Houston’s multifamily industry has been hit hard by the oil slump.
Rental growth has slowed, vacancies are up and the pipeline for new apartment projects has all but dried up.
But Iggy Grillo remains bullish about the apartment market in the Bayou City. That’s because the vice president of development for Stream Realty Partners LP has focused on a special niche in multifamily: the active-adult renter.
“It’s a market that’s just beginning to be built and developed,” Grillo told brokers and developers who gathered at Stream Realty’s annual State of the Houston Market event Oct. 13. “This opportunity in Houston is really incredible.”
Houston is experiencing a massive demographic shift as Baby Boomers, the largest generation in U.S. history, are starting to retire en masse, Grillo said. About 1 million Americans will age into the so-called active-adult category — those ages 55 years and older – within the next four years, he said.
Many of these empty nesters are downsizing from their large single-family homes into smaller apartments that are easier to maintain and offers a lock-and-leave lifestyle, Grillo said.
Developers, like Stream Realty in Houston, are now looking to capitalize on this demographic shift, constructing age-restricted apartment communities that cater to renters ages 55 years and older.
“Substantial multifamily developers are getting into this space,” Grillo said. “The demand is really, really strong.”
Stream Realty, under Grillo’s direction, plans to launch a wave of new Solea-branded active-adult apartments across Houston. The real estate brokerage and developer has broken ground on Solea Copperfield, a 129-unit active-adult apartment in the northwest Houston area, and plans to develop at least six new active-adult communities across Houston in the coming years.
These active-adult apartment communities are attracting older renters — the average age is 69 years — who want to be close to their children and grandchildren in the suburbs, Grillo said. These active-adult renters typically have retirement accounts and are able to capture a lot of their wealth from selling their single-family homes, he said.
This means active-adults are generally a more stable renter demographic, than cash-strapped and college debt-ridden Millennials. Active-adult renters are less affected by the oil slump than their younger counterparts, Grillo said.
“There’s low exposure to the economy,” Grillo said of the active-adult apartment sector. “There’s a real insulation to what’s happening in the market. This is an asset that has an inherent safety to them.”
By: Paul Takahashi
SOURCE: Houston Business Journal