The Grayson is a 330-unit class-A apartment community in the northern Houston submarket of Spring.
SPRING, TX—A limited development pipeline and record-setting job growth here combined to make a property prime for investment. Moreover, the asset was well-aligned with Passco Companies' strategy of identifying top-tier multifamily assets in high-growth markets, according to Jake Niles, director of acquisitions/West at Passco Companies.
Passco acquired the Grayson, a 330-unit class-A apartment community in this northern Houston submarket. Although the price was undisclosed, Niles notes the firm was able to acquire this asset at below replacement cost.
“There is a tapering development pipeline in Spring,” Niles tells GlobeSt.com. “This limited development pipeline could be an effect, in part, of higher construction costs and a storm-related shortage of construction labor. Developers are now competing for the materials and workers they need to complete projects. As a result, apartment developments are becoming increasingly expensive to build, straining budgets. The Grayson is expected to benefit substantially from limited competition in the submarket, where demand is continuing to outpace supply at a rate of 1.91 units absorbed per delivery.”
The Grayson, constructed in 2016, is located at 4115 Louetta Rd. The property is near Interstate 45 and State Highway 99, providing residents with access to downtown Houston, as well as throughout the greater metropolitan area and northern submarkets. The location also positions the community within the Klein Independent School District, a distinct advantage over otherwise comparable nearby properties, notes Niles.
“Long considered the 'Energy Capital of the World,' the greater Houston area has also experienced a significant influx of jobs in recent years, achieving the highest rate of employment growth among the country's top 12 MSAs last year at more than twice the national average,” explains Niles. “Major employers including Amazon, Texas Medical Center and Daikin Industries having recently undergone or are currently in the midst of expansions, are bringing thousands of jobs, driving further growth and increasing the area's appeal.”
The Grayson's open-concept one-, two-, and three-bedroom units include stainless steel appliances, island kitchens with recessed LED lighting, granite kitchen countertops and full-size washers/dryers. Features of the gated community include a fitness center with cardio, resistance training and free weights, spacious dog park, jogging trail, fully equipped resident lounge and kitchen, cyber café, a swimming pool, outdoor courtyard kitchen with grilling stations and a fireplace, and reserved parking spaces.
“In addition to being situated within an expanding economy, this community comes with significant curb appeal as one of just a handful of newly constructed multifamily properties in an affluent area with a limited development pipeline,” says Niles. “The Grayson's best-in-class design and amenities meet and exceed the expectations of today's residents. The asset also presents the opportunity for additional upside based on significant rent growth in popular neighborhoods further north.”
This affluent submarket with a growing job market has an average annual household income of nearly $109,000 (within one mile of the Grayson). This is expected to rise by more than $4,000 by 2022.
“In addition to benefiting from the health of the Houston economy overall, Spring will continue to be bolstered by Springwoods Village, located four miles from the Grayson,” Niles tells GlobeSt.com. “This master-planned development, anchored by the ExxonMobil corporate campus, will ultimately build out approximately 9 million square feet of commercial space.”
Josh Goldfarb and John Carr of Cushman & Wakefield's Southeast multifamily advisory group represented Passco as the buyer and Bridgeview Louetta LLC as the seller in this transaction. Chris Black and Caleb Marten of KeyBank Real Estate Capital's Commercial Mortgage Group arranged acquisition financing on behalf of Passco Companies.
Passco is a privately held California-based commercial real estate company that specializes in acquisition, development and property and asset management throughout the United States.
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Lisa Brown
Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.
