 3,000 more will go up this year.

“That was a big hole to climb out of, but they’re making good progress,” said John Tuccillo, chief economist of the National Assn. of Realtors in Washington. “The people in Houston have gone through their hell, and what they’re going to have now is a nice, stable market.”

Commercial real estate has not recovered as well as apartments. Office space occupancy reached just 75% last year, from a low of 67% in 1987. Shopping centers have barely begun to recover, with occupancy improving to 79% last year from the 1987 low of 77%.

“Office space and retail space are improving slowly, but we’re still badly overbuilt,” Gilmer said. “We’re not going to see any cranes over Houston any time soon.”

Still, for those who rode out the rough times, it is a revival is to be savored.

Rippel, who arrived in Houston in 1982 to open Trammel Crow Residential’s first office here, soon after was scrambling to refinance deals, writing checks to keep properties going and laying off people. He even had to spend a year working as a consultant to stay afloat.

As the economy began to turn around, he started hunting for projects. In the last few years, his firm has built five apartment complexes and bought nine others.

“I had opportunities to go to Phoenix or California, but I chose to stay here,” Rippel said. “I believed Houston would eventually come back. It just took longer than I thought.”