It is hard to miss all of the new apartment complexes that have been popping up all over Houston recently. Given the oil industry’s continuing downturn, it is fair to question who is actually moving into these new residences. Certainly there are multiple industries that make up the economic system that is Houston, but oil has been and still is the foundation that fosters major growth in the city. Hence, when the oil industry is suffering, many other industries find they are considerably affected as well.
The increase in vacancies for Houston apartment complexes has been worrying some businesses involved in the apartment rental business. Neal Verma, owner of Nova Asset Management Inc., has recognized a growing problem accompanying the drop in oil prices: the layoffs and lack of new jobs are causing people to drop their rental agreements because of a fear that they will fail to pay rent. Verma’s company owns many properties that have been affected by the downturn. Verma usually finds his vacancy rates to be around 5%, but in recent times, that figure has climbed to 8 or even 10%.
On the other hand, Verma states that in times like these one can usually find bargain buys for apartment complexes. Consequently, during oil booms the prices of apartments can skyrocket to ridiculous amounts. Verma is confident his firm will make it out of the crisis in good standing, but knows that there are rough times ahead for the foreseeable future. For now, he is increasing the fee paid for referrals, and investing more heavily in marketing in local areas. He hopes that this will be sufficient to ride out this downturn.
Article written by HEI contributor Timothy McNally.