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Houston Apartment Association
State of the Industry Breakfast
January 26, 2016
Thank you to our Generous Sponsor:
Houston Apartment Association
State of the Industry Breakfast
January 26, 2016
Houston economic outlook
January 2016
Presented by:
Patrick Jankowski
Senior Vice President, Research
Greater Houston Partnership
15
16
+17
14
The New Math
Jobs Added
’15 23,200
’16 22,900
+ ’17
+ 60,000
’14 106,100
The New Math
Jobs Added
’15 23,200
’16 21,900
+ ’17
+ 60,000
’14 106,100
The New Math
Jobs Added
’15 23,200
’16 21,900
+ ’17 + 60,000
’14 106,100
The New Math
Jobs Added
’15 23,200
’16 21,900
+ ’17 + 60,000
’14 105,100
The New Math
The New Math
[VALUE]
[VALUE]
[VALUE]
[VALUE]
104.7
23.2 22.9
60.0
'10 '11 '12 '13 '14 '15 '16* '17**
December to December Job Growth (000s)
Source: Texas Workforce Commission *Partnership 2016 Forecast
** 25-Year Average (approx.)
The New Math
49.7
82.9
118.5
89.9
104.7
23.2 22.9
60.0
'10 '11 '12 '13 '14 '15 '16* '17**
December to December Job Growth (000s)
Not likely to be repeated any time soon
Everyone wants oil prices to recover soon
When will prices recover?
When will prices recover?
30
32
34
36
38
40
42
44
Feb 16 Apr 1616-Jun Aug 16 Oct 16 Dec 16 Feb 17 Apr 17 Jun 17 Aug 17 Oct 17 Dec 17 Feb 18
$ P
er
Barr
el
Source: Yahoo Finance
Futures Chain, Crude Oil, NYMEX
When will prices recover?
When will prices recover?
Wells FargoOil Price Forecast
Q1 Q2 Q3 Q4
Brent Crude
$40 $42 $50 $58
When will prices recover?
Wells FargoOil Price Forecast
Q1 Q2 Q3 Q4
Brent Crude
$40 $42 $50 $58
When will prices recover?
Wells FargoOil Price Forecast
Q1 Q2 Q3 Q4
Brent Crude
$40 $42 $50 $58
When will prices recover?
Wells FargoOil Price Forecast
Q1 Q2 Q3 Q4
Brent Crude
$40 $42 $50 $58
When will prices recover?
When will prices recover?
Source: OilPro
When prices do recover . . .
When prices do recover . . .
Pay shareholder dividends
When prices do recover . . .
Pay shareholder dividends
Drill more wells
When prices do recover . . .
Pay shareholder dividends
Drill more wells
X Hiring binge
0
20
40
60
80
100
120
140
160
1.5
1.8
2.0
2.3
2.5
2.8
3.0
'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16
WTI
($/bbl)Jobs
(millions)
Source: U.S. Energy Information Administration and Texas Workforce Commission data
Oil Prices and Employment Growth
Employment Monthly Oil Prices
We’ve been here before
0
20
40
60
80
100
120
140
160
1.5
1.8
2.0
2.3
2.5
2.8
3.0
'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16
WTI
($/bbl)
Jobs
(millions)
Source: U.S. Energy Information Administration and Texas Workforce Commission data
Oil Prices and Employment Growth
Employment Monthly Oil Prices
We’ve been here before
Houston economic outlook
January 2016
Presented by:
Patrick Jankowski
Senior Vice President, Research
Greater Houston Partnership
Greater Houston - Overall(as of 12-31-2015)
Under Construction 102 Properties / 29,062 Units
Dec ’08: $739 ● 85.2¢ ● 85.8% | Dec ’09: $721 ● 83.0¢ ● 83.9%
Greater Houston(as of 12-31-2015)
Classification Analysis
Looking Ahead
Houston Apartment MarketJanuary 2016
2016 – Overbuilt – Too Much Supply For Demand Demand: Job Growth of 22,000
Empty Nesters
International
Supply: +20,000 Units
Market Defies Macro Analysis Sub Market Specific
Lease-Up Specific
Class Specific
Class Outlook A – Flat to Negative (New Construction & Wide Range of Performers)
B – Mildly Positive (2.5%)
C & D – Strong (4.5% to 5.0%)
2016 Rent Growth 2.5% to 3.5%
2016 Absorption +10,000 Units
2016 Ending Occupancy 89.3%
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