Houston Apartment Association State of the Industry Breakfast · Looking Ahead Houston Apartment...
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Houston Apartment Association State of the Industry Breakfast January 26, 2016
Transcript of Houston Apartment Association State of the Industry Breakfast · Looking Ahead Houston Apartment...
Houston Apartment Association
State of the Industry Breakfast
January 26, 2016
Thank you to our Generous Sponsor:
Houston Apartment Association
State of the Industry Breakfast
January 26, 2016
Houston economic outlook
January 2016
Presented by:
Patrick Jankowski
Senior Vice President, Research
Greater Houston Partnership
15
16
+17
14
The New Math
Jobs Added
’15 23,200
’16 22,900
+ ’17
+ 60,000
’14 106,100
The New Math
Jobs Added
’15 23,200
’16 21,900
+ ’17
+ 60,000
’14 106,100
The New Math
Jobs Added
’15 23,200
’16 21,900
+ ’17 + 60,000
’14 106,100
The New Math
Jobs Added
’15 23,200
’16 21,900
+ ’17 + 60,000
’14 105,100
The New Math
The New Math
[VALUE]
[VALUE]
[VALUE]
[VALUE]
104.7
23.2 22.9
60.0
'10 '11 '12 '13 '14 '15 '16* '17**
December to December Job Growth (000s)
Source: Texas Workforce Commission *Partnership 2016 Forecast
** 25-Year Average (approx.)
The New Math
49.7
82.9
118.5
89.9
104.7
23.2 22.9
60.0
'10 '11 '12 '13 '14 '15 '16* '17**
December to December Job Growth (000s)
Not likely to be repeated any time soon
Everyone wants oil prices to recover soon
When will prices recover?
When will prices recover?
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Feb 16 Apr 1616-Jun Aug 16 Oct 16 Dec 16 Feb 17 Apr 17 Jun 17 Aug 17 Oct 17 Dec 17 Feb 18
$ P
er
Barr
el
Source: Yahoo Finance
Futures Chain, Crude Oil, NYMEX
When will prices recover?
When will prices recover?
Wells FargoOil Price Forecast
Q1 Q2 Q3 Q4
Brent Crude
$40 $42 $50 $58
When will prices recover?
Wells FargoOil Price Forecast
Q1 Q2 Q3 Q4
Brent Crude
$40 $42 $50 $58
When will prices recover?
Wells FargoOil Price Forecast
Q1 Q2 Q3 Q4
Brent Crude
$40 $42 $50 $58
When will prices recover?
Wells FargoOil Price Forecast
Q1 Q2 Q3 Q4
Brent Crude
$40 $42 $50 $58
When will prices recover?
When will prices recover?
Source: OilPro
When prices do recover . . .
When prices do recover . . .
Pay shareholder dividends
When prices do recover . . .
Pay shareholder dividends
Drill more wells
When prices do recover . . .
Pay shareholder dividends
Drill more wells
X Hiring binge
0
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1.5
1.8
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'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16
WTI
($/bbl)Jobs
(millions)
Source: U.S. Energy Information Administration and Texas Workforce Commission data
Oil Prices and Employment Growth
Employment Monthly Oil Prices
We’ve been here before
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1.5
1.8
2.0
2.3
2.5
2.8
3.0
'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16
WTI
($/bbl)
Jobs
(millions)
Source: U.S. Energy Information Administration and Texas Workforce Commission data
Oil Prices and Employment Growth
Employment Monthly Oil Prices
We’ve been here before
Houston economic outlook
January 2016
Presented by:
Patrick Jankowski
Senior Vice President, Research
Greater Houston Partnership
Greater Houston - Overall(as of 12-31-2015)
Under Construction 102 Properties / 29,062 Units
Dec ’08: $739 ● 85.2¢ ● 85.8% | Dec ’09: $721 ● 83.0¢ ● 83.9%
Greater Houston(as of 12-31-2015)
Classification Analysis
Looking Ahead
Houston Apartment MarketJanuary 2016
2016 – Overbuilt – Too Much Supply For Demand Demand: Job Growth of 22,000
Empty Nesters
International
Supply: +20,000 Units
Market Defies Macro Analysis Sub Market Specific
Lease-Up Specific
Class Specific
Class Outlook A – Flat to Negative (New Construction & Wide Range of Performers)
B – Mildly Positive (2.5%)
C & D – Strong (4.5% to 5.0%)
2016 Rent Growth 2.5% to 3.5%
2016 Absorption +10,000 Units
2016 Ending Occupancy 89.3%
