Planned Utility Development Proves Fruitful in Acquisition
A location in a PUD district combined with solid healthcare jobs and steady multifamily fundamentals, prove advantageous from an investment perspective for the buyer of Retreat at Shadow Creek Ranch.
PEARLAND, TX—Houston’s total nonfarm employment is forecast to expand 2.6% or by 81,100 jobs this year. And no longer primarily dependent on oil-related jobs, healthcare is a stalwart leader of employment growth in the metro.
“2018 was a great year with over 73,000 jobs created and 2019 is expected to be similar, with healthcare leading the way in jobs,” Jennifer Ray, Berkadia director, tells GlobeSt.com. “Houston’s multifamily fundamentals have remained steady, which we can expect to get better with labor figures continuing to rise.”
A prime example of strong multifamily fundamentals is the Retreat at Shadow Creek Ranch, a 370-unit multifamily asset located within a Planned Utility Development/PUD district. This is an area with almost no new capability for new developments.
This location, combined with solid employment, proves advantageous from an investment perspective. These conditions precipitated buyer Goldman Sachs Asset Management Private Real Estate to acquire the Retreat at Shadow Creek from Inland Private Capital Corporation, a real estate investment firm based in Oak Brook, IL. The price was undisclosed.
Ray and senior managing director Ryan Epstein of Berkadia’s Houston office arranged the sale on behalf of the seller.
“The property is found within a PUD, which has already met a set amount of utilities and number of tracts allotted for multifamily development. The decrease in deliveries, coupled with the PUD’s virtually nonexistent capability for new projects, create an opportunity for long-term growth and value appreciation,” said Epstein.
Built in 2013, Retreat at Shadow Creek Ranch is located at 2500 Business Center Dr. Situated near major transit corridors and employment hubs, the multifamily property has access to metro Houston and surrounding neighborhoods. Pearland Town Center and Pearland Medical Center are less than 10 minutes away and Pearland Regional Airport is less than 30 minutes away. South Freeway is less than 10 minutes away, providing a direct route to downtown. Sam Houston Freeway is about 10 minutes away, offering access throughout the city’s middle loop areas.
Leasing activity is expected to remain positive in the area and across the metro as single-family home prices are forecast to rise 1.5% while existing single-family home sales dip 0.6%, according to a report by Berkadia. Even with sustained rental demand, supply-side pressure is forecast to cause a 60-basis-point reduction in average apartment occupancy to 93.2% by year-end. And, even with the decline in occupancy, effective rent is expected to rise 4.2% year-over-year. At $1,177 per month in December, average effective rent is forecast to be more than $300 less than the typical mortgage payment.