22820 Imperial Valley Drive, Houston, TX
Completion Date: 2013
Net Rentable Area: 140,440 S.F.
Number of Buildings: 15
Asset Type: Multifamily
The Forest Apartments is a 192-unit, garden-style apartment building located in Houston, Texas. The property consists of 13 two-story buildings situated on six acres with parking for 254 vehicles, resulting in a parking ratio of 1.32 spaces per unit. The property is located in the Northeast FM 1960 East/IAH Airport submarket of Houston, approximately 21 miles north of downtown Houston.
Ytech had a particular interest in this submarket as corporate expansions in the immediate area would generate more than 100,000 new jobs between 2013 and 2018, drawing in thousands of new residents. As of 2012, employment rates began to pick up again, resulting in more than 12 jobs being created for every apartment brought online in that submarket. Demand for multihousing space is directly correlated with employment growth.
Ytech conducted in-depth research of the employment market, with a focus on the high-tech, energy and healthcare sectors as these have proven to be major drivers of job creation in this submarket. The data showed that not only was net absorption outpacing the three-year average of approximately 14,000 units, but it also demonstrated that the area had experienced significant rental rate growth for a period of six years.
Ytech completely redeveloped the property through capex infusion of more than $1.5 million and leased the units until stabilized occupancy was achieved. Its redevelopment plan involved exterior renovations, roof repairs, HVAC replacement and repairs, interior renovations and down unit rehabilitation. The project was completed in October 2013. Ytech was able to extract the property’s intrinsic value by achieving stabilized occupancy by February 2014. Currently, the property is at 96 percent occupancy.
Ytech’s management and marketing plan for this project has resulted in above-average returns for the submarket. By placing a particular emphasis on high renewal rates, Ytech has been able to attain higher revenues while significantly decreasing tenant improvements and leasing costs. These initiatives resulted in an net operating income (NOI) increase of 26 percent since acquisition.