Houston: The Opportunity City
Praxis Newsletter – July 2011
While visiting our latest acquisition, the Elm Grove Apartment complex in Houston, I was struck by the drive and entrepreneurial spirit of the people I encountered there.
The people of Houston are attracted to, and motivated by, Houston’s business-friendly attitude and thriving economy.
Houston is known as The Opportunity City, and people relocate there from all over the country to take advantage of its strong economy and job growth.
As a comparison to the entire state of California, which added 89,000 jobs in all of 2010, the city of Houston alone added 51,000 jobs between April of 2010 and April of 2011.
This is the kind of economic growth that helped us select Elm Grove.
The complex is located in Kingwood—a suburb of Houston. Kingwood is a 17,000 acre master-planned community on a scale and quality rarely seen in the U.S. Kingwood is one of the finest neighborhoods in Houston, located only 15 minutes from Bush Intercontinental Airport. The Elm Grove project is located in a quiet residential neighborhood across the street from an elementary school and the neighborhood recreation center.
Elm Grove’s prime location is the chief reason 40% of its tenants have been residents for two years or longer, and its stable tenant profile—with numerous residents residing there for longer than five years—was yet another factor in selecting this project.
Elm Grove’s potential for rent increases and adding value is an additional feature that helped us select this property. The complex was taken back by the lender in mid-2010 and came to suffer from a lack of maintenance and focus, as is typical of all lender owned properties.
We are in the process of spending $500,000 to re-side and repaint the exteriors, modernize the interiors with new appliances and finishes, and upgrade the pool and recreation areas. Elm Grove lagged behind the eight competitive projects in Kingwood in terms of rental rate per square foot and occupancy, but with the improvements in progress, we believe Elm Grove will see a substantial increase in rent per square foot and occupancy (current occupancy is 89.7%).
As Houston expects to add 3.53 million residents and 1.3 million jobs between now and 2035, and the Kingwood area is projected to be the second strongest rental market in the southeast U.S., Elm Grove presents a tremendous opportunity for our investors worthy of Houston’s nickname: The Opportunity City.
