Downtown Apartment Market

[TheSirDingle]

Downtown Houston Market update 2019 Q3: 

http://www.downtowndistrict.org/static/media/uploads/attachments/downtown_market_update_2019_q3.pdf

Residential:

Occupancy rate is now up to 91%, up from 90.3%.

There are currently 6086 residential units, with 837 U/C and 1179 planned. 

Rent/square foot is $2.35 which is an increase of $0.19, and well above the $1.29 regional average.

I suspect around 11.4k people living in Downtown now, going off 2.07 per unit occupancy. 

Hospitality:

8228 hotel rooms, with 150 U/C ad 400+ planned.

year-to-year occupancy rate up 6% to 68%. 

 

Many other details inside the attachment, such as Preston details and many retail updates. 

 

 

Edited October 8, 2019 by TheSirDingle

[Houston19514]

21 hours ago, TheSirDingle said:

Downtown Houston Market update 2019 Q3: 

http://www.downtowndistrict.org/static/media/uploads/attachments/downtown_market_update_2019_q3.pdf

Residential:

Occupancy rate is now up to 91%, up from 90.3%.

There are currently 6086 residential units, with 837 U/C and 1179 planned. 

Rent/square foot is $2.35 which is an increase of $0.19, and well above the $1.29 regional average.

I suspect around 11.4k people living in Downtown now, going off 2.07 per unit occupancy. 

Hospitality:

8228 hotel rooms, with 150 U/C ad 400+ planned.

year-to-year occupancy rate up 6% to 68%. 

 

Many other details inside the attachment, such as Preston details and many retail updates. 

 

 

 

Good stuff.  But I think 2.07 per unit occupancy is probably too high.  I think 1.4 per occupied unit is a more likely average, which would put our current population at 7754 (but this seems to only include rental units; there are an additional several hundred living in condos).

[TheSirDingle]

44 minutes ago, Houston19514 said:

 

Good stuff.  But I think 2.07 per unit occupancy is probably too high.  I think 1.4 per occupied unit is a more likely average, which would put our current population at 7754 (but this seems to only include rental units; there are an additional several hundred living in condos).

Personally think it's around 1.8. I think an update for June said it was somewhere around 1.71. So 2.07 is a little too much, I could see a little under 10k people living within the rental market. With an extra few hundred living in condos. Still think total Downtown pop is above 11k, since it was stated slightly below 11k in June. Wonder when they're going to release official population stats for the area? 

[Houston19514]

3rd Quarter, 2019:

 

A net 157 units were absorbed in the CBD, while zero new units were delivered.  (Assuming 1.4 people per occupied apartment, downtown added about 75 people per month during the 3rd quarter)  88.9% occupancy.  (CBRE's reports can be frustrating at times.  Last quarter they reported 90.3% occupancy. With additional net leasing and no deliveries, it's a simple mathematical certainty that occupancy would go up, not down...)

 

The "Central Houston" market (downtown, Montrose/Museum/Midtown, Heights/Wash Ave., Highland Village/Upper Kirby/West U, and Med Center/Braes Bayou) delivered 918 new units during the quarter, with 869 units net absorption (for approximately 1,200 additional residents).

 

[TheSirDingle]

Don't know where to put this, but here it is.
Article:https://www.bisnow.com/houston/news/multifamily/houston-multifamily-market-to-normalize-with-deliveries-set-to-double-in-2020-102528

Looks like the multifamily market deliveries are going to normalize after a below average 2019. 

 

Multifamily deliveries/absorption:

Quote

After a slow 2019, multifamily developers in Houston are poised to deliver nearly 17,000 units in 2020, double the delivery volume of last year. For America’s fourth-largest city, the rapid rise in deliveries is a return to form, rather than a surge forward...

“We only had around 8,000 deliveries last year, that’s a very low number for the Houston [area],” Berkadia Senior Managing Director Ryan Epstein said. “We’re starting to get back to normal. Seventeen thousand units is not a big number on the base, but we’re coming off a very low number of deliveries."...

 

The 14,025 units recorded in 2019 is the highest number absorbed since 2014, excluding the temporary boost after Hurricane Harvey...

 

Jobs:

Quote

Houston’s continued job growth despite an oil downturn has kept the area’s multifamily market active. As of November, Houston added 85,500 jobs year over year, a 2.7% increase. It was the 25th consecutive month that Houston’s job growth exceeded the national rate, according to JLL research. The job growth has earned Houston its fourth consecutive quarter of positive net absorption for the first time since 2015, signaling a rebound from Houston’s slow months following the start of the oil downturn...

 

Occupancy/rent:

Quote

apartment demand significantly outpaced inventory expansion, elevating occupancy 110 basis points year-over-year to 94% by the fourth quarter of 2019, according to Berkadia research. At the same time, Greater Houston's effective rent advanced 0.5% to $1,113 per month by year-end...

 

[Houston19514]

4tth Quarter, 2019:

Very slow quarter.

 

A net  -54  units were absorbed in the CBD, while zero new units were delivered.  (Assuming 1.4 people per occupied apartment, downtown lost about 25 people per month during the 4th quarter)  88% occupancy. 

 

The "Central Houston" market (downtown, Montrose/Museum/Midtown, Heights/Wash Ave., Highland Village/Upper Kirby/West U, and Med Center/Braes Bayou) delivered 1,171 new units during the quarter, with 67 units net absorption (for approximately 94 additional residents).

 

[TheSirDingle]

30 minutes ago, Houston19514 said:

4tth Quarter, 2019:

Very slow quarter.

 

A net  -54  units were absorbed in the CBD, while zero new units were delivered.  (Assuming 1.4 people per occupied apartment, downtown lost about 25 people per month during the 4th quarter)  88% occupancy. 

 

The "Central Houston" market (downtown, Montrose/Museum/Midtown, Heights/Wash Ave., Highland Village/Upper Kirby/West U, and Med Center/Braes Bayou) delivered 1,171 new units during the quarter, with 67 units net absorption (for approximately 94 additional residents).

 

Would the real occupancy be 90.1% since this is going off CBRE's 3rd quarter report? Anyway wonder what the equilibrium is, i'm suspecting 91%; maybe even a little higher. Should float around that during the spring/summer. 

Edited January 15, 2020 by TheSirDingle

[Luminare]

On 1/15/2020 at 3:18 PM, Houston19514 said:

4tth Quarter, 2019:

Very slow quarter.

 

A net  -54  units were absorbed in the CBD, while zero new units were delivered.  (Assuming 1.4 people per occupied apartment, downtown lost about 25 people per month during the 4th quarter)  88% occupancy. 

 

The "Central Houston" market (downtown, Montrose/Museum/Midtown, Heights/Wash Ave., Highland Village/Upper Kirby/West U, and Med Center/Braes Bayou) delivered 1,171 new units during the quarter, with 67 units net absorption (for approximately 94 additional residents).

 

 

This might be an assumption, but I wouldn't be surprised if 4Q are normally slow. Not exactly a great time to move with all the various holidays, and financial calendars closing.

[TheSirDingle]

Article: http://www.downtowndistrict.org/static/media/uploads/attachments/downtown_market_update_2019_q4.pdf
 

Residential:

Occupancy: 88.9% (down from 91%, might be the usual 4Q slowdown as stated by @Luminare)

Units: 6086 Completed 

873 Under construction (might not include fairfield residential) 

1179 planned 

- Also states that The Preston shapes takes inspiration from a ship's hull

 

Hospitality: 

Units: 8228 rooms

150 under construction 

400+ planned 

- Also Cambria hotel has received AAAs four diamond designation (only 6.3% of hotels receive this), putting the total AAA FD rooms over 5200

 

also lots of great info on the office, retail, innovation market, etc

 

[TheSirDingle]

Article: http://www.downtowndistrict.org/static/media/uploads/downtown_market_update_2020_q1-compressed.pdf

 

Q1 Market overview is here!!
 

Residential: 

Occupancy: 86.3% (down from 88.9%, This is due to Camden units being delivered, Although there was a net absorption not including this)

Units: 6278 units (up from 6086)

888 Under Construction 

893 Planned 

Delivered: 192 units (Camden 271 units, guess they're not including the short term low income units)

 

Retail:

450+ Restaurants

12 opened 

5 planned 

Downtown's retail shouldn't be hit to hard. It's also more of a question of when, than if, in terms of a rebound. This is due to Downtown's insanely large consumer base, stating "168k employees, 4300 businesses. and more than 65k residents within two miles - are too strong." by the article. 

 

Hotel: 

8228 Rooms

150 Under Construction

300+ planned

[Houston19514]

1st Quarter, 2020:

Very slow quarter.

 

A net 2  units were absorbed in the CBD, while 271 new units were delivered.  88.1% occupancy. 

 

The "Central Houston" market (downtown, Montrose/Museum/Midtown, Heights/Wash Ave., Highland Village/Upper Kirby/West U, and Med Center/Braes Bayou) delivered 1,768 new units during the quarter, with 501 units net absorption (for approximately 700 additional residents).

 

[X.R.]

Any update for Q2/Q3? With all the new rooms potentially coming online, I was wondering if there were more up-to-date official numbers counting the amount of housing in the pipeline.

[downtownian]

8 minutes ago, X.R. said:

Any update for Q2/Q3? With all the new rooms potentially coming online, I was wondering if there were more up-to-date official numbers counting the amount of housing in the pipeline.

 

https://www.downtownhouston.org/media/uploads/attachments/2020-10-26/Downtown_Market_Update_2020_Q3.pdf

 

Q3 occupancy of 83.1%. Seems to be underperforming Montrose/Heights/Kirby on occupancy although rates are holding up

[TheSirDingle]

6 hours ago, downtownian said:

 

https://www.downtownhouston.org/media/uploads/attachments/2020-10-26/Downtown_Market_Update_2020_Q3.pdf

 

Q3 occupancy of 83.1%. Seems to be underperforming Montrose/Heights/Kirby on occupancy although rates are holding up

Not as bad as I thought, with all the doom and gloom being reported by the newspapers about the Downtown "emptiness", I was suspecting it was low 60%. Hopefully this shows that the recently revived Downtown apartment market is stronger than we thought. 

 

I think this means we should be seeing a pretty good recovery Q1/Q2 of next year, with Q4 2020 slowly ticking up in occupancy. I'm expecting it to be back in the 89-90% range by the end of Q2 next year. Baring anything absolutely crazy happens.  

 

 

[downtownian]

4 minutes ago, TheSirDingle said:

Not as bad as I thought, with all the doom and gloom being reported by the newspapers about the Downtown "emptiness", I was suspecting it was low 60%. Hopefully this shows that the recently revived Downtown apartment market is stronger than we thought. 

 

I think this means we should be seeing a pretty good recovery Q1/Q2 of next year, with Q4 2020 slowly ticking up in occupancy. I'm expecting it to be back in the 89-90% range by the end of Q2 next year. Baring anything absolutely crazy happens.  

 

 

 

Downtown is strange right now. Weekdays are fairly empty as a fair amount of people are still working from home. You can see this in the lunch spots and the tunnels. Evenings and weekends have some pockets of activity: the Harry Potter bar consistently has long lines, Discovery Green is packed, Bravery Chef Hall is packed, places like Flying Saucer, Pappas Bros are decently busy.

[kbates2]

The uptick in the homeless population is likely going to be a large problem for the downtown apartment market.  It seems like ever since they put up the fencing underneath 59 near Franklin, that massive homeless camp has just moved into random corners of downtown.  I've been down here for 6 years and have never really had areas that I fully avoided due to panhandlers.  There are several areas now that I hesitate to walk by.  I'm still confident in downtown residential over the long run but with so many homeless, no yards to spend time in with everything closed, and with the current status of working from home, I think that occupancy numbers are going to fall sharply for a period.

[downtownian]

Ouch, but not completely unexpected: 

"McClenny’s report ranks the Downtown as the 42nd worst place on a list of 42 Houston submarkets. The cost of rent in the urban center has dropped 14.3% in the last six months, 12.3% in the last year. Just 271 apartments have opened in the Downtown, and over 1,200 are under construction."

https://realtynewsreport.com/downtown-apartment-rents-down-14-percent-while-houston-suburbs-hold-firm/

 

[TheSirDingle]

They Just Recently uploaded the yearly Downtown at A Glance report, which can be found here: http://www.downtowndistrict.org/research-reports/

Unit Occupancy: They didn't give an exact figure but going off of their household figures I can estimate it's around 85% (Most likely high 84%). Which is up from 83.1% as reported by @downtownian back in October. 

Downtown Population and Units

Household population: 10,142 people 

Total Population (still don't know what else it's counting): 11,787 people 

Number of units: 6,278 units

Under Construction: 1,197 units

Proposed: 579 (probably not concrete since we have the inside scoop 😎)

Financial Aspects and Walkability Scores

Average Apartment Rental Rate: $2,140/month (I think this holds Downtown as the highest cost rental submarket?)

Rental Rate per SF: $2.35/SF

Transit Score: 99

Bike Score: 83 (could be improved, but we have a lot of bike lane construction going on don't we?)

Walk Score: 92

Greater Downtown Stats (2 mile radius)

Occupancy: 89% (surprisingly good considering the past year)

Number of Households: 32,898

Renter Occupied: 69%

Owner Occupied: 31%

Greater Downtown Population Stats

Household Population: 68,756

Total Population: 78,965

Percent Bachelor's Degree or Higher: 51%

Population by Age

A very young population around the core.

Population by Sex: Female: 56%, Male: 44%. Pretty big difference, didn't know ratio was that big. 

Final Note

2020 was a pretty hard year for everybody, and it hit the Downtown market pretty hard with it just recently barely regaining its footing. Covid hurt many of the businesses and people in Downtown, and made a few shut their doors permanently.  It has also halted the progress Downtown has taken to becoming a 24/7 neighborhood, and the insane increase in foot traffic we were seeing pre-Covid. 

Now that 2020 has passed I have a good feeling 2021 will be a great year of progress for Downtown. Going off of recent trends there's a good chance it will return to its pre-Covid state (barring it doesn't start super-mutating and the vaccine doesn't work as intended) and eventually surpass its previous high (maybe later this year?). Now that we have the residential, and hotel infrastructure set, Downtown will have a much easier time coming back the downturn. 

2021 should be a great year.

 

[HNathoo]

12 hours ago, TheSirDingle said:

They Just Recently uploaded the yearly Downtown at A Glance report, which can be found here: http://www.downtowndistrict.org/research-reports/

Unit Occupancy: They didn't give an exact figure but going off of their household figures I can estimate it's around 85% (Most likely high 84%). Which is up from 83.1% as reported by @downtownian back in October. 

Downtown Population and Units

Household population: 10,142 people 

Total Population (still don't know what else it's counting): 11,787 people 

Number of units: 6,278 units

Under Construction: 1,197 units

Proposed: 579 (probably not concrete since we have the inside scoop 😎)

Financial Aspects and Walkability Scores

Average Apartment Rental Rate: $2,140/month (I think this holds Downtown as the highest cost rental submarket?)

Rental Rate per SF: $2.35/SF

Transit Score: 99

Bike Score: 83 (could be improved, but we have a lot of bike lane construction going on don't we?)

Walk Score: 92

Greater Downtown Stats (2 mile radius)

Occupancy: 89% (surprisingly good considering the past year)

Number of Households: 32,898

Renter Occupied: 69%

Owner Occupied: 31%

Greater Downtown Population Stats

Household Population: 68,756

Total Population: 78,965

Percent Bachelor's Degree or Higher: 51%

Population by Age

A very young population around the core.

Population by Sex: Female: 56%, Male: 44%. Pretty big difference, didn't know ratio was that big. 

Final Note

2020 was a pretty hard year for everybody, and it hit the Downtown market pretty hard with it just recently barely regaining its footing. Covid hurt many of the businesses and people in Downtown, and made a few shut their doors permanently.  It has also halted the progress Downtown has taken to becoming a 24/7 neighborhood, and the insane increase in foot traffic we were seeing pre-Covid. 

Now that 2020 has passed I have a good feeling 2021 will be a great year of progress for Downtown. Going off of recent trends there's a good chance it will return to its pre-Covid state (barring it doesn't start super-mutating and the vaccine doesn't work as intended) and eventually surpass its previous high (maybe later this year?). Now that we have the residential, and hotel infrastructure set, Downtown will have a much easier time coming back the downturn. 

2021 should be a great year.

 

 

I think we'll be hearing a pretty big announcement for the downtown market towards the end of this month or early next month.

[Avossos]

3 hours ago, HNathoo said:

I think we'll be hearing a pretty big announcement for the downtown market towards the end of this month or early next month.

What kind of ‘big’ announcement??

[CREguy13]

6 hours ago, HNathoo said:

 

I think we'll be hearing a pretty big announcement for the downtown market towards the end of this month or early next month.

I can corroborate.  If it's something different, even better.

[Tumbleweed_Tx]

On 1/5/2021 at 12:13 AM, TheSirDingle said:

 

Total Population (still don't know what else it's counting): 11,787 people 

 

they're counting the homeless, too.

[Avossos]

18 hours ago, CREguy13 said:

I can corroborate.  If it's something different, even better.

Well - my best guess, since this is the 'downtown apartment market' topic, is a conversion of a vacant building into apartments. Guesses, in order:

1) Old Days Inn / Holiday Inn to be apartments

2) 800 Bell St to be apartments

3) Battlestiens to be condos / apartments

4) Old SWB building at Capital & San Jacinto to be renovated to apartments

5) Harris county to sell a building to be renovated to apartments

6) Marquette or Camden breaking ground on their plans (don't believe capital markets are supportive of this today, but I could be wrong)

[kbates2]

Chris Shepherd coming to downtown is huge news for me personally but I don't know if that is the pretty big announcement.

I'm hoping for new apts or a grocery store...

[Montrose1100]

19 hours ago, Avossos said:

Well - my best guess, since this is the 'downtown apartment market' topic, is a conversion of a vacant building into apartments. Guesses, in order:

1) Old Days Inn / Holiday Inn to be apartments

2) 800 Bell St to be apartments

3) Battlestiens to be condos / apartments

4) Old SWB building at Capital & San Jacinto to be renovated to apartments

5) Harris county to sell a building to be renovated to apartments

6) Marquette or Camden breaking ground on their plans (don't believe capital markets are supportive of this today, but I could be wrong)

800 Bell being saved would be worth another decade of seeing through the Old Days Inn / Holiday Inn.

[Avossos]

On 1/5/2021 at 1:01 PM, HNathoo said:

 

I think we'll be hearing a pretty big announcement for the downtown market towards the end of this month or early next month.

Was this the skanska announcement?

[HNathoo]

2 hours ago, Avossos said:

Was this the skanska announcement?

Yes. 

[CREguy13]

2 hours ago, Avossos said:

Was this the skanska announcement?

For me it was - I accidentally posted it in the wrong thread.  Hopefully @HNathoo knows something we don't!

[Avossos]

 

10 hours ago, HNathoo said:

Yes. 

 

10 hours ago, CREguy13 said:

For me it was - I accidentally posted it in the wrong thread.  Hopefully @HNathoo knows something we don't!

Well y'all were in sync then! A little bummed we don't have a conversion to residential or something.

 

in terms of offices... I love the Skanska news, but I am also extremely hopeful that 1 Market Square happens... that garage as is... is just a disappointment.

[Nate99]

On 1/6/2021 at 2:29 PM, Avossos said:

Well - my best guess, since this is the 'downtown apartment market' topic, is a conversion of a vacant building into apartments. Guesses, in order:

1) Old Days Inn / Holiday Inn to be apartments

2) 800 Bell St to be apartments

3) Battlestiens to be condos / apartments

4) Old SWB building at Capital & San Jacinto to be renovated to apartments

5) Harris county to sell a building to be renovated to apartments

6) Marquette or Camden breaking ground on their plans (don't believe capital markets are supportive of this today, but I could be wrong)

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.