- Two developers have different outlooks on the multifamily market in Houston.
- One will stop building after their current eight buildings are completed next year; the other just submitted plans for a 40-story tower.
- The drag of oil prices on the Houston economy is impacting apartment rentals differently across the city.
Plans for a new Uptown Houston apartment building were recently submitted to the city’s Planning Department.
The project, called Vantage, is planned for 1.53 acres at the northeast corner of Post Oak Boulevard and San Felipe Road in Uptown.
Regardless of naysayers who are closely watching the price of crude oil, this is the tallest tower that developer The Dinerstein Cos. will soon have rising from the ground.
The 40-story tower will include two floors of retail and 32 stories of residential space. In between those two layers will be seven floors of parking, including two underground. Atop the parking deck will be an indoor and outdoor amenity deck.
The Dinerstein Cos. is Houston-based, and in the luxury apartment segment, so they know exactly what they’re getting themselves into. In the past few years, they’ve been building in the area, and last year told the Houston Business Journal that it plans to develop more high-rise apartment towers.
In fact, The Dinerstein Cos. is already working on its first luxury apartment tower – The Millennium Tower – near the Texas Medical Center. Ground was broken for that high rise of 22 stories last January, and until now, was the tallest building constructed by the company.
However, other developers are still busily adding apartments to Houston’s skyline. But some say that that activity will grind to a halt in 2017.
Is the multifamily market in Houston headed for a crash?
Multifamily developers are expected to bring online 25,000 new apartment units in 2016. Trammell Crow Residential, for one example, has eight apartment projects under construction in Houston, all set to open in 2016 and 2017.
But that company is signaling its concern about the multifamily market in Houston going forward.
“In the near term, there is some concern obviously,” Scot Davis, Trammell Crow Residential’s senior managing director of development in Houston, told the Houston Business Journal.
“In the next 12 months or so, it’s going to be a tougher market. We’ve been pretty resilient to date, but this year is going to test that. Things are going to get worse before they get better.”
And, Davis continued, his company has no additional projects in their pipeline for Houston after the current batch opens. He says that supply of units outstrips demand even now.
Some Houston apartments will weather the oil slump better than others, Davis told the paper.
And, it goes back to the most famous adage in real estate: location.
Apartments in the Energy Corridor and The Woodlands, where many oil and gas companies reside, are suffering from weak demand. They are the most likely to offer generous rent concessions.
When it comes to inner 610 Loop apartments, opined Davis, performance depends on the property. The Texas Medical Center and Pearland markets, where a lot of medical workers live, are seeing fewer concessions.
Which is why The Dinerstein Cos. continues to plan for cranes above the Houston skyline.