Rehabbed, Rebranded Property Debuts in Hungry Houston Market
- Jan 24, 2012
Houston—With an eye on value-add opportunities in the bustling Houston apartment market, Marquette Cos. has acquired and rehabilitated The Apartments at Copper Springs, a 376-residence community in the city’s thriving I-290 corridor.
Snapping up Copper Springs and adding that extra shine was a timely move on Marquette’s part. “The stars have aligned for apartments in Houston,” David Mitchell, a principal with Apartment Realty Advisors, tells MHN. “We added something like 85,000 to 88,000 jobs from November to November. Absorption has been just incredible and there really hadn’t been any new development, so the fundamentals are as good as we’ve seen them in a long time.”
Carrying the address of 13333 West Rd, Copper Springs was originally developed as Las Ventanas by Koontz McCombs in 2003. In addition to sizeable units, the property features 365 parking spaces, a location within close proximity to the Sam Houston Tollway and resort-style amenities that were taken up a notch through Marquette’s rejuvenation program. While the new Copper Springs was built as a Class-A property, it had much to gain from a makeover, given the increasingly loud cry for premier apartment accommodations.
“Houston’s really been doing well and a lot of it’s just because the energy markets have been so strong here—oil and gas—the jobs are incredible,” Mitchell notes. “And our Texas Medical Center has been phenomenal, and then we’ve got the Port of Houston with the expansion of the Panama Canal, which has been incredible.”
With the local jobs market boosting renter demand, investors are flocking to the area. “Institutional buyers are very interested in Houston right now because the rents are moving up, so there’s demand on both sides—renter demand and buyer demand.
However, the availability of Class-A properties has contracted significantly, so buyers are beginning to target the quality assets that can benefit from renovations and repositioning.
“That valued-add game went way a few years ago when the recession hit and our market was overbuilt,” he explains. “People didn’t need to buy Class-B product and rehab them because there were plenty of A deals. But what’s happened recently is no one’s built anything. We’ve added all these jobs so the absorption’s been phenomenal and now we’re out of product because our occupancies are high. So now, people are starting to buy these B deals and really fix them up. The whole value-add game is back.”
But with all things being cyclical, the party for investors in Houston won’t last forever. The question is, how long will the good times roll? “What’s going to happen is development is going to come back at some point over the next two or three years. However, as of right now, there are a bunch of developers out there that would love to build but it’s not as easy to get equity and debt as it was.”
Alas, overdevelopment of the Houston apartment market is not on the horizon.