HOUSTON – The slowdown in the energy industry and Houston’s job growth has not torpedoed the Houston apartment industry, says Hal Holliday, a veteran of the commercial real estate industry.
Holliday entered the commercial mortgage banking in 1971 and he was co-founder of the firm that bears his name, Holliday Fenoglio Fowler, although he is no longer with the company.
Holliday, now serving as executive vide president of debt and structured financing for CBRE, has arranged financing for hundreds of multifamily projects over the years.
With Houston’s rapid pace of multifamily units in recent years, many had believed that the city was amassing a gross oversupply of apartments. But Houston has absorbed 13,100 units so far this year and apartment occupancy stands at 91 percent, Holliday says.
“It’s been remarkably good,” Holliday says, noting that today’s record-setting single family sales, strong retail sales and fast-paced multifamily leasing don’t seem to correlate with the major decline in oil prices and the stress that causes on the Houston economy.
The Houston apartment market will get out of whack in 2016, Holliday told the recent CBRE Press Luncheon. Some 16,000 new units will be completed next year and the occupancy rate will slip below 90 percent. But the following year, in 2017, the construction binge will have come to a halt and less than 2,000 units will be completed that year, giving the market time to digest the new supply.
So by 2018, the Houston apartment market should be back into a healthy equilibrium, Holliday says.
EDITOR’s NOTE: Holliday co-founded Holliday Fenoglio with John Fenoglio in 1982 and HFF became the nation’s largest commercial mortgage banker. John Fenoglio spoke with Realty News Report last month about the state of Houston’s commercial real estate markets. Click the links below to see John Fenoglio’s two-part Q&A with Realty News Report. Ralph Bivins, Editor.
Fenoglio Part One http://realtynews.wpengine.com/2015/10/27/houston-is-no-place-for-vulture-funds-the-qa-with-john-fenoglio/
Fenoglio Part Two http://realtynews.wpengine.com/2015/10/28/houston-wounded-by-oil-bust-but-its-not-fatal-q-a-part-2-with-john-fenoglio/