Trammel Crow insight: Houston apartments vs. oil slump

​HOUSTON – Trammell Crow Residential has seen a lot of success in Houston over the years, building many Alexan-branded luxury apartment projects across the Bayou City.

However, amid lower job projections and increased competition, the developer said it is concerned about Houston’s multifamily market during the oil slump.

As crude oil prices plunged to around $30 a barrel, Houston energy companies laid off thousands of workers, some of whom live in apartments. 

The Greater Houston Partnership predicts the Bayou City will create about 20,000 jobs this year, a far cry from the more than 100,000 jobs created annually during the energy boom.

Multifamily developers are expected to deliver about 25,000 new apartment units this year.

Trammell Crow Residential currently has eight apartment projects under construction in Houston, all set to open in 2016 and 2017.

After these projects open, the developer has no other new apartment deals in the pipeline. That’s because right now, supply far exceeds demand in Houston.

Apartments in the Energy Corridor and The Woodlands, where many oil and gas companies reside, are seeing a lot of softness amid the oil slump. Many of these apartments are offering between six to ten weeks worth of rent concessions.

However, when it comes to inner 610 Loop apartments, performance depends on the property. The Texas Medical Center and Pearland markets, where a lot of medical workers live, are seeing fewer concessions.

The Houston Heights, where there are few Class A apartments but a lot of demand from Millennials, is expected to fare well despite the downturn.

​Although Trammell Crow Residential is bearish on Houston in the short term, it’s bullish on the market in the long run.