Texas Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in Texas.
Issue link: https://texasrealestatebusiness.epubxp.com/i/817755
www.REBusinessOnline.com Texas Real Estate Business • May 2017 • 39 I N T E R F A C E C O N F E R E N C E C O V E R A G E Tenant concessions, ranging from free rent to complimentary carpet cleanings to distribution of gift cards, have become the norm in Houston's multifamily market over the last few years. And according to several indus- try experts who spoke at the InterFace Houston Multifamily conference on March 28, it's the millennials who are taking advantage of them. Houston has become an especially attractive destination for millennials in recent years. According to a survey by JAXUSA Partnership, which tracks demographic trends throughout ma- jor metros, between 2010 and 2013, the metro ranked sixth in population growth of residents age 20 to 29. Tenants receive fewer concessions in submarkets without a lot of new construction. In Houston, this primar- ily means suburbs — The Woodlands, Pearland, and Katy. In submarkets closer to downtown, where there is generally more construction, conces- sions have come to serve as bargain- ing chips for prospective renters. For Houston landlords, operating in a market where concessions have become standard has made lease re- newals harder to come by. Stacy Hunt, executive director of multifamily de- velopment and management firm Greystar, sees a direct correlation be- tween millennials and lease renewals. "Properties in [sub]markets where you have a lot of millennials — Down- town, Heights, Washington Avenue — it's tougher to renew them without giving them a deep concession," said Hunt, a conference panelist. Speaking to a crowd of 175 real es- tate professionals at the Royal Sonesta Hotel, Hunt explained that tech-savvy millennials are informed about mar- ket rates for apartment rentals, and won't hesitate to invoke them in ne- gotiations. In a joking manner, he also noted that their lack of material pos- sessions makes it easy for them to pick up and move at will. Jenifer Paneral, regional vice presi- dent of Pinnacle Property Manage- ment, notes that this itinerant life- style is wreaking havoc on landlords' books. "Turnover is a huge component of the expense side," she said. "We're really trying to keep our current resi- dents in place, but it's very challeng- ing with all the competition and con- cessions." Ricardo Rivas, principal and chief investment officer at Allied Orion Group, echoed Hunt's sentiment that landlords have little recourse but to yield to tenant demands. "We'll have people coming in who will say, 'My friend is getting this much or that much for the rent, and we're not going to renew unless we get the same or less,'" said Rivas. "At the end of the day, in a down market, we have to give in and discount the rent." According to Cushman & Wake- field, roughly 18 percent of the met- ro's current population, or about 1.5 million people, are millennials. An- other 128,000 are projected to settle in Houston over the next five years. This means that until multifam- ily construction levels off in 18 to 24 months, reducing supply and en- abling rent growth to resume, multi- family developers in Houston must get creative to attract and keep millen- nials at their properties. As such, developers are consider- ing new amenities that are especially geared toward the younger crowd. These include offering bar service in the lobby and offering full-scale pack- age handling services. In the age of e- commerce, the latter is a particularly popular feature, says Rivas. — Taylor Williams FREEDOM CROSSING AT FORT BLISS VISIT US AT BOOTH N3134 Y STREET F R E E D O M C R O S S I N G AT F O R T B L I S S . C O M • J O I N U S O N E L P A S O , T E X A S More than 127,000 active & retired military personnel/families BLISSFULLY YOURS EXPERIENCE Dan Frey - 512.682.5507 Current annual sales on Fort Bliss exceed $275 million 461,435 sf GLA with more than 30 restaurants & retailers First-ever open-air town center on a U.S. military installation Anchors: The Grand Theatre 10, The Exchange & Commissary MILLENNIALS IN HOUSTON MULTIFAMILY DRIVER'S SEAT, SAY INTERFACE PANELISTS For information on upcoming InterFace events, visit www.interfaceconferencegroup.com