Downtown Apartment Market

[kbates2]

1 hour ago, Nate99 said:

If we're doing a wish list, The Federal prison on Texas could convert into a hostel, though I'm not sure that would be net better for the neighborhood. 

Maybe take the doors off the cells and convert it to a homeless shelter to get folks off the street. 

The ones on the streets have the potential to get into shelters as it is, they just don't for drug or mental health reasons.  That jail is one of the few exceptions to the rule that anything is better than a surface parking lot.

[Nate99]

1 hour ago, kbates2 said:

The ones on the streets have the potential to get into shelters as it is, they just don't for drug or mental health reasons.  That jail is one of the few exceptions to the rule that anything is better than a surface parking lot.

Right, not practical, just thinking about the immediate neighborhood. I wasn't meaning to lock them up, just to use a facility that's designed to be difficult to trash as a place out of the weather. No easy answers.  

[downtownian]

This "Downtown Economic Recovery Monitoring Update / December 2020" posted by Central Houston, Inc. is very interesting - all metrics are downtown from what I can tell:

Office

-Estimated 16.1% of employees in-office downtown

-Office vacancy at 21.2%; rental rates down to $36.41/sf

Residential

-Core population of 10,251 residents across 6,279 units

-Occupancy of 82.6% in December, down 7.4%(!) over last 12 months but inline with 84% in Midtown and 84.3% in Upper Kirby

-Rent is still 15% premium to other areas

Lodging

-14.1% occupancy in November and $131.27 average daily rate = $18.53 RevPAR

-The historical occupancy by month on page 10 is very interesting - (4.1% occupancy in April 2020!)

Food and Beverage

-75% of street level restaurants excluding bars are open and 67% of tunnel restaurants are open

 

Seems really negative but there is so much potential once things start reopening - the Main Street outdoor seating initiative, POST, all the construction. I'm excited to see how it all plays out. 

 

Source

https://www.centralhouston.org/media/filer_public/29/8d/298d8135-942c-49bb-b83b-8cc6f5cccd9b/economic_recovery_update_december_2020.pdf

[skooljunkie]

Regarding multi-family occupancy just remember that overall Houston metro area apartment occupancy is at about 88% and it’s a about the same in Austin metro. It’s down 1 to 2 percentage points year-over-year just about everywhere ever since mortgage rates plummeted and the unemployment rate soared. 

[hindesky]

Camden report shows difficulties in Houston apartment market

R.A. Schuetz, Staff writer

Feb. 5, 2021Updated: Feb. 5, 2021 2:28 p.m.

 

Camden Property Trust’s annual earnings report reflected a number of setbacks the Houston apartment market has suffered in the past year.

Camden’s 2020 net income fell 43 percent to $124 million ($1.24 per diluted share) from $220 million ($2.22) the year before as a result of increased maintenance costs and taxes and a drop of income from deferred compensation plans and property sales. Adjusting the lease of a retail tenant who has not been able to pay rent will likely cost Camden $3.5 million in rent from a retailer, which was reflected its released earnings. For the the quarter ended Dec. 31, the Houston-based multifamily real estate investment trust reported net income of $29.1 million (29 cents a share), down sharply from $95 million (95 cents) in the year-earlier period.

The Houston market saw some of Camden's biggest hardships in 2020, with net operating income falling 8.3 percent from the year before and the weighted average monthly rental rate falling 0.4 percent. The apartment developer and operator blamed the energy slump and a high number of newly built units on the market's performance and said it planned to sell off Houston assets in the second half in the year.

“We had 20,000 apartments delivered last year, and we’re in the process of delivering another 20,000 apartments this year,” Keith Oden, executive vice chairman of Camden’s board, said in a Friday earnings call. The influx of apartments came as the oil industry was struggling with profitability. Then COVID hit.

Oden estimated 40,000 apartments would require a net increase of 200,000 Houston-area jobs to provide the population growth needed to fill them.

“And that just hasn’t happened,” he said. “It’s just as simple as that. We’ve got way too much supply. It’s hand-to-hand combat on the stuff that’s either downtown or close-in assets, which makes up a decent part of Camden’s portfolio.”

Camden officials believe the economy will begin to recover in the second half of 2021 as the vaccine allows more workers to return to offices. At that point, it plans to begin selling off its older properties, including properties in the Houston and Washington, D.C., markets, and acquiring newer properties, which will require less maintenance.

“Our strategy this year is going to be very similar to what we did in the last cycle,” said Ric Campo, Camden’s chief executive. “Beginning in the last cycle, we disposed of roughly $3 billion of property with an average age of over 20 years and acquired properties that were on average at the time five or six years old.”

Despite the challenges, Houston outshone the rest of Camden’s portfolio on one metric: rent collections.

Although the occupancy of Camden properties in the Houston area have fallen to 93.8 percent in 2020 (the lowest of any of its markets) and rents have fallen by 0.4 percent (the only market where they have contracted), nearly all of its Houston residents are paying their rents.

Only 0.4 percent of Camden residents in Houston have fallen behind on rent, compared to 6.4 percent in California.

Campo blamed the high delinquencies in its California properties on politics. “Both the state and local governments have just put it into the brains of folks there that they just don’t have to pay,” he said. “And all of the various legislation and moratoriums and what have you, you just have a group of people that look at it like getting a free loan from Camden. Ultimately, they’ll have to pay or their credit will be destroyed, and it will be interesting to see how that all plays out and how the government responds to that moving forward.”

The call also engaged the idea that markets such as New York and California may be exporting not only residents to lower-cost-of-living markets but also their attendant incomes. That may eventually push up aspects of the cost of living in cities such as Austin and Houston when they arrive.

“Right now, the market is soft enough where you can’t push rents today no matter what people make,” Oden said. “But ultimately, as the market firms up, our resident base are higher income and can take rental increases once we have the pricing power to be able to do that.”

rebecca.schuetz@chron.com;

 

 

 

 

 

[H-Town Man]

That is a sobering report, especially the employment expansion that "just hasn't happened." It is good that things like the Ion and TMC3 are located along the Red Line so that they can benefit the downtown and Midtown markets which are struggling. Also some hope in the fact that oil is headed up to $60. If it continues to rise past $60, that will lead to expansion of the industry in Houston. Either way, the vaccine needs to work on new virus strains or else the inner-Houston apartment market is pretty much toast.

 

[zaphod]

I've been watching oil prices creep up too. Does that reflect an improvement in the industry that would yield job recovery here, or does it mean that some producers have given up or the Saudi's are taking a chill pill? How high would it need to get to make things normal again?

This city has absolutely got to get away from relying on oil industry. Everyone says its already more diversified but its obvious every time that oil drops bad stuff happens here so there is still a long way to go...

[TheSirDingle]

Looks like things are finally coming back up.

Residential Market

Occupancy Rate: 84.1%

Note: This is up dramatically from the previous quarter low of 82.2%, I'm projecting it be up to 87% by the end of summer. 

Residential Units: 6,279 units

Under Construction: 1,317 units 

Note: This includes The Brava (373 units), Trammell Crow (309 units), Sovereign (229 units), Fairfield (286 units), and Mckee City Living (120 units). A pretty significant lineup to look forward to.

Planned: 275 units

Note: don't know what this one is, but I assume it's a low ball considering the updates going around the forum. 

Looks like everything should be going back to normal, I'm expecting foot traffic and in-office occupancy to be back to, or close to normal later this year. 

Source: https://www.centralhouston.org/filer/0/1618017844/493/

[hindesky]

I rode around downtown on Saturday and the number of people was like old pre-covid times. Astros were about to play, Discovery Green was packed, and there was a volleyball tournament at GRB

Edit: Forgot about the "Rusty Krab" event at 711 Main St.

Edited April 13, 2021 by hindesky

[X.R.]

I would say daytime, non-office life is getting close to pre-covid times, with weekends having me asking "COVID what?". Daytime office life will get a boost soon as the large law firms and some oil and gas offices are targeting June 1st as the D-day for returning to the office for all employees. That day has been postponed a few times, but I think June 1st is going to stick. A few friends have had the companies/firms do a two-three days in the office, two-three at home thing for the last month to get people acclimated to the office life again, which has kind of livened up downtown the past month or so. Friends and colleagues are weirdly happy to be back, I think moreso as a sign of normalcy than anything else. Courthouse is certainly getting to like 75% pre-COVID. The way I know June 1st will stick is we've started telling people in interviews work from home isn't an option, when before it was much more fluid. 

Nightlife is still a bit slow. Went out for the first time since COVID to the main street bars this past weekend and it was certainly much, much emptier than I was used to. Saturday felt like an old Thursday. I talked to the bartenders at every bar tho, and they all were like "yo, it has increased ALOT in the last two-three weeks" in terms of foot traffic, so I'm thinking June/July is when the reports of "we can't keep up with demand" at the bars and restaurants and such in DT will happen. I don't think people truly understand that while Texas and Houston (to a lesser extent) are "open" when compared to much of the remaining parts of the country, we aren't anywhere close to "back." 

When that happens in June/July, with all the offices coming back online, its gonna be a sight to behold. I expect 610/59s/45n traffic to be somehow worse that it is now and then people will be like "about those apartments downtown" lol. 

Edited May 10, 2021 by X.R.

[Montrose1100]

15 hours ago, X.R. said:

I would say daytime, non-office life is getting close to pre-covid times, with weekends having me asking "COVID what?". Daytime office life will get a boost soon as the large law firms and some oil and gas offices are targeting June 1st as the D-day for returning to the office for all employees. That day has been postponed a few times, but I think June 1st is going to stick. A few friends have had the companies/firms do a two-three days in the office, two-three at home thing for the last month to get people acclimated to the office life again, which has kind of livened up downtown the past month or so. Friends and colleagues are weirdly happy to be back, I think moreso as a sign of normalcy than anything else. Courthouse is certainly getting to like 75% pre-COVID. The way I know June 1st will stick is we've started telling people in interviews work from home isn't an option, when before it was much more fluid. 

Nightlife is still a bit slow. Went out for the first time since COVID to the main street bars this past weekend and it was certainly much, much emptier than I was used to. Saturday felt like an old Thursday. I talked to the bartenders at every bar tho, and they all were like "yo, it has increased ALOT in the last two-three weeks" in terms of foot traffic, so I'm thinking June/July is when the reports of "we can't keep up with demand" at the bars and restaurants and such in DT will happen. I don't think people truly understand that while Texas and Houston (to a lesser extent) are "open" when compared to much of the remaining parts of the country, we aren't anywhere close to "back." 

When that happens in June/July, with all the offices coming back online, its gonna be a sight to behold. I expect 610/59s/45n traffic to be somehow worse that it is now and then people will be like "about those apartments downtown" lol. 

Traffic is pretty bad right now. 

[TheSirDingle]

Climbing Back to Normalcy

Residential Market

Occupancy Rate: 85.6%

Note: Up from 84.1% last quarter and 82.2% the quarter before

The amount of units built, U/C, and planned are the same rn but I'm gonna post them anyway 

Residential Units: 6,279 units

Under Construction: 1,317 units

Planned: 275 units

Multifamily Rental Prices

Downtown's rent PSFM (Per Square Foot Month) is the highest its been since April 2020, with 136 Class A units absorbed (whatever Class A means) in the second quarter. Downtown's rents are also the strongest in the loop at a healthy $2.12 PSFM, which is higher/outpacing Midtown/Montrose ($1.91 PSFM), the Heights ($1.86 PSFM), and Upper Kirby/Highland Village ($1.83 PSFM).

On another note it is said by specialists that Downtown's Multifamily is in comeback mode with the market absorbing more apartments units in the past 90 days than it did in the final six months of 2020. This is also without move-in specials, and with less than a dozen properties offering some type of leasing concessions, in comparison Midtown has 20 properties and the Heights has 23 properties doing concessions. 

Source: https://www.centralhouston.org/filer/0/1626385503/512/

Edited July 17, 2021 by TheSirDingle

[kbates2]

Really good to hear.

[adr]

Speaking anecdotally - seeing a significant uptick in move-ins in my condo building downtown.  Some are rentals, but others are sales.

[TheSirDingle]

Anybody know why http://www.downtowndistrict.org/ stop posting updates on the Downtown markets? They were always fun to look at, and had a lot of good information. 

Anyway, there seems to be a lot of apartment development going on in downtown right now. On top of the 41 residential properties and the 6,279 units that come with it, we have another 2,254 units under construction. That would bring the total units to *ding* *ding*... 8,533 units. Downtown is accelerating faster and faster towards that 12k units goal, honestly exciting to see. 

List of under construction apartment (re)developments within the downtown area:

Note: There's maybe 1 or 2 of these already completed, but I'm keeping them in for consistency sake. 

McKee City Living: 120 units - completion 1Q 2022.

Brava: 373 units - est completion 4Q 2022.

Sovereign at the Ballpark: 229 units - est completion 2022.

1810 Main: 286 units - est completion 2022.

Parkside Residences: 309 Units - est completion 1Q 2023.

Warehouse District 1: 304 units - est completion 4Q 2023.

Warehouse District 2: 184 Units - est completion 2Q 2024.

1801 Smith Conversion: 372 Units - est completion 2Q 2023.

City View Lofts: 57 units - est completion 2023

Prairie St Renovation: 20 Units - est completion 4Q 2022

One of the great things about this is that a lot of these buildings will be done relatively soon.

 

Now for some numbers crunching. If we're assuming an person/unit range of 1.41 - 1.71, and we're using an occupancy range of 84.1% (last official statement) - 91% (2019 Q3). We can get a Downtown apartment population of (with all the units completed) 10,118 - 12,271 at 84.1% occupancy, and  10,948 - 13,277 at 91%. 

 

Hopefully we can get nightlife foot traffic back to its pre-covid levels. I haven't seen the foot traffic during the day, but I heard it has almost gotten back normal, especially with those huge conventions like Anime Matsuri going on. Hopefully Downtown can pass its pre-covid self foot traffic in the next year or so. 

 

EDIT: Added City View Lofts II and Prairie St Renovation.

Edited July 31, 2022 by TheSirDingle

[hindesky]

@TheSirDingle Don't forget about the 57 units at the City View Lofts II and the 20 units at the Prairie St. renovation.

[TheSirDingle]

17 minutes ago, hindesky said:

@TheSirDingle Don't forget about the 57 units at the City View Lofts II and the 20 units at the Prairie St. renovation.

Thank you, forgot about them. Gonna edit them in.

Edited July 31, 2022 by TheSirDingle

[Urbannizer]

 

https://houston.culturemap.com/news/city-life/houston-downtown-apartments-most/

A new study suggests downtown Houston has evolved into a magnet for apartment dwellers.

From 2013 to 2022, downtown Houston has added 15,607 apartments, according to a new study from StorageCafe. That puts Houston in third place among 100 major U.S. cities for the most growth in downtown apartment supplies. Atlanta ranks first (21,508), with Los Angeles at No. 2 (19,432).
During the 10-year period covered by the study, Houston’s inventory of downtown apartments rose 63 percent.

“While office workers aren’t yet returning in droves, people still seem interested in living in downtown Houston, which has another 2,700 new apartments currently under construction with completion dates spanning approximately two years,” according to StorageCafe.

[kennyc05]

How does Atlanta rank 1st? They have to be counting Midtown Atlanta with Downtown Atlanta. 🤔

[Houston19514]

1 hour ago, kennyc05 said:

How does Atlanta rank 1st? They have to be counting Midtown Atlanta with Downtown Atlanta. 🤔

Probably.  It's one of those lame "Studies" that requires a lot of digging to figure out what it actually says. My understanding is that it uses an expansive (and rather illogical) definition of downtown Houston. Who knows how they defined "downtown" in the other cities?

Edited September 23, 2022 by Houston19514

[kennyc05]

35 minutes ago, Houston19514 said:

Probably.  It's one of those lame "Studies" that requires a lot of digging to figure out it actually says. My understanding is that it uses an expansive (and rather illogical) definition of downtown Houston. Who knows how they defined "downtown" in the other cities?

Yeah makes sense!

[editor]

Houston ranks #3 nationally in new apartments built in its downtown between 2013 and 2022:

https://rejournals.com/the-most-active-downtown-areas-for-apartment-construction-chicago-is-ranked-no-12/

[hindesky]

Downtown Living Initiative  

Since 2012, the Downtown Living Initiative (DLI) has promoted economic development and stimulated commercial activity through development incentives for selected multifamily residential mixed-use projects. The first phase of the program, DLI 1.0, offered qualifying projects up to $15,000 in tax rebates for each unit constructed in an approved, participating multifamily project. Conceived by Downtown Houston+ in partnership with the City of Houston, the program focused on project sites that were in proximity to non-office amenities and attractions, including Discovery Green, churches and schools, and sports venues.  

Over the last decade, the DLI has yielded thousands of new residential units, and their tenancy success has nearly tripled the Downtown residential population since 2012. 

The goals and incentives of the program’s next phase, DLI 2.0, will be defined and announced in 2023-2024.