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Downtown Apartment Market


Houston19514

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I've been posting apartment market information in the Sky House Main thread, because it originally grew out of a conversation there. In order to make them more available, I wanted to start a separate thread.  Here goes.

 

As of 2nd quarter, 2016, downtown had a 56.2% occupancy rate.  207 new units were delivered during the second quarter '16.  Net absorption was 142 units.  FWIW, downtown had, by far, the lowest occupancy of all the submarkets in the Houston metro.  The metro-wide occupancy rate was 89.7%   I think the downtown submarket has a great future, but there was little doubt there would be a glut of apartments in the short term.

 

The "Central Houston" market (downtown, Montrose/Museum/Midtown, Heights/Wash Ave., HIghland Village/Upper Kirby/West U, and Med Center/Braes Bayou) had a 78.4% occupancy rate.  1,404 new units delivered during the quarter, with 732 units net absorption.

 

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3rd Quarter 2016:

 

Downtown had a good third quarter.

Occupancy rate climbed from 56.2% to 58.4%, with 224 unit net absorption, up from 142 units absorbed in the second quarter. 338 new units were delivered in 3rd quarter.

 

The area CBRE calls "Central" Houston had net absorption of 1,170 units in 3rd quarter!  https://researchgateway.cbre.com/Layouts/GKCSearch/DownloadHelper.ashx

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As of 4th quarter, 2016, downtown had a 60.3% occupancy rate.  611 new units were delivered during the fourth quarter.  Net absorption was 216 units.  The metro-wide occupancy rate is 88.5%  

 

The "Central Houston" market (downtown, Montrose/Museum/Midtown, Heights/Wash Ave., HIghland Village/Upper Kirby/West U, and Med Center/Braes Bayou) had a 79.1% occupancy rate.  2,222 new units delivered during the quarter, with 269 units net absorption.

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As of 1st quarter, 2017, downtown residential had a 58.5% occupancy rate.  286 new units were delivered during the first quarter.  Net absorption was 279 units.  The metro-wide occupancy rate was 88.3%  Downtown seems to be maintaining a pretty decent pace of absorption.

 

The "Central Houston" market (downtown, Montrose/Museum/Midtown, Heights/Wash Ave., HIghland Village/Upper Kirby/West U, and Med Center/Braes Bayou) had a 78.3% occupancy rate.  2,120 new units delivered during the quarter, with 1,247 units net absorption.

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As of 2nd quarter, 2017, downtown residential had a 63.2% occupancy rate (up from 58.5% in the 1st quarter).  Net absorption was 267 units , while 242 new units were delivered.  Net absorption for the year to date was 546 units.  Downtown is maintaining a good steady pace of absorption.  (Assuming 1.4 people per occupied apartment, downtown is adding a little more than 125 people per month.)

 

The metro-wide occupancy rate is 88.9% 

 

The "Central Houston" market (downtown, Montrose/Museum/Midtown, Heights/Wash Ave., HIghland Village/Upper Kirby/West U, and Med Center/Braes Bayou) had an 81% occupancy rate (up from 78.3% in the first quarter.  1,563 new units delivered during the quarter, with 1,676 units net absorption.  Net absorption year to date:  2,923.  Using the same apartment residency assumption as above, Central Houston is adding about 682 people per month, just in rental residential.

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As of 3rd quarter, 2017, downtown residential had a 62.3% occupancy rate.  A net 266 units were absorbed, while 274 new units were delivered.  Net absorption for the year to date was 812 units.  Downtown is maintaining a good steady pace of absorption.  (Assuming 1.4 people per occupied apartment, downtown is adding a little more than 125 people per month.)

 

The metro-wide occupancy rate is 88.3% 

 

The "Central Houston" market (downtown, Montrose/Museum/Midtown, Heights/Wash Ave., HIghland Village/Upper Kirby/West U, and Med Center/Braes Bayou) had an 82.6% occupancy rate (up from 78.3% in the first quarter).  555  new units delivered during the quarter, with 1,318 units net absorption.  Net absorption year to date: 4,241.  Using the same apartment residency assumption as above, Central Houston is adding about 660 people per month, just in rental residential.

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As of 4th quarter, 2017, downtown residential had a 67.1% occupancy rate.  A net 281 units were absorbed (up from 266 absorbed in the 3rd Q), while 886 new units were delivered.  Net absorption for the year was 1,093 units.  Downtown is maintaining a good steady pace of absorption.  (Assuming 1.4 people per occupied apartment, downtown continues to add more than 125 people per month.)

 

The metro-wide occupancy rate is 88.6% 

 

The "Central Houston" market (downtown, Montrose/Museum/Midtown, Heights/Wash Ave., HIghland Village/Upper Kirby/West U, and Med Center/Braes Bayou) had an 85.4% occupancy rate (up from 78.3% in the first quarter 2017).  1,355 new units delivered during the quarter, with 1,788 units net absorption.  Net absorption year to date: 6,029.  Using the same apartment residency assumption as above, during the 4th quarter, Central Houston added more than 830 people per month, just in rental residential. Averaged over the year as a whole, we added more than 700 people per month in Central Houston.

Edited by Houston19514
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1st Quarter, 2018:

A net 205 units were absorbed in the CBD, while zero new units were delivered.  While it slowed a bit in the 1st Q, Downtown is still maintaining a good pace of absorption.  (Assuming 1.4 people per occupied apartment, downtown continues to add almost 100 people per month.)

 

The "Central Houston" market (downtown, Montrose/Museum/Midtown, Heights/Wash Ave., Highland Village/Upper Kirby/West U, and Med Center/Braes Bayou) delivered 770 new units during the quarter, with 626 units net absorption. 

Edited by Houston19514
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13 minutes ago, Houston19514 said:

1st Quarter, 2018:

A net 205 units were absorbed in the CBD, while zero new units were delivered.  While it slowed a bit in the 1st Q, Downtown is still maintaining a good pace of absorption.  (Assuming 1.4 people per occupied apartment, downtown continues to add almost 100 people per month.)

 

The "Central Houston" market (downtown, Montrose/Museum/Midtown, Heights/Wash Ave., Highland Village/Upper Kirby/West U, and Med Center/Braes Bayou) delivered 770 new units during the quarter, with 626 units net absorption. 

 

Anyone have average rent, current occupancy, number of units currently and number of units under construction?

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43 minutes ago, Houston19514 said:

1st Quarter, 2018:

A net 205 units were absorbed in the CBD, while zero new units were delivered.  While it slowed a bit in the 1st Q, Downtown is still maintaining a good pace of absorption.  (Assuming 1.4 people per occupied apartment, downtown continues to add almost 100 people per month.)

 

The "Central Houston" market (downtown, Montrose/Museum/Midtown, Heights/Wash Ave., Highland Village/Upper Kirby/West U, and Med Center/Braes Bayou) delivered 770 new units during the quarter, with 626 units net absorption. 

 

Do you have the occupancy rates?

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1 hour ago, downtownian said:

 

Anyone have average rent, current occupancy, number of units currently and number of units under construction?

 

According to CBRE, the average rent downtown is $2.03/ square foot/month.

 

They give a 1st quarter occupancy rate of 62.3% but I find CBRE's occupancy rates to be kind of squirrely. They show 205 units absorbed in the quarter, zero units added to the market in the quarter, but the occupancy rate dropping compared to 4th quarter 2017.  That is a mathematical impossibility (and I've seen the same thing in CBRE reports for other markets).

 

There are some problems with CBRE's numbers:  According to CBRE, we stand at 5,951 units downtown; 271 units currently under construction; and 1,529 units proposed. Catalyst, with 359 units, either delivered in the 1st quarter, or was under construction in the 1st quarter. CBRE's report allows for neither. (The 271 they show under construction are Camden's.)

Edited by Houston19514
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On 5/2/2018 at 3:23 PM, Houston19514 said:

 

According to CBRE, the average rent downtown is $2.03/ square foot/month.

 

They give a 1st quarter occupancy rate of 62.3% but I find CBRE's occupancy rates to be kind of squirrely. They show 205 units absorbed in the quarter, zero units added to the market in the quarter, but the occupancy rate dropping compared to 4th quarter 2017.  That is a mathematical impossibility (and I've seen the same thing in CBRE reports for other markets).

 

There are some problems with CBRE's numbers:  According to CBRE, we stand at 5,951 units downtown; 271 units currently under construction; and 1,529 units proposed. Catalyst, with 359 units, either delivered in the 1st quarter, or was under construction in the 1st quarter. CBRE's report allows for neither. (The 271 they show under construction are Camden's.)

 

Good thread, I appreciate these updates. Wonder if they went to a tighter boundary for the downtown submarket? That could explain lower occupancy and fewer units absorbed.

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On 5/2/2018 at 3:23 PM, Houston19514 said:

The 271 they show under construction are Camden's.

 

Would/should their figure include Marlowe? (Meaning does CBRE only focus on rental market or is that another flaw in the figures?)

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14 hours ago, kbates2 said:

 

Would/should their figure include Marlowe? (Meaning does CBRE only focus on rental market or is that another flaw in the figures?)

 

I would think their purpose is to focus on the rental market and that they would not include Marlowe.

 

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1 hour ago, Avossos said:

downtown Grocery will go where the current municipal courts are now... That is my bet.

I am all for razing 1400 Lubbock to the ground (along with the adjoining police station, and hell, the downtown aqaurium too). But, I think it's a little too off the beaten path for a grocery store. 

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2 hours ago, Vy65 said:

I am all for razing 1400 Lubbock to the ground (along with the adjoining police station, and hell, the downtown aqaurium too). But, I think it's a little too off the beaten path for a grocery store. 

 

Some company like Midway will buy the land in 5 years, raze the entire property (not the church) and create a very urban enviroment with access to Houston Avenue, Washington Ave, Memorial Drive and Buffalo Bayou. It's current configuration is horrible, but it can be very well connected to major arteries. 

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22 hours ago, Vy65 said:

I am all for razing 1400 Lubbock to the ground (along with the adjoining police station, and hell, the downtown aqaurium too). But, I think it's a little too off the beaten path for a grocery store. 

 

I think if there's a big grocery store there (think large HEB or Kroger) than it will pull people in.

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I'd rather see a mixed use development with a grocery store on the far north end of downtown (where that chase drive thru is, for example). 

 

You raze down the municipal courts and put a massive development there. The views of downtown would be pretty great. 

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29 minutes ago, Naviguessor said:

Washington and Heights will cover this side of downtown/Sixth Ward for HEB. 

 

Not really, people live in an urban environment with the hopes of avoiding their cars.  

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On 5/7/2018 at 9:39 AM, cspwal said:

Anecdotally, there's dogs everywhere

 

So downtown has 8,000 people. At what point is that enough for an HEB?

 

I know nothing about grocery store economics but . . . 

 

take 8k people

 

multiply by some market share

 

multiply by some number of visits per week

 

multiply by some spending per trip

 

8,000 x 75% x 2 x $50

 

$600,000 potential revenue per week?

 

plus what from downtown office workers?

 

Doesn't seem like a lot of revenue potential at this point, even with what are probably very optimistic assumptions, but I have no idea how much a typical store brings in per week.

 

And Google helps here:

 

https://www.statista.com/statistics/197905/2010-sales-per-store-of-supermarkets-in-the-us/

 

$65.9m on average for HEB, the highest in the U.S.

 

The numbers above work out to $31.2 million, and, as stated above, I bet they're highly optimistic.

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Something also worth considering above, from an economic point of view that $31.2 million would not be incremental sales for HEB because they'd get a share of the 8,000 residents as it is driving to the Washington Avenue and Montrose store.  It's made even more difficult because it's not like the downtown residential population is concentrated such that a store could be placed within comfortable walking distance of even 75% of the 8,000 people.

 

Maybe some concept like Randall's Midtown would work.  Looking at those statistics one kind of understands how Phoenicia works.

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