Left to right: Terri Clifton, President of Better World Properties LLC, Bruce McClenny,
President of ApartmentData.com, and Michael Knight, Vice President of Operations,
Better World Properties LLC.
We recently had the pleasure to share insight with many of our industry friends and colleagues. From our perspective at Better World Properties LLC and with our decades of experience in the apartment industry, we find the 2019 outlook for Houston multifamily owners and investors encouraging. Our review of the data does not support worries about a national recession. We also see some of the best opportunities in 2019 will be found within the B and C class apartment space.
Nationally, there is some pockets of ongoing perception that flooding and oil & gas are primary issues for the local Houston economy. This perception is not supported by credible numbers. While the pace of growth in Houston apartments has slowed some from it’s previous frantic pace, fundamentals and expectations remain encouraging.
We don’t expect growth in Houston to be explosive in 2019, but we do see growth that it is strong and sustainable. Slow and steady often wins the race. Rising construction costs and stagnant white-collar job growth will continue to challenge Class-A apartments, although the macro trend of renting-by-choice as opposed to owning a home is expected to continue. Upward pressure on blue-collar wages due to labor demand and continued population growth should bode well for B and C apartment properties. Some of this could be tempered by ongoing disruptions in the retail sector. On the other hand, the logistics industry in Houston is expanding rapidly.
Overall, we see more rationality in the apartment market today than we have witnessed in the past. Big data, artificial intelligence (AI), and ubiquitous educational programs are helping investors and lenders make more informed decisions that are driven less by emotion, and irrational fears or desires to game the system. We continue to see far more shoppers than sellers in the Houston market. Capital remains abundant, and while we don’t believe interest rates will rise to a level of concern this year, we do agree it makes sense to not push underwriting assumptions and leverage to the maximum.
We continue to see good success rates in the value-add arena; especially, where the bones are good, locations are strategic with deeper understanding of submarkets, employer growth, support services and infrastructure. Prudent focus is kept on fundamentals enhancing curb appeal, security, laundry and adding wow-factors to kitchens with color, style and function.
Smart home technology will continue to increase in demand while decreasing in cost. Apartment owners will need to be discerning to recoup costs. Direct-to-consumer digital marketing of apartment communities will dominate with a focus on social media and artificial intelligence. Cars continue to be necessary in Houston. Those apartment communities that offer designated parking, garage spaces and covered parking will continue to be desirable.
We look forward to another good year making it a better world in the apartment industry for apartment owners, investors and apartment residents.
If you would like to chat about investing in apartments in Texas, adding apartments to your current multifamily portfolio, improving the return on your existing Texas apartment properties, or simply want to chat, give us a call.
We love nothing better than to talk apartments.