TheNiche Posted January 8, 2007 Share Posted January 8, 2007 I know that we've got a few folks on the forum that are in the know. Is anyone other than me a bit concerned about where the in-town apartment market is going to end up in 2008? I'm looking at construction stats, then looking at absorption and occupancy stats, and they don't exactly match. Granted that the Katrina mess completely clouded the true workings of the market, and granted that energy and medical are going gangbusters, but... ...am I just paranoid or is this really happening? How many units can we fill? Link to comment Share on other sites More sharing options...
Guest Marty Posted January 8, 2007 Share Posted January 8, 2007 Granted that the Katrina mess completely clouded the true workings of the market.A lot of Katrina evacuees live in the apartments at the end of my subdivision they tell me they feel safe walking down the Boulevard i live on and a lot of the evacuees work at the HEB, CVS and Walgreens in my area ,very nice people so i say the media is wrong like always. Link to comment Share on other sites More sharing options...
TheNiche Posted January 8, 2007 Author Share Posted January 8, 2007 A lot of Katrina evacuees live in the apartments at the end of my subdivision they tell me they feel safe walking down the Boulevard i live on and a lot of the evacuees work at the HEB, CVS and Walgreens in my area ,very nice people so i say the media is wrong like always.This isn't a news story...although if I'm right, it'll become one soon enough. It'll be interesting to see which news outlets and/or firms have the balls to break it.Class A apartments in the in-town area got hit with something around 1,000 refugee households in Sept. 2005, and they've been bleeding off ever since. But all the volatility from households that normally wouldn't be in Class A digs is preventing me from seeing what would've otherwise happened if the market was just growing with the local economy...as a result it is hard to know what to expect from our economy when it comes time to fill the 6,600+ units that I've identified as being under construction in the in-town area and that'll probably deliver in 2007 and 2008. That's the equivalent of everything that's been completed since the start of 2003, so I'm a bit concerned...and not about evacuees. I'm concerned for our developers. Link to comment Share on other sites More sharing options...
Guest Marty Posted January 8, 2007 Share Posted January 8, 2007 Where i live they just built a subdivision at Treaschwig & Birnam Wood BLVD and the other apartment is called Timber Run "sec 8" at 3030 Hirschfield worth over 6,830,512 ,now it's worth about 4,440,900 in one year" built in 2001-02" check out that addresses at the HCAD Link to comment Share on other sites More sharing options...
Scharpe St Guy Posted January 8, 2007 Share Posted January 8, 2007 Niche,If they are not absorbed with renters how about converting them into Condo's? I would imagine it's a race for each developer to get there project completed and leased and then resell before the slow down...Scharpe St Guy Link to comment Share on other sites More sharing options...
TheNiche Posted January 8, 2007 Author Share Posted January 8, 2007 Niche,If they are not absorbed with renters how about converting them into Condo's? I would imagine it's a race for each developer to get there project completed and leased and then resell before the slow down...Scharpe St GuyThat approach would have a very brief margin within which it would work. When rents go down or rental concessions go up, there's less incentive for existing renters to become buyers. Also, it doesn't take too many active condo projects to sap the market dry.Funny thing is that some people seem to recognize the dark cloud on the horizon, but they're breaking ground anyway. As long as lenders lend, builders build. Link to comment Share on other sites More sharing options...
TAK Posted January 8, 2007 Share Posted January 8, 2007 What is considered "in town"?Are there any numbers/guesstimates for the Houston metro as a whole? Link to comment Share on other sites More sharing options...
travelguy_73 Posted January 8, 2007 Share Posted January 8, 2007 Funny thing is that some people seem to recognize the dark cloud on the horizon, but they're breaking ground anyway. As long as lenders lend, builders build.While I would tend to agree with this, I think that the new Inner Loop developments will be fine. Instead, I see pressure on the 80's and 90's developments as they attempt to compete with new complexes. Since the trend is away from the traditional multi-building, outdoor parking model, and firmly toward soft loft midrises that are less 'apartment-like,' older complexes that have any sort of new development competition will have to reduce (or level out) their price/sq ft or massively upgrade their interiors (both resulting in slashed profits). IMO, those are the developments that will have a tougher time getting banks to listen. Link to comment Share on other sites More sharing options...
TheNiche Posted January 8, 2007 Author Share Posted January 8, 2007 What is considered "in town"?Are there any numbers/guesstimates for the Houston metro as a whole?Inner loop and Galleria area, basically.While I would tend to agree with this, I think that the new Inner Loop developments will be fine. Instead, I see pressure on the 80's and 90's developments as they attempt to compete with new complexes. Since the trend is away from the traditional multi-building, outdoor parking model, and firmly toward soft loft midrises that are less 'apartment-like,' older complexes that have any sort of new development competition will have to reduce (or level out) their price/sq ft or massively upgrade their interiors (both resulting in slashed profits). IMO, those are the developments that will have a tougher time getting banks to listen.Well you're right that the pain is spread around to the Class B and C complexes, but that doesn't mean that the A's aren't hurting too. Link to comment Share on other sites More sharing options...
jm1fd Posted January 9, 2007 Share Posted January 9, 2007 So how would this impact the single family residential rental market? I would presume the same...but then again, it is a somewhat different product usually at a higher pricepoint, so it could be looked at differently... Link to comment Share on other sites More sharing options...
mrfootball Posted January 9, 2007 Share Posted January 9, 2007 There was a huge rash of Tax-credit housing that was built up in 2005 and 2006 using 'extra' money allocated by the Federal Gov't to create more housing for low-income earners (and ostensibly refugees). I would go further to say that there has been a lot of fraud and abuse going on with the whole FHA and Tax Credit Housing deal. Link to comment Share on other sites More sharing options...
TheNiche Posted January 9, 2007 Author Share Posted January 9, 2007 So how would this impact the single family residential rental market? I would presume the same...but then again, it is a somewhat different product usually at a higher pricepoint, so it could be looked at differently...On the margins, I'm sure there'd be an impact. Not so much for new construction as for older less expensive homes at similar equivalent prices to Class A apartments. They are substitute products for one another, after all, but as you suggested, they aren't perfect substitutes for all people.There was a huge rash of Tax-credit housing that was built up in 2005 and 2006 using 'extra' money allocated by the Federal Gov't to create more housing for low-income earners (and ostensibly refugees). I would go further to say that there has been a lot of fraud and abuse going on with the whole FHA and Tax Credit Housing deal.I know for a fact that your sentiment is correct, except that the rules are so poorly implemented that it qualifies less as fraud and abuse as it is government incompetence. Link to comment Share on other sites More sharing options...
sttombiz Posted January 13, 2007 Share Posted January 13, 2007 your fear is that market is going to be saturated with existing units? so no one to rent/buyI agree with you in the terms that too many developers are going high end with their apartment developments. in the bus section a few sundays ago, some [developers] were bragging about installing granite and building elaborate community centers stocked with plasmas and starbucks outlets (kidding with the latter). Im all for the community aspect of the apartment complex but I believe most just want to live there and only deal with the neighbors when they make too much noise. I think the market will become saturated with high end apartment developments. but the new generation graduating college in these next few years is different and most of them enjoy the idea of the high end complex. its my opinion though that apartments were built so that college grads wouldnt have to live with their parents after graduating. if the new notion is that these kids will shell out over 1500/mo for a 600-700 sq ft apartment then by all means build. but if history proves us right, theyre looking for the deal rather than the loft. they did just graduate college- you know?the saturation will help existing complexes and lower the value of new townhome developments. single family home prices may be adversely effected but likely in the category of the ones which rent for 1500/mo in the area of the new spur of development. Link to comment Share on other sites More sharing options...
TheNiche Posted January 13, 2007 Author Share Posted January 13, 2007 your fear is that market is going to be saturated with existing units? so no one to rent/buyI agree with you in the terms that too many developers are going high end with their apartment developments. in the bus section a few sundays ago, some [developers] were bragging about installing granite and building elaborate community centers stocked with plasmas and starbucks outlets (kidding with the latter). Im all for the community aspect of the apartment complex but I believe most just want to live there and only deal with the neighbors when they make too much noise. I think the market will become saturated with high end apartment developments. but the new generation graduating college in these next few years is different and most of them enjoy the idea of the high end complex. its my opinion though that apartments were built so that college grads wouldnt have to live with their parents after graduating. if the new notion is that these kids will shell out over 1500/mo for a 600-700 sq ft apartment then by all means build. but if history proves us right, theyre looking for the deal rather than the loft. they did just graduate college- you know?the saturation will help existing complexes and lower the value of new townhome developments. single family home prices may be adversely effected but likely in the category of the ones which rent for 1500/mo in the area of the new spur of development.No, actually I'm not at all concerned about a shortfall in demand (unless oil goes bust). In fact, I wouldn't be at all surprised if the number of units absorbed increases by a fairly substantial amount. But I'm concerned that supply is expanding much faster than demand. And you're right that college grads comprise a large portion of the units demanded, but I don't think that the changes in preferences are as drastic or recent as you make it sound. It certainly won't be a trend that is able to counter the overbuilding.Incidentally, I know that you think that you were kidding about the Starbucks amenity, but 7 Riverway offers that. Link to comment Share on other sites More sharing options...
mrfootball Posted January 14, 2007 Share Posted January 14, 2007 I think the major concern is that falling rates will simply serve to attract more lowlifes and undesireables to the Houston area, placing a further burden on county and city services. The crime rate is already horrible, expect it to get worse. Link to comment Share on other sites More sharing options...
houstonmacbro Posted January 14, 2007 Share Posted January 14, 2007 I think the major concern is that falling rates will simply serve to attract more lowlifes and undesireables to the Houston area, placing a further burden on county and city services. The crime rate is already horrible, expect it to get worse. It's funny. Me and a buddy had this discussion about the bad crime element that was coming this way after Katrina. We talked about how it was going to impact Houston in ways we hadn't expected. Looks like its happening. But don't forget that we have a burgeoning illegal population here that is also committing a lot of the crimes as well. Combine those two forces and watch out! Link to comment Share on other sites More sharing options...
dalparadise Posted January 15, 2007 Share Posted January 15, 2007 I think developers may be attempting to lead rising mortgage rates. They're anticipating a decline in affordability and thus, a spike in apartment demand. After all, it's difficult to react quickly in this regard. So, maybe they're rolling the dice? Link to comment Share on other sites More sharing options...
TheNiche Posted January 15, 2007 Author Share Posted January 15, 2007 I think developers may be attempting to lead rising mortgage rates. They're anticipating a decline in affordability and thus, a spike in apartment demand. After all, it's difficult to react quickly in this regard. So, maybe they're rolling the dice?Nope. The yield curve on treasury securities has been inverted for a good long while, which is an indication that expectations are that future interest rates aren't going to go up much, if at all. Developers in Houston and those that lend to them don't have any better an idea of where the market is headed than do professional securities brokers in NYC.I think that the cause is very simply a combined effect where the number of units coming on to the market was slow at precisely the moment when our economy heated up and Katrina provided an overnight boost to the market. Developers have just overshot on the correction. Link to comment Share on other sites More sharing options...
dalparadise Posted January 15, 2007 Share Posted January 15, 2007 Nope. The yield curve on treasury securities has been inverted for a good long while, which is an indication that expectations are that future interest rates aren't going to go up much, if at all. Developers in Houston and those that lend to them don't have any better an idea of where the market is headed than do professional securities brokers in NYC.I think that the cause is very simply a combined effect where the number of units coming on to the market was slow at precisely the moment when our economy heated up and Katrina provided an overnight boost to the market. Developers have just overshot on the correction.I know they don't have any better idea than you do. Thus, my speculation that they may be "rolling the dice". Link to comment Share on other sites More sharing options...
mrfootball Posted January 15, 2007 Share Posted January 15, 2007 I'm just so tired of the 'strip miner'-esque developers that permeate this city and county. For every good developer there are a thousand hacks out there giving us more stuff we don't want or need. Link to comment Share on other sites More sharing options...
TheNiche Posted January 15, 2007 Author Share Posted January 15, 2007 I'm just so tired of the 'strip miner'-esque developers that permeate this city and county. For every good developer there are a thousand hacks out there giving us more stuff we don't want or need.Uh huh...I'm not sure that that is pertinent to the topic of the thread, but I can assure you that at least some people need those things or else they wouldn't get sold and leased. Now, you may not want or need it, but that's a different matter.I know they don't have any better idea than you do. Thus, my speculation that they may be "rolling the dice"....that's a lot of dice-rolling.You know it might also be that the good deals have dried up on the coasts and that institutional and hedge fund money is looking to markets that haven't yet been tapped out. Link to comment Share on other sites More sharing options...
houston-development Posted January 25, 2007 Share Posted January 25, 2007 Note: This post originally appeared in the Allen House: it was nice knowing you - thread and was moved to an on-topic thread.Well yeah, you're right. ...but they might also be attracted to a place that offers three months of free rent and a free plasma screen TV. It happens. It will happen. Watch.thats what happens when you build 17,000 units. yes, you read that correctly...we are expecting seventeen thousand units to come on line this year.*coughbloodbathcough* Link to comment Share on other sites More sharing options...
Houston19514 Posted January 25, 2007 Share Posted January 25, 2007 thats what happens when you build 17,000 units. yes, you read that correctly...we are expecting seventeen thousand units to come on line this year.*coughbloodbathcough*What's the source of that 17,000 number? A recent Chronicle article pegged it at 5,300 units to be delivered this year. Link to comment Share on other sites More sharing options...
TheNiche Posted January 25, 2007 Author Share Posted January 25, 2007 What's the source of that 17,000 number? A recent Chronicle article pegged it at 5,300 units to be delivered this year.Per O'Connor & Associates, there are 13,342 units under construction and another 9,296 that are proposed. I think that a number of those that are proposed will get killed, but a fairly sizable portion already have enough momentum and will likely move forward...or are already under construction and haven't been updated in the stats.For the past eight years, our average annual absorption of Class A units was just shy of 5,000 per year. Given that Classes B, C, and D are bleeding tenants already, and have been since 2002 (except for 2005, of course), I think that the glut of Class A product is going to cause some ugliness. And I expect that it'll be particularly bad inside the loop. Link to comment Share on other sites More sharing options...
Houston19514 Posted January 25, 2007 Share Posted January 25, 2007 Per O'Connor & Associates, there are 13,342 units under construction and another 9,296 that are proposed. I think that a number of those that are proposed will get killed, but a fairly sizable portion already have enough momentum and will likely move forward...or are already under construction and haven't been updated in the stats.For the past eight years, our average annual absorption of Class A units was just shy of 5,000 per year. Given that Classes B, C, and D are bleeding tenants already, and have been since 2002 (except for 2005, of course), I think that the glut of Class A product is going to cause some ugliness. And I expect that it'll be particularly bad inside the loop.What portion of those under construction are scheduled to be deliverd this year. Seem highly unlikely that all of them would be. And of course, of those "proposed", none will be delivered this year, one would presume (and hope). Link to comment Share on other sites More sharing options...
TheNiche Posted January 25, 2007 Author Share Posted January 25, 2007 What portion of those under construction are scheduled to be deliverd this year. Seem highly unlikely that all of them would be. And of course, of those "proposed", none will be delivered this year, one would presume (and hope). For the whole region, I really don't know, but can say with confidence that it'll be more than half and that the market is still going to be weaker in 2007 that it should be because the Katrina effect is still wearing off. I haven't taken the time to go project by project throughout the metropolitan area and figure out the hard numbers, though. I have done that for the inner loop area but won't say what I've come up with , except that I expect it to be uglier than it was in 2004. Link to comment Share on other sites More sharing options...
buildingunbuildingrebuilding Posted January 26, 2007 Share Posted January 26, 2007 For the whole region, I really don't know, but can say with confidence that it'll be more than half and that the market is still going to be weaker in 2007 that it should be because the Katrina effect is still wearing off. I haven't taken the time to go project by project throughout the metropolitan area and figure out the hard numbers, though.I have done that for the inner loop area but won't say what I've come up with , except that I expect it to be uglier than it was in 2004. Many of the proposed and under construction properties are tax credit properties- O'Connor shows 15 affordable housing projects under construction versus 37 market rate. So its not as if these are all targeting the same renters. This is obviously a tremendous amount of construction, but job growth remains strong and Class A absorption solid. These guys have been working on this redevelopment plan for several years. Its a fantastic site. And at a project like this, you are knocking down several hundred units, so Allen House (or Westcreek) is not adding as many units as seems at first blush. Link to comment Share on other sites More sharing options...
infinite_jim Posted January 26, 2007 Share Posted January 26, 2007 Stern is the literal "dean" of postmodernism's preoccupation with consumer culture, this project is top shelf & will be a "shoe-in"the competition will have to make adjustments like the kind of offers the Niche was referring to,and this building is one more notch in houston's quest to be a globalized market, an "international" city.. Link to comment Share on other sites More sharing options...
houston-development Posted January 26, 2007 Share Posted January 26, 2007 Many of the proposed and under construction properties are tax credit properties- O'Connor shows 15 affordable housing projects under construction versus 37 market rate. So its not as if these are all targeting the same renters. This is obviously a tremendous amount of construction, but job growth remains strong and Class A absorption solid. These guys have been working on this redevelopment plan for several years. Its a fantastic site. And at a project like this, you are knocking down several hundred units, so Allen House (or Westcreek) is not adding as many units as seems at first blush. on paper, your theory is correct. however, you are demolishing affordable housing for $1.50+ rents, so its not off-setting each other. additionally, per ADS, there were 11,000 units (a majority market rate, NOT tax credit) under construction at the end of last year with 17,000 proposed. therefore, we most likely will see about 17,000 market rate units available this year, as i stated earlier edited to add (and hopefully this works): UNDER CONSTRUCTION Central: Camden City Centre I / Camden 379 493P Montrose/Museum City Plaza / Koontz McCombs 404 493J Montrose/Museum Metropole / Cambridge 290 492X Inner Loop W/Greenway Camden Plaza / Camden 271 492W Inner Loop W/Greenway Alexan Kirby / Trammell Crow 230 492Y Inner Loop W/Greenway Alexan Main Street / Trammell Crow 286 532L Med Center/Bellaire Mosaic / Wood Partners 393 533B Med Center/Bellaire Taylor Heights / Martin Fein 326 493F Heights Southwest: Gables 6464 / Gables 163 490R Galleria Alexan Post Oak / Trammell Crow 394 491R Galleria Woodlake Site / Sueba 265 490S Woodlake/Westheimer Broadstone Memorial / Alliance Comm 400 488C West Memorial/Briar Fst Portico at West Eight/Richfield 510 489V Westchase Lakemont / Verde 312 526E Fort Bend Sienna Plantation Site / Martin Fein 270 609Z Fort Bend Wynhaven at Fort Bend / Trammell Crow 300 571S Fort Bend Brazos Ranch / Judwin 308 605R Richmond/Rosenberg Villas at River Park/Internacional 300 607J Richmond/Rosenberg Northwest: Broadstone Lofts W 18th/Alliance Com 304 452S Brookhollow Alexan Bunker Hill / Trammell Crow 398 450X Spring Branch Torrey Chase Site I/ Bohannon 232 331W FM 1960 W/Champions Conservatory Champions Fst** 190 330T FM 1960 W/Champions Cypress Pointe / Woodmark 228 329P FM 1960 W/Champions Stoneleigh Spring Cypress II/Woodmark 242 330B FM 1960 W/Champions 290 & Skinner Site / New Quest 252 367F FM 1960 W/Steeplechase Boardwalk @ Town Center/ Cambridge 450 251G Woodlands/Far North Abbey Woodlands / Abbey Res 360 251U Woodlands/Far North Conservatory Alden Bridge** 190 216K Woodlands/Far North Alexan Woods / Trammell Crow 280 252W Woodlands/Far North River Pointe III / Martin Fein 224 Conr Conroe Northeast: Villas @ Foxbrick II 70 334U FM 1960 E/IAH Airport Wynhaven @ Deerbrook / Trammell Crow 360 335T FM 1960 E/IAH Airport Lafayette Village* / Dwayne Henson 250 457Y Far East Stone Park II / Greystar 276 457U Far East Fall Creek III / Martin Fein 246 375Z Far East Magnolia Cove Site / DMC 192 337G Lake Houston/Kingwood Southeast: Anna Dupree* 176 573D Hwy 288/South Carrington Park @ Sabo / Davis 258 576Y Gulfgate/Almeda Mall Tuscan Lakes II / Martin Fein 204 659B Clear Lake Bayview**/ CIS 240 461Y Baytown Village @ Morningstar**/DMA Dev 78 TEXC Texas City ====== Total (41 properties) 11,501 PROPOSED: Central: Mid Town Site I&II / Camden 600 Montrose/Museum Post Mid Town III / Post 136 Montrose/Museum Camden City Centre II / Camden 263 Montrose/Museum 4310 Dunlavy I&II / Marom 486 Montrose/Museum City Place / Farb 183 Montrose/Museum Alexan Westheimer Sq / TCR 244 Montrose/Museum Museum Site / Grayco 219 Montrose/Museum Gables River Oaks I / Gables 378 Inner Loop W/Greenway Gables River Oaks II / Gables 350 Inner Loop W/Greenway HISD Site / Morgan & TCR Commercial 600 Inner Loop W/Greenway Comfort Inn Site / DMC 309 Inner Loop W/Greenway The Belle Meade / Grayco 119 Inner Loop W/Greenway Verandah @ Meyerland II / Verandah 174 Med Center/Bellaire Genesis Park II / Archstone 400 Med Center/Bellaire OST & Almeda Site /Simmons Vedder 304 Med Center/Bellaire OST & Kirby Site / Simmons Vedder 293 Med Center/Bellaire N Braeswood Site / Grayco 344 Med Center/Bellaire Washington & Waugh / Morgan 236 Heights Park Tower / Finger 347 Inner Loop East Southwest: Regency Arms Site / Marom 350 Galleria Gables 6464 Phase II / Gables 220 Galleria Alexan Voss / Trammell Crow 400 Galleria Eldridge/Briar Fst / Simmons Vedder 330 West Memorial/Briar Fst Lofts on Briar Forest / Guefen 352 West Memorial/Briar Fst Camden Oak Crest II Camden 300 Westchase Bridgegate / Hettig 324 Fort Bend Shadowbrooke II / Cornerbrook Dev 300 Fort Bend West Bellfort at Hwy 6 / Funding Inc 288 Fort Bend Northwest: Nexus Site / Gross 300 Brookhollow Enclave @ Tidwell*/Hettig 40 Brookhollow Northbrooke II / Cornerbrook Dev 260 FM 1960 W/Champions Torrey Chase Site II/ Bohannon 204 FM 1960 W/Champions San Cierra / Sueba 362 FM 1960 W/Champions Vintage Oaks / Sueba 350 FM 1960 W/Champions Cypresswood & 249 / Michael Stevens 324 FM 1960 W/Champions Stoneleigh at Ella / Woodmark 400 FM 1960 W/Champions Paramatta & I-45 / Woodmark 250 FM 1960 W/Champions Wynhaven @ Grant Rd / Trammell Crow 372 FM 1960 W/Steeplechase Huffmeister Cypress N Houston / Davis 250 FM 1960 W/Steeplechase Alexan Somerall / Trammell Crow 368 Bear Creek/Copperfield Barker Cypress & 529 / Davis 250 Bear Creek/Copperfield Alexan Yorktown / Trammell Crow 306 Bear Creek/Copperfield Mason & Oak Pk Trail / Judwin 308 Katy/Far West Foxlake Drive Site / Beeler 320 Katy/Far West Vizcaya @ Park Harbor II / 276 Katy/Far West Legends @ Cinco Ranch 270 Katy/Far West Landmark at Katy / Landmark 240 Katy/Far West Mason Park / Today Realty Advisors 312 Katy/Far West The Mansions Woodland / Westerm Rim 250 Woodlands/Far North Lakes @ Westview II & III / Realm 372 Conroe Wedgewood Falls/ Allen Acq 120 Conroe Northeast: Green Pines II* / SPM 220 Eastex Frwy/Near NE Waterside Court*/Hettig 118 Northline/Aldine Fair Lake Cove* / Greater Coastal 200 Lake Houston/Kingwood Harbor Walk II / Chancellor 100 Lake Houston/Kingwood Southeast: Landmark City Park / Landmark 240 Hwy 288/South Shadow Creek Ranch II / Davis 300 Hwy 288/South South Shore Harbor Site / Flournoy 300 Clear Lake Nasa Road I Site / Davis 250 Clear Lake ====== Total (59 properties) 17,116 Link to comment Share on other sites More sharing 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The Great Hizzy! Posted January 26, 2007 Share Posted January 26, 2007 That does seem like a very robust (or at least very aggressive) number of units. Link to comment Share on other sites More sharing options...
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