LUXURY the Word for Houston Multifamily Market
Houston’s multifamily market is certainly a mixed bag. Supply is currently outpacing demand, and another 29,000 units are under construction. Houston leads the nation in declining rents, yet some submarkets are commanding a premium for new luxury developments. Pearl CityCentre and Pearl Residences at CityCentre, developed by The Morgan Group and shown above, are listing 1BR units as low as $1,465/month and 3BR units as high as $5,455/month; according to Rent Jungle, the average Houston rent in July 2016 was $1,373/month. Developers continue to look for ways to stand out in this increasingly competitive sector.
At PRISM, we’ve delivered renderings for a growing number of multifamily projects – 54 projects and 22 different clients this year thus far. While these numbers cover projects in 10 locations (AZ, CA, CO, FL, GA, MD, NC, TX, VA and Europe), the commonality is the level of luxury in each. One such example is The Wilshire at River Oaks District, by Pelican Builders and designed by our client, Kirksey. Adjacent to the posh new lifestyle center, The Wilshire is the epitome of modern glamour, which the developer wanted to communicate through our intricately detailed renderings.
LENDING - Houston's multifamily savior
So what is the outlook for this sector? PRISM was a sponsor at Bisnow’s recent Houston Multifamily event. Valerie Delafosse, PRISM VP of Business Development, shares these highlights:
- Despite the high supply, lenders aren’t expecting to take back any properties. The market needs this time to catch up, and it will.
- Lenders are more willing now to provide for gap financing and refinancing. Market equilibrium is expected to return in about 18 months.
- Brokers are seeing large institutional players scouting Houston because they see an upside on the exit. Equity is easier to get right now than debt.
- Class B and C properties are holding steady, resulting in more bulk transactions right now.
- Developers are holding their land, waiting for possible opportunities to refinance. Their bigger challenge is keeping current tenants full.
- Despite opportunities in the Texas Medical Center and Pearland, the Energy Corridor and Woodlands remain soft. Now is not a value-add market for developers.
Thanks to cautious lenders (and smart investors and developers), Houston’s multifamily sector should be able to ride out the turbulence. In the mean time, some amazing new projects will be opening, including Market Square Tower by Jackson & Ryan Architects. Speakers cited the project as an example of amenities developers are now using to lure residents to luxury properties, like a glass bottom infinity pool cantilevered off the 40th floor! PRISM generated therenderings used for pre-leasing and publicity.
Developers share insight with SMPS Houston
Society for Marketing Professional Services (SMPS) Houston recently hosted some of Houston’s largest developers, to discuss their current and upcoming projects. Our own Valerie (shown here with fellow committee member Marlene Hay of Terracon) was part of the SMPS Houston programming committee responsible for organizing the Developers Night event. The event took place in Knoll’s sleek new Houston showroom, a working example of the latest in workplace design and finishes. More than 130 marketing and business development pros from local A/E/C firms attended. Some of the highlights:
- Sean Murphy of Skanska discussed their new Capitol Tower, West Memorial Place and Spring Crossing office developments
- Midway’s Eric Mayfield shared details about the new Kirby Grove ‘urban activity center, and their redevelopment of GreenStreet, anchored by Hotel Alessandra
- Devon Tiner of HAS discussed their renovations to all three area airports - IAH’s smart facility design/build project and terminal D renovation, Hobby’s anchor development and Houston’s Spaceport at Ellington Field