If you are thinking about investing in Houston multifamily real estate, you are not alone. The market has seen a revival since Hurricane Harvey as the city rebuilds and returns to normal. There are a number of hot spots for real estate investment, which are largely the same as they were before the hurricane, just more active. In our opinion, the time to invest is now, while the market is beginning to rise.
Hurricane Harvey as a Real Estate Market Stimulus
Houston has been showing its economic fortitude since Hurricane Harvey. After a final count of 39,000 homes damaged and destruction totaling $87 billion, the city is set for a $2.6 billion boost in retail sales, as people rebuild and replace the things they lost in the natural disaster.
The city can also plan on adding 69,900 jobs next year, assuming the oil industry continues recovering. That represents 2% growth, in keeping with the city’s average across the last 25 years.
As many predicted, the hurricane led to tightening demand on Houston’s oversupplied apartment market, with about 6,000 new occupancies since it occurred. Although most of those will be temporary, some portion of them will be conversions.
“A new segment of permanent renters could emerge out of the storm,” Robert Kramp, director of research and analysis for CBRE, said. “For example, older homeowners contemplating apartment living now have an additional motivation to shift from owning to renting.”
Best Areas for Houston Rental Property Investment
“Everybody is very bullish about multifamily in the city of Houston right now,” HFF realty managing director Chris Curry said in late October. “Since the hurricane, it's only gotten stronger.”
One factor encouraging sales is the fact that rising material and labor costs have made new buildings completed before the hurricane cheaper to buy than it would be to build them now, he noted. This is especially true for Houston, where numerous luxury buildings made it through the pipeline after the downturn in the energy industry in 2014 hobbled the market.
Flooding from the hurricane has not distracted investors from their earlier plans. Spring, a community in the northwestern Houston area, was hard hit by floods, but development is continuing unabated.
In the western part of the metropolitan area, Energy Corridor, which experienced extensive flooding, is also keenly attracting interest from investors now. One of the larger recent deals has been the sale in the Energy Corridor of the H6, a 293-unit complex with a long list of amenities that was completed in 2015. Its vacancy rate has dropped from 10% to 5% since the hurricane.
The Midtown neighborhood of Houston will be getting its first high-rise, a luxury apartment building that will have 27 stories, thanks to financing its Australian developer finalized in November. The $200 million building will include 357 units and 12,000 square feet of retail space. The building, to be known as The Midtown, will be at the center of a redevelopment project that includes more multifamily housing.
Experts in Multifamily Rental Property Investing in Houston
At CWS Capital Partners, we can help you invest in the rapidly changing Houston market. We have 22 multifamily investment properties in Houston and its suburbs, including Katy and Spring. Our experts have a thorough understanding of the city and its multifamily real estate market, and we can help you acquire or develop a property, reposition a property, or take part in a 1031 exchange.
Contact a CWS Capital Partners expert today to find out more about multifamily investment opportunities in Houston.
The information provided here is for your general informational purposes only. It should not be considered a recommendation or personalized advisory advice. CWS has made this third party information available from authors it believes are knowledgeable and reliable resources. However, its accuracy or completeness cannot be guaranteed and sentiment may change due to legal or economic conditions.
All investments involve risk including the possible loss of principal. You should familiarize yourself with all risks associated with any investment product before investing.
Advisory services are provided by CWS Capital Partners LLC, a registered investment advisor.
Securities offered by CWS Capital Partners LLC are through an affiliated entity, CWS Investments. CWS Investments is a registered Broker Dealer, member FINRA, SIPC.