Multifamily rentals at all-time high
A natural law of real estate stipulates that where employment opportunities arise, so too will apartments. Given ExxonMobil’s development of a 385-acre campus just south of The Woodlands, along with an influx of companies relocating their headquarters moving to the area, construction of multifamily development in The Woodlands is hardly a surprise. Neither, real estate experts say, is a surge in demand for rental housing.
Among the new multifamily developments in the works are Phase II of the Millennium Apartments on Waterway Avenue, which will include 314 units by developer Dinerstein Corp. and Landmark of Magnolia on FM 1488. In nearby Springwoods Village, plans to construct a four-story complex to be known as the Belvedere are under way. Such projects are set to be completed about the time the ExxonMobil campus comes online, though local Realtors say there is plenty of demand already.
“It’s more than just ExxonMobil,” said Ryan Epstein, first vice president of CB Richard Ellis’ multifamily housing practice. “It’s all the ancillary companies that want to be near there. I sold a project up there a few years ago, and rents have moved 20 cents a square foot just in that time. Occupancy is high, rents are moving and not a single Exxon employee has even showed up yet.”
A renter’s economy
Economic factors lead many to rent who may have purchased before the housing bust. Many newcomers to The Woodlands, in fact, qualify for loans but do not have the 40 percent required for a down payment, Epstein said. This has not only moved many into the renting realm, but also created a population of high income renters.
“They can afford a bigger apartment, a high-rise or luxury product,” he said. “Another part of it, specifically in The Woodlands, is that it’s a landing path. If someone relocates here, they are not going to just buy a home right away. They may want to figure out exactly where they want to be, or they need to be somewhere for 18 months or so while they are building a home.”
An increase in demand, as the market dictates, means higher rates. Over the past 12 months, rental rates in The Woodlands have jumped 8.6 percent—a significant increase, said Bruce McClenny, president of Apartment Data Services Inc.
“The story in The Woodlands, economically speaking, is fabulous,” McClenny said. “That submarket had three properties come online this year, and those leased up very quickly—and we are talking about 1,000-unit properties.”
Apartment occupancy rates in The Woodlands market are now at about 93.6 percent, according to Interfaith of The Woodlands, which compiles such data.
“People are coming here, and most choose to be renters first,” McClenny said. “When more people want to rent and availability is small, it’s time to raise the rents, and people are accepting it.”
Although the demand for rentals appears to be increasing because of economic conditions, The Woodlands’ response to that demand will not deviate from the community’s master plan the development is known for, real estate experts say.
“When you have a controlled market like The Woodlands, demand is very high,” Epstein said.
The master plan for The Woodlands includes more multifamily housing in Town Center, the Village of Creekside Park and in the proposed 66-acre mixed use development of Hughes Landing, according to The Woodlands Development Company.
A 40-story luxury condominium building is also planned for Town Center near The Woodlands Waterway. The high-end units aim to fill the need of a specific segment of the area’s population, such as empty nesters and young professionals.
“Town Center was always planned to be more urban, with higher density residences than the villages in The Woodlands,” said Susan Vreeland-Wendt, spokeswoman for The Woodlands Development Company.
Meanwhile, the basic demographics of The Woodlands have not changed significantly, she said.
“The average number of persons per household is 2.65, which has been relatively unchanged for the past five years,” she said. “Currently, 41.1 percent of households have children under the age of 17. Five years ago, that number was 43.5 percent.”
According to a report conducted by Interfaith, households with adults aged 55 and up increased from 11.9 percent in 1998 to 25.8 percent in 2008.
The ultimate projection for the numbers of apartments and assisted living homes in The Woodlands is 11,080, Vreeland-Wendt said. That number stands at 7,500 today. A little under half of the projected attached homes, or 3,690, exist today.
The building boom in apartments and higher interest in rentals does not necessarily mean the percentage of The Woodlands’ owner occupied dwellings is decreasing.
The 2010 Census showed about 22 percent of renter-occupied dwellings in 2010, compared to about 20 percent in the 2000 data.
These are numbers do not represent solely apartment dwellers. A large number of families—many of them newcomers—are choosing to rent single family homes. Thus, the search of a rental home, especially during summer months, has become a daunting task, local Realtors say.
“This year, I’ve done more leases than I have in any previous year,” said Woodlands-based Realtor Bill Phillips of Martha Turner Properties.
Like other agents in the area, Phillips works on many relocations. But unlike years past, many corporate relocation packages do not allow them to purchase homes until their existing homes sell elsewhere. Meanwhile, many newcomers still want a two-car garage and three bedrooms within the same school district where they eventually plan to purchase.
The lack of available rental homes in The Woodlands during the summer—when families are pressed to get settled before school begins—was surprising, he said.
“Leases were getting snatched up right and left,” Phillips said. “There would be days where you show a dozen lease properties, and by the time you get back to the office, only two or three are still available. It was just very active with multiple offers.”