In their earnings call on 28 Oct, Camden Property Trust CEO, Richard Campo, made some interesting comments on the Houston apartment market that has obviously been weighing down their results.
He stated that approximately 23,000 apartments have been added to the Houston market this year and a further 10,000 are planned for next year. Most have been added by merchant builders who don’t have any units pre-let before they started building. Houston is projected to add 10,000 – 20,000 jobs this year. At a ratio of 5:1 this amounts to a demand for approx 4,000 apartments at the top end of the range.
In the boom years of 2013 and 2014 Houston added over 125,000 jobs each year. Since that time the Energy business has let go approx 80,000 with new jobs being in Healthcare, Petrochemical construction and retail. Those jobs are not as high paying as the lost Energy jobs.
As a result he estimates that the 2016 new builds have an occupancy rate of 30 per cent at most. In recent weeks there has been a massive shift in the local market where the merchant builders are now offering three months’ free rental, up from two previously.
Mr Campo expects that 2017 will remain weak for Houston. In 2018 there will be a significant drop off in unit completions and with the energy job market expected to increase, 2018 should be a strong year of recovery.