Houston’s pipeline of new apartment projects continues to dry up amid the oil slump
Houston’s pipeline of new apartment projects continues to dry up amid the oil slump.
However, developers are still under construction on 17,543 apartment units across the Bayou City. Most of these new apartments were planned during the energy boom, when the economic stars were aligned and job growth seemed boundless.
Construction crews from D.E. Harvey prepare to hoist the acrylic sky pool piece 40 stories atop Market Square Tower, being developed by Houston-based Woodbranch Investments Corp. Houston has more than 17,000 new apartment units under construction during the third quarter, according to Transwestern.
Energy companies shed thousands of jobs as oil prices plunged over the past two years. Houston added 14,200 new jobs over the past year, according to the Greater Houston Partnership — a far cry from the more than 100,000 jobs created annually during the height of the energy boom.
Patrick Jankowski, chief economist for the Greater Houston Partnership, said even if oil prices rebound, Houston won’t see any significant job growth until 2018. That’s because oil and gas companies will take some time to respond to a recovery, he said.
For Houston’s multifamily sector, the slower job growth will mean more pain, Jankowski said. To keep occupancy rates up, many new luxury apartments are offering two to three months of rent concessions in several crowded submarkets and will likely continue to do so until job growth picks back up.
In the meantime, Jankowski said he is concerned about the oversupply of new apartments, particularly in Houston’s Class A apartment market.
“We’ve built more apartments than jobs,” Jankowski said. “That math doesn’t work. You guys need to stop. We have enough now.”
Here are the Houston neighborhoods with the most apartment units under construction during the third quarter, according to Transwestern’s 2016 Trendlines report.
- Medical Center/Braes Bayou: 2,117 units
- Montrose/Museum District/Midtown: 1,800 units
- Downtown Houston: 1,678 units
- Tomball/Spring: 1,601
- Galleria/Uptown: 1,376 units
- Katy/Cinco Ranch/Waterside: 1,053 units
- Highland Village/Upper Kirby/West University: 949 units
- Energy Corridor/CityCentre/Briar Forest: 884 units
* Paul Takahashi covers residential and multifamily commercial real estate for the Houston Business Journal