Occupancy rates at Nova Asset Management’s well-leased portfolio of 16 apartment complexes in Houston are starting to slip amid sustained low oil prices.
The Houston-based owner and manager of 6,000 local apartment units is just starting to see the effect of the slowdown in Houston’s economy from energy layoffs, said Neal Verma, president and co-founder of Nova Asset Management.
About one-quarter of the portfolio is Class B, with rents for one-bedroom units averaging $850 a month. The complexes are typically between eight and 20 years old.
“In the B class properties, a lot of tenants do have some kind of connection to the oil and gas industries,” Verma said. “We used to have 100 percent leased. Now we’re seeing 95 percent leased.”
At a 300-unit Class B property, 15 people normally move out each month. In the last three months, that’s crept up to between 20 and 30 vacancies, Verma said.
Three-quarters of Nova Asset Management’s portfolio is comprised of older Class C properties with rents averaging $600 a month.
The Class C properties, which frequently house construction workers, may lose some tenants as the pace of new office building construction begins to taper off in areas such as the Energy Corridor and the Galleria. The Class C occupancy rate has dipped below 98 percent, but has been close to 100 percent recently, Verma said.
“A lot of those jobs are finishing, but no new construction is happening in Houston,” Verma said.
Nova Asset Management recently collaborated with property management software firm RealPage on a new way to collect rent payments. Tenants pay using eMoneyOrders at area retail stores.