Apartment Market

[houston-development]

No, I did in fact see that. Let me make sure I understand fully. Was that your way of saying that the 17,000 number was indeed an exaggeration? I have not in any way disregarded ADS and O'Connor; it seems to be you who is "disregarding" their numbers. Their numbers say 11,500 or now 13,000 "under construction". You have not shown us any of their numbers that say or even imply that we will have 17,000 units delivered this year.

17,000 wasnt an exaggeration nor did i ever imply it was. i was giving you the benefit of the doubt and was using YOUR 11k and change as an example. im not disregarding anything, im posting information that backs up my statements. sometimes they conflict but overall its the same message. its you who hasnt shown anything other than your opinion. last time i looked, an opinion isnt fact, so stop acting like yours is.

on a side note, this is my last post. nothing personal against anyone in particular and i dont mean to appear singling you out, houston.

i dont gain anything posting inside information (allegedly) here.

1) im helping my competitors by volunteering information they otherwise wouldnt know (be it directly or someone tells someone kinda thing)

2) regardless of my previous track record, ill still get slammed. i acknowledge that im bringing this onto myself, which plays into this decision.

its just not worth it. overall, y'all are a group of great guys and i wish each and every one of you the best in life.

since this has gone way off topic (sorry mods), i might as well give one last tid bit.

the shriners center, located on braeswood and brompton, will be bidded on by 2 - 4 groups next monday. the winning bidder will probably pay +/- $65 psf for 7.75 A. they will not close until jan of '08 and have around $2m of hard and released earnest money.

have a wonderful day

[Houston19514]

17,000 wasnt an exaggeration nor did i ever imply it was. i was giving you the benefit of the doubt and was using YOUR 11k and change as an example. im not disregarding anything, im posting information that backs up my statements. sometimes they conflict but overall its the same message. its you who hasnt shown anything other than your opinion. last time i looked, an opinion isnt fact, so stop acting like yours is.

on a side note, this is my last post. nothing personal against anyone in particular and i dont mean to appear singling you out, houston.

i dont gain anything posting inside information (allegedly) here.

1) im helping my competitors by volunteering information they otherwise wouldnt know (be it directly or someone tells someone kinda thing)

2) regardless of my previous track record, ill still get slammed. i acknowledge that im bringing this onto myself, which plays into this decision.

its just not worth it. overall, y'all are a group of great guys and i wish each and every one of you the best in life.

since this has gone way off topic (sorry mods), i might as well give one last tid bit.

the shriners center, located on braeswood and brompton, will be bidded on by 2 - 4 groups next monday. the winning bidder will probably pay +/- $65 psf for 7.75 A. they will not close until jan of '08 and have around $2m of hard and released earnest money.

have a wonderful day

It's quite sad that being asked to back up your statements with sources is such a burden for you, but there you go. To clear the water that you have intentionally muddied:

You have provided NO source that indicates that any of the professional estimators expect 17,000 units to be delivered this year. ALL you have provided are well-sourced estimates of the number of units under construction and proposed. With regard to my "opinions", the only numbers I have used are soundly based (and clearly stated as such) on either a Houston Chronicle article or on the numbers included in YOUR sources. I frankly have no opinion of my own on this subject.

Furthermore NOBODY slammed you. All I did was ask for a source for your 17,000 number and we still have not seen that. I did not attack you personally or otherwise. I did not argue with your conclusion that the market would be overbuilt or would suffer negative absorption. ALL I did was (unsuccessfully) ask for a source for your statement of 17,000 new deliveries this year.

[Houston19514]

Depends entirely upon the kind of product. I don't have figures broken down in fine detail, though.

To further the discussion of how long apartment construction takes... I've been searching for clues. So far I've found two complexes in the Houston area (both low-rises) with construction time-table estimates. One was hoping for contruction to take aprox 8 months. The other said it would take 16 months until completion, once construction started.

[TheNiche]

I'll merge the two lists later tonight and see what I come up with.

16,725 units presently under construction, of which at least 6,776 are already leasing but not yet completed, and at least 1,375 of which are preleased.

Sources: O'Connor & ADS, as reconciled by TheNiche

Average annual absorption of all units since 1999: 4,450

Average annual absorption of Class A units since 1999: 4,954

Source: O'Connor

[Houston19514]

16,725 units presently under construction, of which at least 6,776 are already leasing but not yet completed, and at least 1,375 of which are preleased.

Sources: O'Connor & ADS, as reconciled by TheNiche

Average annual absorption of all units since 1999: 4,450

Average annual absorption of Class A units since 1999: 4,954

Source: O'Connor

Wow. Very intersting numbers. Thanks for the work, Niche. Any chance you could post the combined listing of projects under construction?

Two Thoughts:

(1) I would think paid subscribers to O'Connor and ADS would be a bit peeved to find out that both of them have missed literally thousands of units that are under construction...

(2) Dare I point out again, that, while these numbers are very interesting, they do not constitute an estimate or projection of the number of deliveries that will occur this year.

[The Great Hizzy!]

That seems surpisingly fast to me, but as I said, I really don't know. Can mid-rises be built that fast? I'm certain high-rises cannot be. But I also don't know if there are any mid or high-rises included in the 13,000 + number.

8-10 months seems a little fast to me as well but I'm also assuming projects with a minimum of 300-plus units. Perhaps smaller projects would fit into Gary's estimated timeframe. For your average 300-unit or more project, I'd figure more along the lines of 12-15 months, depending on height and amenities.

[TheNiche]

Wow. Very intersting numbers. Thanks for the work, Niche. Any chance you could post the combined listing of projects under construction?

Two Thoughts:

(1) I would think paid subscribers to O'Connor and ADS would be a bit peeved to find out that both of them have missed literally thousands of units that are under construction...

(2) Dare I point out again, that, while these numbers are very interesting, they do not constitute an estimate or projection of the number of deliveries that will occur this year.

You're welcome. I'd rather not post the list, though, as a favor to the folks at O'Connor. Very sorry, but I have my reasons. I would be willing to run the numbers any which way you like them, if that's any consolation.

You are correct that they do not constitute an estimate of 2007 deliveries to market, and I concur that the 17,000 mark may be a bit high. Still, to squable over a few thousand units isn't very productive. Whichever way you slice it, that is a lot of units.

[Houston19514]

You're welcome. I'd rather not post the list, though, as a favor to the folks at O'Connor. Very sorry, but I have my reasons. I would be willing to run the numbers any which way you like them, if that's any consolation.

You are correct that they do not constitute an estimate of 2007 deliveries to market, and I concur that the 17,000 mark may be a bit high. Still, to squable over a few thousand units isn't very productive. Whichever way you slice it, that is a lot of units.

Just looking for accurate well-sourced numbers, my friend. ;-)

[TheNiche]

Just looking for accurate well-sourced numbers, my friend. ;-)

No, I understand. You can't exactly cite TheNiche as a source of your information to a lender/broker/your boss, as the case may be.

[The Great Hizzy!]

You can't exactly cite TheNiche as a source of your information to a lender/broker/your boss, as the case may be.

The Who... ?

[Houston19514]

More evidence: The Business Journal has an announcement of a new 280 unit garden-style apartment complex in Clear Lake... Construction to start in 2 months and will take 16 months to complete.

[Gary]

More evidence: The Business Journal has an announcement of a new 280 unit garden-style apartment complex in Clear Lake... Construction to start in 2 months and will take 16 months to complete.

Interesting. I guess the calculations we were discussing before weren't to far off.

[Double L]

I honestly don't see what the big deal is. Everything will work itself out eventually.

[TheNiche]

I honestly don't see what the big deal is. Everything will work itself out eventually.

I take it that you are either not an owner of Houston area residential real estate or that you are a long-term holder that can wait out a downturn?

I am vested in this market, both professionally and personally. So this concerns me.

[lockmat]

Hmm, looks VERY similar to this: http://www.westvil.com/images/render2.jpg

*prays that this development will happen...*

What is this a rendering of? Something in Houston or somewhere else?

[TheNiche]

What is this a rendering of? Something in Houston or somewhere else?

http://www.westvil.com/location.html

[lockmat]

You're welcome. I'd rather not post the list, though, as a favor to the folks at O'Connor. Very sorry, but I have my reasons. I would be willing to run the numbers any which way you like them, if that's any consolation.

You are correct that they do not constitute an estimate of 2007 deliveries to market, and I concur that the 17,000 mark may be a bit high. Still, to squable over a few thousand units isn't very productive. Whichever way you slice it, that is a lot of units.

Thanks for the link on that other development.

O'Conner and ADS. Yall keep referring to them. What are they, and can someone like myself, regular Joe, get my hands on it? They seem to have some pretty interesting info.

And oh, is there an official website with renderings and info on this Allen project?

[TheNiche]

O'Conner and ADS. Yall keep referring to them. What are they, and can someone like myself, regular Joe, get my hands on it? They seem to have some pretty interesting info.

They'll sell data to anyone willing to pay for it. ADS orients their website toward consumers, with a free search tool. The consumer site won't give you market data, though.

http://www.oconnordata.com/corp/index.cfm

http://www.apartmentdata.com/

[Double L]

So in another thread we stated that there are 17,000 new units coming into the in-town area, right? What is the current rate of absorption and what is Class A, Class B and Class C?

Off topic:

I will say that I'm not a big fan of TIF's for this reason because they distort the market and if the supply surpasses demand in real estate it will be bad for the market.

[TheNiche]

So in another thread we stated that there are 17,000 new units coming into the in-town area, right? What is the current rate of absorption and what is Class A, Class B and Class C?

Off topic:

I will say that I'm not a big fan of TIF's for this reason because they distort the market and if the supply surpasses demand in real estate it will be bad for the market.

Nope, 16,750 to the Houston area. Class A is a mixed bag. The economy is strong, but we're still shedding refugee households, so the net of it is positive, but weaker than it should be. Classes B, C, and D are hemorraging tenants, and had been for a few years before Katrina.

[Double L]

Ah, well I had anticipated a population deflux to follow our population influx for a while. Definently something to keep an eye on. Developers who notice will have an edge up.

[Houston19514]

Nope, 16,750 to the Houston area. Class A is a mixed bag. The economy is strong, but we're still shedding refugee households, so the net of it is positive, but weaker than it should be. Classes B, C, and D are hemorraging tenants, and had been for a few years before Katrina.

Once again, the 16,750 number is "under construction." That is NOT the same as the number that will be delivered to the market this year. Just one quick example: The Sawyer Heights Lofts are under construction but I don't believe they are scheduled to be available for lease until 2008.

[TheNiche]

Once again, the 16,750 number is "under construction." That is NOT the same as the number that will be delivered to the market this year. Just one quick example: The Sawyer Heights Lofts are under construction but I don't believe they are scheduled to be available for lease until 2008.

Double L did not provide a time frame. Your assertions are correct, if unnecessary.

[Houston19514]

Double L did not provide a time frame. Your assertions are correct, if unnecessary.

Give it rest, man. The time frame was implied by asking about the rate of absorption, not to mention carrying the "17,000" number over from the other thread, which was entirely about the 2007 time frame. Without a time frame for the numbers, you're just babbling nonsense. We could just as easily say there are 50,000 apartments coming on line...

My assertion was correct AND necessary, presuming you want a logical, fact-based discussion that leaves people with real, useful information.

[TheNiche]

Give it rest, man. The time frame was implied by asking about the rate of absorption, not to mention carrying the "17,000" number over from the other thread, which was entirely about the 2007 time frame. Without a time frame for the numbers, you're just babbling nonsense. We could just as easily say there are 50,000 apartments coming on line...

My assertion was correct AND necessary, presuming you want a logical, fact-based discussion that leaves people with real, useful information.

So it is somehow infactual or irrelevant that projects currently under construction about which we know contain the sum of 16,750 units?

Time frames do matter, but a schedule for delivery is not available. We can get a very rough idea of what might come on line in 2007 without getting ourselves into a state of analysis paralysis, and the conclusion one way or the other is that there are likely to be way more units hitting the market than can be absorbed in 2007 and that the effect will be a lower occupancy rate, stagnant rents, and a significant increase in lease concessions. The projection that I come up with may lack precision, but I believe that it will be accurate nevertheless.

...and so you see, we aren't talking about "50,000 apartments coming on line" or some unreasonable amount. I honestly don't know where you got that load of equine manure.

[Houston19514]

So it is somehow infactual or irrelevant that projects currently under construction about which we know contain the sum of 16,750 units?

Time frames do matter, but a schedule for delivery is not available. We can get a very rough idea of what might come on line in 2007 without getting ourselves into a state of analysis paralysis, and the conclusion one way or the other is that there are likely to be way more units hitting the market than can be absorbed in 2007 and that the effect will be a lower occupancy rate, stagnant rents, and a significant increase in lease concessions. The projection that I come up with may lack precision, but I believe that it will be accurate nevertheless.

...and so you see, we aren't talking about "50,000 apartments coming on line" or some unreasonable amount. I honestly don't know where you got that load of equine manure.

I just pulled that number out of my hat. I thought that was obvious. But if we are divorcing the discussion from any timetable, it is not equine manure. Surely there WILL be 50,000 new apartments in the Houston area over some undefined time period.

Yes, I know your point is that the sky is falling for apartment owners and throwing out the 16,750 number as if those apartments will all come on the market this year helps build your case, but it is simply not accurate to do so. If you want to talk about 16,750 new apartments, you have to also talk about the absorption that will occur (or not) during the same period of time during which those apartments will come on line. Otherwise, you're just talking nonsense. I realize we don't have firm numbers of what will be delivered this year. But one thing we do know, without coming anywhere near to "analysis paralysis" is that the number will be LESS than 16,750, probably significantly less. To refuse to acknowledge that is to present an inaccurate picture of the market.

[TheNiche]

I just pulled that number out of my hat. I thought that was obvious. But if we are divorcing the discussion from any timetable, it is not equine manure. Surely there WILL be 50,000 new apartments in the Houston area over some undefined time period.

Yes, I know your point is that the sky is falling for apartment owners and throwing out the 16,750 number as if those apartments will all come on the market this year helps build your case, but it is simply not accurate to do so. If you want to talk about 16,750 new apartments, you have to also talk about the absorption that will occur (or not) during the same period of time during which those apartments will come on line. Otherwise, you're just talking nonsense.

It was obvious that you pulled the number out of your hat. What is not obvious is the point that you are trying to make. There is a very big difference between the number of units that are under construction and the number that are proposed or projected. Those that are under construction will deliver, and in a reasonably short time frame. They are locked in, and guaranteed. Proposed or projected complexes are by no means guaranteed. Your 50,000 projected units will likely deliver in cycles triggered by shocks to supply and demand that are difficult to predict...or they may not deliver at all in a time span relevant to projects being planned in the present.

If you want to talk about 16,750 new apartments, you have to also talk about the absorption that will occur (or not) during the same period of time during which those apartments will come on line. Otherwise, you're just talking nonsense.

I already have in the other thread, and have established a confident (if imprecise) projection that new supply will outpace demand in 2007.

But one thing we do know, without coming anywhere near to "analysis paralysis" is that the number will be LESS than 16,750, probably significantly less. To refuse to acknowledge that is to present an inaccurate picture of the market.

Is anybody refusing that fewer than 16,750 units will likely deliver in 2007? Why do you carry on with this line of debate?

[Houston19514]

It was obvious that you pulled the number out of your hat. What is not obvious is the point that you are trying to make. There is a very big difference between the number of units that are under construction and the number that are proposed or projected. Those that are under construction will deliver, and in a reasonably short time frame. They are locked in, and guaranteed. Proposed or projected complexes are by no means guaranteed. Your 50,000 projected units will likely deliver in cycles triggered by shocks to supply and demand that are difficult to predict...or they may not deliver at all in a time span relevant to projects being planned in the present.

I already have in the other thread, and have established a confident (if imprecise) projection that new supply will outpace demand in 2007.

Is anybody refusing that fewer than 16,750 units will likely deliver in 2007? Why do you carry on with this line of debate?

You CANNOT be serious. I merely posted a caveat that was absolutely necessary to make your 16,750 number realistic, meaningful, and honest, and you insisted on arguing the point. You seem to enjoy assuming your own version of reality in order to make your arguments. There are probably more honest and more productive ways to win others over to your way of thinking.

[TheNiche]

You CANNOT be serious. I merely posted a caveat that was absolutely necessary to make your 16,750 number realistic, meaningful, and honest, and you insisted on arguing the point. You seem to enjoy assuming your own version of reality in order to make your arguments. There are probably more honest and more productive ways to win others over to your way of thinking.

Do you deny that there are 16,750 units under construction? ...and that when units are under construction, they are guaranteed to hit the market, but that when they're proposed or projected, there are no guarantees on anything? ...and that even if a precise schedule for delivery is unavailable, just knowing the number of units is at least somewhat helpful, and certainly relevant?

I've already told you multiple times that you're right that not all of these will deliver in 2007. I've already told you what I expect of absorption in 2007. And short of building a probability distribution for both the supply and demand sides, I've already provided you my set of market expectations and reasoning for them. I honestly don't see what else you are out to prove.

[Double L]

I guess we're making predictions, but I don't think we should discuss the possibilities until we see a raw vacancy rate in Houston and if it means lower rents well I think that's a good thing.