The Growth of the 2-Story Store; Houston’s Amenities Problem

Photo: Jackson Myers via Swamplot Flickr Pool


12 Comment

  • Re: Houston a “Too Many Amenities” Rental Market
    At first, I was going to scoff at this article but, after reading it, it makes quite a bit of sense. Installing amenities that no one really wants just adds to the overhead of the property – and renters end up paying for things they don’t want. Economically inefficient.
    In the list of 10 amenities, I would disagree that air conditioning is “optional”. In our climate, it is mandatory.

  • Too many amenities in an apartment is a bad thing?? And air conditioning in Houston is not an amenity, it’s a basic requirement like water and electricity.

  • Re: Apartment amenities: I wouldn’t consider air conditioning and parking an amenity in Houston, rather a necessity. No onsite laundry is a dealbreaker for me. Going to a laundromat is a huge time killer. No dishwasher is a dealbreaker too. But most amenities I don’t really need or want. Balconies usually become storage for old bikes or function as spots for a smoke break for most people. I don’t have pets and find it strange how many people cram big dogs into small apartments. Pools and gyms are only nice if they’re maintained well which they aren’t in most apartments I’ve found.

  • “Houston City Council has approved a plan to direct how the first long-term federal housing aid headed this way after Hurricane Harvey will be spent, targeting $600 million to repair or build single-family homes and $375 million to fix or construct apartments.”

    What a total waste of money! They should use the money is provide low-cost LOANS so people can raise their own homes in the 500 year floodplains. Condemn homes in the 100 year floodplains and buy them out to make floodable green-ways with the returns on the loan repayments. With the proposed plan you will be paying billions more to repair them again in a few years you ….. a stupid plan that is only DESIGNED TO BUY VOTES

  • Amenities are interesting. I’d love to see what Cody has to say because just because people want or don’t want an amenity on a survey doesn’t mean that actually affects their decision making process. I may want a dishwasher, but I may not be willing to pay an extra $25/month for it. I may not use a pool, but if you have a complex of 500 units and only 40% of them want a pool, or you as a manager going to risk losing 40% of your tenants because 60% theoretically would go pay $25 less a month for a place without a pool. The error lies in the too many amenities category when building new.

    And the article covers areas where a/c is a plus, not needed. In Houston, it’s basically a requirement like electricity and running water.

  • More expensive land = need to generate higher rents/square foot = more amenities added. Not that hard to figure out.
    The good thing for tenants is – once the apartment is built, the cost of the land or the construction or the amenities fundamentally doesn’t impact the rent. The only thing that impacts the rent is how much the apartment building next door is charging for rent. Thanks to the recent glut of apartments, tenants who shop around and negotiate stand a good chance at scoring a lot of amenities for their $, especially compared with apartments in big east/west coast cities.

  • I’ve never understood the business center amenity. Isn’t that what coffee shops are for?

  • Harvey Budget item of $60 million to ‘social and homelessness”. Why is this being added for Harvey relief? Others questionable as well; pols doing their thing?

  • I have some thoughts on this as a multifamily owner.
    We get a lot of people looking for in unit W/D. For some its a deal breaker. Though I think most that consider it a must-have are setting their search filters above our price. If you’re looking in the price point of which we’re operating, they’re not going to find it. So if they really want it our competitors who are $300+/monht more can offer it. All our properties offer W/D onsite (not all, but most), just none in unit.
    AC is not optional. Maybe it is from the standpoint of an owner providing it — but not someone living in a unit without it. Note, the property code doesn’t MANDATE the owner provide an AC (so long as windows have screens). Plenty of properties are “bring your own AC” as they have a high likelihood of walking off. I’m talking class C here, not B or better.
    Steve: “too many” isn’t a bad thing, in theory. But those come at a cost to the renter. If you’re living in a property that has a gym that you don’t use, some % of your rent goes towards that even if you don’t see it as a line item on your lease.
    Parking is *NOT* a requirement. At least not for everyone. Not in 2018. Younger people care a lot less about parking than older. Esp if they’re living in a dense area. It’ll be like when people stopped getting land lines.
    And then stopped getting cable. Owning your own car will be something that less and less people do — I’m sure of it. There is uber, self driving on demand cars (soon), scooters that you can pick up all over the place for a few bucks, etc. I own plenty of places that are full, while offering less than 1 space per unit (Or some properties, like our new one downtown, has zero spaces yet is fully occupied).
    Pets are something that all things being equal, no owner wants their tenants to have. But at some point, the extra pet fee/rent make up for the negatives. So the ones that accept them don’t just do it because they couldn’t rent otherwise, they do it to capture a fee that in theory outweighs the downside.
    None of our places have balconies/pools/gyms, but then again, we’re in the class C world at a different price point than being discussed. I do find it funny when I see an email from a prospect that says “I’m looking for something in Montrose, under $800, that’s newer, central air, dishwasher, granite, new appliances, W/D in unit, maybe a pool on the roof, gym….”. Uh, um… Sometimes I reply politely that our units (and price point) is not for them, other times I just chuckle to myself and move on.
    Anyway.. That’s my $.02. Or maybe $.05

  • I am in the multi-family apt. business and I agree that Houston has lots of new, posh properties. It may be over-built. Of course, developers are stirring the pot to get people to relocate, turning Class B into Class C with current tenants moving to whatever’s new. If they can afford it.
    Clubhouse, Pool, Pool Pavilion, Fitness Center, Yoga Studio, Golf Simulator, Business Center, Gaming Lounge, Roof Deck, Dog Park, Dog Wash, Bike Storage… these are all standard offerings.
    I’ve noticed that in the southeast US, projects are, on average, smaller with less of the bells & whistles. Few pools or clubhouses – just a Leasing Office. Units will have a stacking W/D for example, instead of full-size laundry machines. Also, to get apartments into the city-centers, there are a lot of rehabs of existing buildings. Where there are Historic District regulations there are tax incentives to match. And in these cases the units are quite small and there are no amenities to speak of.

  • An amenity package affects the ability of a new multifamily property to lease up quickly. Yes, they do cost money to build and maintain, but they will get built in a competitive market — and Houston is a very competitive market. Investors do not want to put money into an under-amenitized property because if there turns out to be a glut of empty units when the property is finished then they will be at a serious disadvantage not just in terms of price point but in terms of being able to attract renters at all; and the worst possible scenario is one where a new property does not lease up within 12 months because then they need to fill empty units as well as the units where there is turnover and do it at the same time.
    This force being what it is, the cost of amenities is simply the cost of doing business in Houston. It is largely reflected in what developers are willing to pay for land.
    There are two exceptions that I can think of: 1) where multifamily developers cannot justify paying prevailing market prices for any land in a submarket due to apartments not being the highest and best use, in which case one might reasonably expect modifications to the form of the development or appreciation of rental rates over time; and 2) during a major economic recession like the 80s oil bust or a submarket that undergoes dramatic decline for other reasons, some apartment owners may fill in pools or eliminate other amenities that are either associated with operating costs or that already have substantial deferred maintenance, creating stratification within rental stock of the same age.

  • Podium style multifamily class A ground up development tends to be the most amenity rich type of multifamily development there currently is and Houston has a lot of them mostly concentrated near urban development with a majority targeted towards the millenial/young prof demographic. You cant blanket the entire multifamily market and compare it all together either because within that market is a large web made up of garden, podium, mid and high rise styles of development within that sector as well targeting a wide gamut of tenants… Value add investment in repositioning from class B amd C once a property meets that point in its lifecycle would also be something to consider when comparing the entire multifamily market under one umbrella…… Nice rendering in the article though ;-) (my two cents from a visualization perspective while working on these types of development from concept to market in various regional markets)