The Apartment Report Houston - Transwestern Q1.2011 Houston The Apartment Report THE APARTMENT...
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ED CUMMINS Senior Vice President 713.272.1288 | direct [email protected] TRANSWESTERN HOUSTON MULTIFAMILY GROUP 1900 West Loop South, Suite 1300 Houston, Texas 77027 713.270.7700 | telephone 713.271.8172 | facsimile transwestern.net Q1.2011 Houston TRANSWESTERN The Apartment Report RENTAL RATES Houston’s 53 apartment submarkets maintained Q4 2010’s average per SF market rents of $0.89 in the first quarter. Although rents declined slightly toward the end of 2010, the monthly rent increases throughout the year, specifically near the end of Q2 2010 at the peak leasing season, were able to absorb the impact and stabilize the annual performance. Although concessions are down from a year ago, rent discounts are still widely used by Houston area apartments. The most recent survey reveals that 49% of properties reported some sort of discount with an average rent concession of 10%. The drop in concessions and strong demand resulted in an effective rental rate increase of 1.4% in Q1 2011. Houston’s core Inner Loop submarkets including the Galleria were able to implement higher rents which include Bellaire/West University, Greenway Plaza and Inner Loop West. The fact that rent levels remained steady throughout 2010 and in the midst of the economic recession is further evidence that the Houston market weathered very well and is primed for occupancy and rent growth. Outlook: Effective rental rates are forecasted to rise as concessions decline and new supply subsides. CLINT DUNCAN Senior Associate 713.270.3316 | direct [email protected] LUPE OLIVARES Senior Analyst 713.272.1290 | direct [email protected] HISTORICAL APARTMENT RENTS/UNIT - QUARTERLY HISTORICAL APARTMENT RENTS/SF - QUARTERLY Q1.2011 SNAPSHOT RENTS OCCUPANCY ABSORPTION SALES DEVELOPMENT Market rents show stability throughout 2010 and in Q1 2011. Effective rents rise 1.4% in the first three months of the year. A 2.0% increase from Q1 2010 results in an average occupancy of 87.5% for Houston area apartments. 3,510 units absorbed in the first quarter, apartment demand should increase during the year with job growth and limited new supply. Although down from 4Q 2010, apartment sales maintained a healthy pace with 21 properties trading. Development activity remains low. A total of 4,339 units are currently under construction and/or in lease-up. $631 $653 $670 $687 $702 $713 $731 $756 $765 $768 $- $100 $200 $300 $400 $500 $600 $700 $800 $900 1Q 2002 1Q 2003 1Q 2004 1Q 2005 1Q 2006 1Q 2007 1Q 2008 1Q 2009 1Q 2010 1Q 2011 $0.75 $0.77 $0.79 $0.80 $0.82 $0.84 $0.86 $0.88 $0.89 $0.89 $0.65 $0.70 $0.75 $0.80 $0.85 $0.90 1Q 2002 1Q 2003 1Q 2004 1Q 2005 1Q 2006 1Q 2007 1Q 2008 1Q 2009 1Q 2010 1Q 2011 We hope you find this report both useful and insightful. Please feel free to contact us if we can assist with your property valuation, rent or sales comparables analysis or any current market trends and information. We look forward to working with you in the near future.
Transcript of The Apartment Report Houston - Transwestern Q1.2011 Houston The Apartment Report THE APARTMENT...
ED CUMMINSSenior Vice President713.272.1288 | [email protected]
TRANSWESTERNHOUSTON MULTIFAMILY GROUP1900 West Loop South, Suite 1300Houston, Texas 77027713.270.7700 | telephone713.271.8172 | facsimiletranswestern.net
Q1.2011Houston
TRANSWESTERN
TheApartmentReport
RENTAL RATES
Houston’s 53 apartment submarkets maintained Q4 2010’s average per SF market rents of $0.89 in the first quarter. Although rents declined slightly toward the end of 2010, the monthly rent increases throughout the year, specifically near the end of Q2 2010 at the peak leasing season, were able to absorb the impact and stabilize the annual performance. Although concessions are down from a year ago, rent discounts are still widely used by Houston area apartments. The most recent survey reveals that 49% of properties reported some sort of discount with an average rent concession of 10%. The drop in concessions and strong demand resulted in an effective rental rate increase of 1.4% in Q1 2011. Houston’s core Inner Loop submarkets including the Galleria were able to implement higher rents which include Bellaire/West University, Greenway Plaza and Inner Loop West. The fact that rent levels remained steady throughout 2010 and in the midst of the economic recession is further evidence that the Houston market weathered very well and is primed for occupancy and rent growth.
Outlook: Effective rental rates are forecasted to rise as concessions decline and new supply subsides.
CLINT DUNCANSenior Associate713.270.3316 | [email protected]
LUPE OLIVARESSenior Analyst713.272.1290 | [email protected]
HISTORICAL APARTMENT RENTS/UNIT - QUARTERLY
HISTORICAL APARTMENT RENTS/SF - QUARTERLY
Q1.2011SNAPSHOT
RENTS OCCUPANCY ABSORPTION SALES DEVELOPMENTMarket rents show stability
throughout 2010 and in Q1 2011. Effective rents rise 1.4% in the first three
months of the year.
A 2.0% increase from Q1 2010 results in an average
occupancy of 87.5% for Houston area apartments.
3,510 units absorbed in the first quarter, apartment demand should increase during the year with job growth and limited new
supply.
Although down from 4Q 2010, apartment sales
maintained a healthy pace with 21 properties trading.
Development activity remains low. A total of 4,339 units are currently
under construction and/or in lease-up.
$631 $653 $670 $687 $702 $713 $731 $756 $765 $768
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
1Q 2002 1Q 2003 1Q 2004 1Q 2005 1Q 2006 1Q 2007 1Q 2008 1Q 2009 1Q 2010 1Q 2011
$0.75
$0.77 $0.79
$0.80
$0.82 $0.84
$0.86
$0.88 $0.89 $0.89
$0.65
$0.70
$0.75
$0.80
$0.85
$0.90
1Q 2002 1Q 2003 1Q 2004 1Q 2005 1Q 2006 1Q 2007 1Q 2008 1Q 2009 1Q 2010 1Q 2011
We hope you find this report both useful and insightful. Please feel free to contact us if we can assist with your property valuation, rent or sales comparables analysis or any current market trends and information.
We look forward to working with you in the near future.
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Q1.2011Houston
The Apartment Report
THE APARTMENT REPORT • HOUSTON • Q1.2011
OCCUPANCY
Apartment communities in Houston posted an average occupancy of 87.5% in the first quarter which represents a 2.0% increase from Q1 2010. Class “A” properties led the pack with an average occupancy of 92.6% followed by class “B” properties averaging 87.5%. The city’s top occupied submarkets were Inner Loop West (95.5%), Heights (94.3%), Hwy 288/Almeda (93.8%), Museum District (93.7%) and Montrose/Memorial Heights (93.7%).
Outlook: Occupancy is expected to increase approximately 2 to 3 percent during the next twelve months.
ABSORPTION
Houston’s first quarter 2011 absorption continues the positive trend exhibited in 2010. The annual absorption last year reached 13,076 units, which is the first time since 2005 that Houston’s apartment market has absorbed over 10,000 units and is a reliable indicator of the city’s recovery. Jobs fuel absorption and Houston recently ranked 2nd in the nation in job growth with an increase of 51,800 jobs (Mar. ’10 - Mar. ’11), according to a report recently issued by the U.S. Bureau of Labor Statistics. First quarter absorption in 2011 yielded 3,510 units, mirroring the strong results registered in the first quarter of 2010 (3,694 units). Class “A” properties recorded the largest share of the quarterly absorption, 48% or 1,689 units. The remainder consisted of class “B” communities at 21% (725 units) and class “C” assets at 23% (810 units).
Outlook: Houston apartment demand will benefit from a diminished development pipeline and solid job growth.
HISTORICAL APARTMENT OCCUPANCY - QUARTERLY
HISTORICAL APARTMENT ABSORPTION - QUARTERLY
92.8%
90.9%
88.2%
86.2%
91.1%
88.7%88.1%
86.7%
85.5%
87.5%
80.0%
82.0%
84.0%
86.0%
88.0%
90.0%
92.0%
94.0%
1Q 2002 1Q 2003 1Q 2004 1Q 2005 1Q 2006 1Q 2007 1Q 2008 1Q 2009 1Q 2010 1Q 2011
714
(2,242)
437 498
(1,631)
2,058 2,162
1,395
3,694 3,510
(3,000)
(2,000)
(1,000)
0
1,000
2,000
3,000
4,000
5,000
1Q 2002 1Q 2003 1Q 2004 1Q 2005 1Q 2006 1Q 2007 1Q 2008 1Q 2009 1Q 2010 1Q 2011
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Q1.2011Houston
The Apartment Report
THE APARTMENT REPORT • HOUSTON • Q1.2011
HOUSTON AREA SALES
APARTMENT SALESThe beginning of 2011 witnessed a healthy amount of sales activity. 21 apartment transactions occurred in the first quarter. The property trades represented all asset classes as well as stabilized and distressed sales.
Outlook: Local apartment listings have risen considerably from last year, of which many are currently under contract and are expected to close in the second and third quarters. High investor interest and a growing supply of offerings will keep sales brisk.
Property Submarket Class Units Built Sale Date
Concord at Allendale Gulf Freeway B 264 2002 Jan-11
Fairfield Cove Champions - East B 135 1983 Jan-11
Alden Landing Woodlands A 292 1999 Jan-11
Lake Wyndemere Woodlands A 320 2001 Jan-11
Village Square Woodlands B 271 1980 Jan-11
Mediterra at Westchase Westchase B 312 1981 Jan-11
Green Tree Place Bear Creek/Copperfield B 189 1975 Jan-11
Somerset Place Brookhollow C 190 1985 Jan-11
Broadstone Memorial Far West A 401 2008 Jan-11
Broadwater Deer Park A 248 2004 Jan-11
Coral Gables Alief C 326 2003 Feb-11
Camden Heights (fka Midtown Heights) Heights A 352 2004 Feb-11
Pathway, The Westchase B 142 1979 Feb-11
Stonebrook II Baytown A 192 2003 Feb-11
El Paraiso Sharpstown/Westwood C 372 1980 Feb-11
Casa Palmas (fka Grayson Falls) Pasadena C 308 1969 Feb-11
Royal Pines Braeswood C 810 1977 Feb-11
Copper Creek Champions - West B 300 1982 Mar-11
Madison at Bear Creek, The Bear Creek/Copperfield B 180 1982 Mar-11
Chalfonte Far West B 86 1983 Mar-11
Carrington Court Galleria B 119 1966 Mar-11
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Q1.2011Houston
The Apartment Report
THE APARTMENT REPORT • HOUSTON • Q1.2011
Currently Under Construction/Lease Up
CONSTRUCTION
Apartment development began tapering off last year with a sum of only 10,924 units built, a considerable drop from the 2009 total of 17,614 units. Currently, 4,339 units are under construction and/or in lease up. A majority of these developments are affordable housing. The Brazosport (southeast Houston) and Katy (west Houston) areas are leading the activity with three projects underway in each submarket. Houston’s Inner Loop/Galleria submarkets, a major hub of development during the past five years, have cooled off with only one property currently under construction (321 units).
Proposed construction is estimated to be in the range of 5,000 to 11,600 units. The Inner Loop and Katy submarkets have the highest concentration of proposed units.
Outlook: Delivery of new units will be minimal for the next 12 to 18 months. New supply will accelerate in the second half of 2012.
Submarket City Property Units Type
Braeswood Houston Floral Gardens 100 Senior Tax Credit
Brazosport Lake Jackson Jackson Village Retirement Center 96 Senior Tax Credit
Brazosport Alvin Melbourne Senior Apartments, The 110 Senior Tax Credit
Brazosport Clute Casa Brazoria 36 Tax Credit
Brookhollow Houston Orchard at Garden Oaks, The 118 Senior Tax Credit
Champions - East Houston Mariposa at Ella Blvd. 180 Senior Tax Credit
Clear Lake/League City League City Grand Villas at Tuscan Lakes, The 206 Conventional
Conroe Conroe Skytop Apartments 192 Tax Credit
Deer Park Deer Park Providence at Town Square 188 Senior Conventional
Deer Park Pasadena ClearPointe Crossing Residences 252 Conventional
Far West Houston Campanile on Eldridge 144 Senior Tax Credit
FM 1960 East Humble Villas at Park Lakes 200 Conventional
FM 1960 East Humble Sierra Meadows 90 Senior Tax Credit
Galleria Houston Ava, The 321 Conventional
Galveston Santa Fe Heritage Crossing 72 Senior Tax Credit
Gulf Freeway Houston Sterling Court Senior Residences 140 Senior Tax Credit
Hwy 288/Almeda Houston South Acres Ranch II 48 Tax Credit
Inwood Houston Chelsea Senior Community 144 Senior Tax Credit
Katy Katy Grand Villas at Grand Parkway, The 276 Conventional
Katy Katy Verona at the Reserve 356 Conventional
Katy Katy Legends at Cinco Ranch Apartments 180 Conventional
Kingwood/Lake Jackson Atascocita Wentworth Senior Housing 90 Senior Tax Credit
Richmond/Rosenberg Richmond Westpark Apartments 248 Conventional
Spring Spring Villas at Old Holzwarth 200 Conventional
Steeplechase Cypress Greenhouse Place 140 Senior Tax Credit
Texas City/Dickinson La Marque Horizon Meadows 96 Tax Credit
Woodlands Spring Village at The Woodlands Waterway, The 116 Senior Conventional
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Q1.2011Houston
The Apartment Report
THE APARTMENT REPORT • HOUSTON • Q1.2011
Construction by Submarket
60
96
282
320
153
152
70
45
516
476
187
146
100
238
300
100
146
118
180
206
192
440
144
290
321
72
140
48
144
812
90
248
200
140
96
0 200 400 600 800 1,000 1,200 1,400
Braeswood
Brazosport
Brookhollow
Champions - East
Clear Lake/League City
Conroe
Deer Park
Far West
FM 1960 East
Galleria
Galveston
Gulf Freeway
Hwy 288/Almeda
Inner Loop West
Inwood
Katy
Kingwood/Lake Houston
Midtown
Museum District
Northshore/Woodforest
Pearland
Richmond/Rosenberg
Spring
Steeplechase
Texas City/Dickinson
Woodlands
Proposed Units (Total = 3,141) Under Constr. Units (Total = 4,127)
(# of Units)
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Q1.2011Houston
The Apartment Report
THE APARTMENT REPORT • HOUSTON • Q1.2011
Houston Apartment SubmarketsTotal Q1
2011
Absorption
(Units)
1 Alief 92 22,155 82.7% 843 $640 $0.78 0 (160)
2 Baytown 51 8,326 85.4% 837 $621 $0.75 0 104
3 Bear Creek/Copperfield 44 11,271 92.7% 843 $757 $0.91 0 144
4 Bellaire/West University 15 3,984 91.2% 923 $1,141 $1.25 0 39
5 Braeswood 85 19,798 83.7% 834 $616 $0.75 100 (223)
6 Brazosport 71 9,848 87.6% 817 $607 $0.75 146 71
7 Brookhollow 95 17,915 79.3% 832 $604 $0.74 118 83
8 Champions - East 89 21,712 81.2% 855 $683 $0.81 180 147
9 Champions - West 56 14,874 89.3% 886 $811 $0.93 0 123
10 Clear Lake/League City 101 22,551 89.7% 874 $825 $0.95 206 41
11 Conroe 44 7,553 90.6% 873 $705 $0.82 192 (42)
12 Deer Park 27 5,126 72.1% 911 $698 $0.78 440 11
13 Downtown 11 1,666 83.0% 1,058 $1,999 $1.87 0 11
14 Far West 104 27,113 89.1% 958 $893 $0.95 144 430
15 FM 1960 East 70 13,511 86.4% 886 $727 $0.84 290 194
16 Friendswood 19 3,122 93.2% 884 $741 $0.85 0 71
17 Galleria 119 27,639 91.5% 891 $1,011 $1.12 321 156
18 Galveston 32 5,164 82.5% 815 $785 $0.98 72 (163)
19 Greenspoint 58 12,839 84.4% 776 $564 $0.74 0 217
20 Greenway Plaza 25 6,106 93.1% 945 $1,286 $1.37 0 54
21 Gulf Freeway 99 20,938 85.2% 816 $629 $0.78 140 239
22 Gulfton 62 17,983 84.5% 809 $598 $0.75 0 40
23 Heights 25 3,933 94.3% 819 $956 $1.15 0 27
24 Hwy 288/Almeda 23 4,808 93.8% 906 $795 $0.90 48 34
25 Inner Loop East 57 9,068 85.3% 811 $650 $0.82 0 12
26 Inner Loop West 8 2,475 95.5% 841 $955 $1.16 0 31
27 Inwood 31 5,050 81.4% 892 $617 $0.70 144 26
28 Katy 55 13,123 91.4% 923 $892 $0.98 812 (20)
29 Kingwood/Lake Houston 33 6,914 90.8% 899 $818 $0.92 90 91
30 Medical Center 72 15,398 92.0% 853 $929 $1.10 0 101
31 Meyerland 18 4,426 92.1% 829 $830 $1.00 0 51
32 Midtown 11 3,233 92.9% 981 $1,540 $1.60 0 1
33 Montrose/Memorial Heights 19 4,541 93.7% 964 $1,360 $1.41 0 54
34 Museum District 36 4,436 93.7% 913 $1,393 $1.42 0 1
35 North Loop - East 28 3,912 86.4% 848 $634 $0.76 0 47
36 Northline/Aldine 60 9,188 90.8% 880 $621 $0.72 0 43
37 Northshore/Woodforest 53 10,414 79.4% 845 $671 $0.81 0 41
38 Pasadena 105 18,103 87.1% 842 $618 $0.76 0 53
39 Pearland 28 6,608 89.9% 947 $939 $1.00 0 143
40 Richmond/Rosenberg 29 4,823 93.4% 861 $762 $0.89 248 24
41 River Oaks 12 2,182 92.9% 1,015 $1,522 $1.47 0 29
42 San Jacinto/Galena Park 10 822 91.7% 774 $593 $0.78 0 0
43 Sharpstown/Westwood 113 25,797 82.3% 801 $553 $0.71 0 403
44 Sheldon 2 110 92.3% 837 $667 $0.81 0 4
45 Spring 28 5,776 90.0% 950 $823 $0.88 200 64
46 Spring Branch 94 16,664 86.2% 913 $686 $0.77 0 (35)
47 Steeplechase 74 17,805 92.7% 912 $839 $0.93 140 297
48 Sugarland/Fort Bend 52 12,693 92.5% 929 $882 $0.96 0 21
49 Texas City/Dickinson 50 6,468 87.8% 842 $672 $0.81 96 118
50 Tomball 17 2,710 91.8% 863 $756 $0.89 0 56
51 Westchase 59 16,186 90.8% 841 $736 $0.88 0 169
52 Woodlake 24 7,566 91.9% 890 $832 $0.94 0 (54)
53 Woodlands 37 9,060 91.5% 895 $979 $1.11 0 90
TOTALS/AVERAGES 2,632 555,486 87.6% 868 $768 $0.89 4,127 3,509
Under
Const.
Units
# of Apt
Communities
# of Apt
Units
Average
Occupancy
Average
Unit SF
Average
Market Rent
/ Month
Average
Market Rent
/ SF
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Q1.2011Houston
The Apartment Report
THE APARTMENT REPORT • HOUSTON • Q1.2011
Source: O’Connor & Associates
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Q1.2011Houston
The Apartment Report
THE APARTMENT REPORT • HOUSTON • Q1.2011
TRANSWESTERNHOUSTON MULTIFAMILY GROUP1900 West Loop South, Suite 1300
Houston, Texas 77027713.270.7700 | telephone713.271.8172 | facsimile
transwestern.net
Amherst at CityView The Park at Lakeside
Units: 310 Units: 592
Built: 1979 Built: 1974
Location: Houston, TX Location: Houston, TX
Price: $6,500,000 Status: Under LOI
Breckenridge at CityView Evergreen Pointe
Units: 509 Units: 197
Built: 1978 Built: 1972
Location: Houston, TX Location: Houston, TX
Price: $6,200,000 Status: Under LOI
Savannah Club Clear Lake Falls
Units: 180 Units: 90
Built: 2003 Built: 1983
Location: San Marcos, TX Location: Webster, TX
Price: To Be Determined Status: Under LOI
Gulf Royale Brazos
Units: 90 Units: 161
Built: 1973 Built: 1984
Location: Texas City, TX Location: Huntsville, TX
Price: $1,260,000 Status: Sold
Westbury Village 1916 W. Gray
Units: 75 Parcel Size: 2.1389 acres
Built: 1994 Built: 1972
Location: Missouri City, TX Location: Houston, TX
Price: $3,000,000 Status: Sold
Indigo Falls Park at Cedar Lawn
Units: 1,062 Units: 192
Built: 1972 Built: 1930 / 1985
Location: Houston, TX Location: Galveston, TX
Status: Under Contract Status: Sold
Woodscape Greentree Village
Units: 544 Units: 250
Built: 1977 Built: 1974
Location: Houston, TX Location: Beaumont, TX
Status: Under Contract Status: Sold
W. Gray
Dunlavy
Current Listings and Recent Transactions
COMING SOON
COMING SOON
The information in this report is the result of a compilation of information on the Houston MSA multifamily market. Transwestern obtained the information from a variety of primary and secondary sources, including O’Connor & Associates and M-PF Research.
