By Barbra Murray, Contributing Writer
Houston–The area surrounding the Texas Medical Center in Houston is fertile ground for apartment development, and Archstone has just planted the seed for a new community to sprout up just two miles southwest of the campus by kicking off construction of a 474-residence project.
Located in one of Houston’s largest employment markets, the as-yet-unnamed development will sit at the intersection of N. Braeswood Blvd. and Brompton Rd., providing easy access to TMC’s 1,000-acre campus, where more than 93,000 employees spend their days. And the payroll is only going to get larger, as many of the 49 member institutions that call the site home complete and commence expansion projects. As a result of an aggregate $7.1 billion in capital investment, the campus will have increased in size to 41 million square feet by 2014, according to the Greater Houston Partnership.
Given the roster of leading academic institutions, hospitals, medical schools and nursing schools, thousands of those who come and go at TMC can likely afford to buy a home in the area; however, apartments are preferred by a great many. TMC sits in the in the Braeswood/Bellaire submarket, where the year-over-year occupancy rate in the apartment sector jumped 440 basis points, according to first quarter numbers by Red Capital Group, a provider of debt and equity capital to the multifamily, student housing, seniors housing and healthcare industries. The figures were even more impressive for Class A assets, which experienced a year-over-year occupancy increase of approximately 650 basis points.
“Strong job growth at the Medical Center and increased enrollment and employment at the University of Houston and Rice University, coupled with the increased appeal of rental tenancy among young professionals, were the principal factors propelling apartment demand,” Daniel J. Hogan, director of research at Red Capital Group, tells MHN. “More cautious about the efficacy of homeownership than in the past, these skilled workers are now more inclined to rent luxury apartments in interesting urban neighborhoods close to their places of employment. As a result, occupancy in buildings completed since 2000 located within two miles of the site of the new Archstone development are over 94 percent.”
Archstone’s project was devised to cater to those renters seeking upper-scale accommodations. In addition to finely appointed residential units, the Mediterranean-style apartment community will feature a café with free Wi-Fi, a state-of-the-art fitness facility, a swimming pool and five courtyards. “This community has been meticulously designed to meet the needs of the many working professionals who will soon call it home,” Jay Curran, Archstone vice president of development for the region, notes in a prepared statement. “Although all of the amenities will provide the convenience and utility these professionals expect, the five lush courtyards will inspire them with a resort-like ambiance they seek when on vacation.”
With a sunny forecast for the job market in Houston, Archstone may not face too many challenges leasing up the property. “The metro economy will create 57,400 payroll jobs in 2011, up from last year’s 3,700 job loss,” Hogan says. “Our unbiased econometric model is still more optimistic for 2012 and 2013, when it projects net creation of 84,700 jobs and 94,000 jobs, respectively. Job creation of this magnitude will give rise to even stronger apartment demand in the area, particularly in urban neighborhoods. It is no surprise, therefore, that real estate investment trusts and other institutional investors are considering sophisticated luxury mid-rise infill projects for the Braeswood area.”