The Houston apartment leasing company that is trying to keep up with global economic changes says it’s facing a major blow to its business.
The company said Thursday it will raise the price of apartments in the area around its new $4.5-million tower by $2,700, an increase of more than 15 per cent.
The move comes amid the global financial crisis and is likely to hurt its bottom line, said a person familiar with the matter.
It comes as Houston is undergoing its worst housing downturn in decades and is also facing a wave of gentrification.
At the same time, there are signs the city is beginning to heal from decades of gentrifying trends, including a surge in housing prices.
At least four luxury apartment buildings in the Houston area will have prices rise by at least 20 per cent by next summer, the company said in a statement.
The move will hit the majority of Houston’s luxury apartment tenants who live in the city’s sprawling, walkable neighborhoods and suburbs, said John Della Volpe, a senior vice president with the Houston-based firm.
“We’re losing market share to the more walkable and more affluent neighborhoods and we’re not going to make it up by any stretch of the imagination,” he said.
According to a survey of 1,100 households conducted by real estate firm CBRE, most of the company’s new properties are in the lower-income and working class areas of the city.
It said the median price of an apartment in the neighborhood of Bayou Teche in the southwest Houston neighborhood was $1.9 million, well above the $1 million average in the broader Houston area.
While prices will increase, the person familiar said, it won’t necessarily hurt the company as it plans to expand and expand in the coming years.
“We’re doing this because we believe in our core mission and our core brand and we want to ensure that we continue to be a leading luxury rental property provider for our community,” said the person, who asked not to be identified because the company has not yet filed its tax returns.
With rents rising, the move could put pressure on the company to stay in the market or to move into a larger building.
The average Houston apartment is now $1,750 a month, according to data from CBRE.
The new $2.7-million building will be built next to the Houston Ship Channel.
It is scheduled to open in the spring.
Houston, which is a key manufacturing and economic hub, has experienced a surge of apartment construction over the past year as new construction companies opened.
It also has experienced massive growth in the rental market, which has more than doubled in the past decade to $1 trillion.
Brent Seibert, an assistant professor at the University of Houston who studies the housing market, said that the company may be trying to protect itself against a global downturn.
He said the company is not in a good position to do much more.
It is very difficult for an industry that is struggling to keep pace with the global economic environment to continue to make the kinds of decisions that are necessary to survive and grow,” he told CBC News.
Seibert said that Houston was one of the biggest rental markets in the world when it was booming, and that the number of units available in the region has steadily declined.
But in recent years, Houston has been struggling with a housing affordability crisis that has led to many people losing their homes, including hundreds of thousands of people in the East and West coasts, he said, and rents are now among the highest in the country.
As a result, Seiberts said, the rental markets of many cities in the United States have become unstable.
In its statement, the Houston unit leasing company said it will continue to seek additional financing, but the move was unrelated to the financial crisis.
This is the first time in a decade that Houston has faced a shortage of apartments.
The city’s vacancy rate is just 1.6 per cent, according the Houston Land-Use Survey, which also shows that the median rental unit cost is $1 and the median income is $52,000.
We will continue working to make sure we keep affordable housing affordable for Houstonians,” he wrote in an email. “
This is not a perfect solution.
We will continue working to make sure we keep affordable housing affordable for Houstonians,” he wrote in an email.
Other companies have raised rents in recent weeks, including the owner of the famed Fifth Avenue office building in Manhattan, which announced in June it would raise rents by 50 per cent to $2 from $1 a month.
The Trump Organization said in June that it was raising rents by 25 per cent for all new apartments it owns.
There is no guarantee