Katy area headed for oversupply of apartments, but demand remains high

An oversupply of apartment units could be in the Katy area’s future.

There are about 19,000 apartment units in the Katy area, with another 2,000 or so under construction from five luxury complexes and one senior living community, according to data from Apartment Data Services. This is about twice as many additional units than the existing apartment market can handle, said Bruce McClenny, president of ADS.

Adding to the potential oversupply is the massive exodus of homeowners leaving apartment complexes because home repairs from Hurricane Harvey are completed, said McClenny and Jerone Bogar, the property manager of Grand Reserve Apartments, a luxury apartment community in Katy.

A year ago, Grand Reserve and its competitors were at capacity because Hurricane Harvey displaced so many people, Bogar said. That is not the case anymore.

“People are now leaving in droves [because their home repairs are finished,]” he said. “This adds extra pressure to communities to replace the Harvey people.”

He described a competitive industry, in which property managers are constantly checking on the rates, concessions and fun activities that other Katy communities are offering.

Currently, the Katy apartment market is saturated, Bogar said, calling it a buyers’ market. The apartment communities are fighting over potential renters, and the upcoming six complexes and their 2,000 units will make it even more difficult for property managers, Bogar said.

Katy’s apartment market is at an 88.6 percent occupancy rate across all apartment types, according to ADS data. Developers usually build in markets when the occupancy rates are around 95 percent, McClenny said.

The Katy area has only once hit that 95 percent mark in November 2012 over the past 10 years, per the data.

Katy area headed for oversupply of apartments, but demand remains high

Yet developers continue to build in Katy because it is a highly desirable place to live thanks to its great schools, good neighborhoods and the growth of health care and retail sectors, McClenny said.

In addition to the 2,000 units, his team at ADS have identified another proposed 12 complexes that would bring 4,000 units in the Katy area.

“It’s a developing area that people want to live in,” McClenny said. “And even if the jobs aren’t there, they like the neighborhoods so that they can grow their families and then commute to their job.”

It also helps that the Katy market, unlike other Houston-area places, has historically had stable occupancy rates and rent prices during economic downturns, he added. But similar to the rest of Houston, the average monthly rent price has skyrocketed in the past decade.

McClenny said Katy’s existing market can likely handle a unit increase of 5 percent to 7 percent—or about 950 to 1,300 units—without being overdone. The number of units under construction is 1,906, or about 10 percent of existing supply, per the data.

Although these numbers indicate a future oversupply of apartment units, McClenny said it does not alarm him. There is demand to live in Katy, and the apartment market is cyclical, he said.

Bogar expressed concern of the incoming competitors and the departing renters, but he said that his  property has enough traffic to sit at a 91 percent occupancy rate. People can afford the Grand Reserve’s luxury prices, he said.

He added many of the newly signed leases are from people moving from other states. Incoming families like to rent before they buy a home, Bogar said. But many renters stay because they enjoy the convenience and community that an apartment complex can provide, he said.

Both Bogar and McClenny pointed out that historically when occupancy rates—and subsequently monthly rents—decrease, developers hit pause on projects or readjust their timelines. As more people move into the area thanks to a good economy and job growth, then rents will likely rise and more units will be built.

“Katy, when you look at it has been a market that has weathered the ups and downs better than any other Houston market,” McClenny said.

Katy area headed for oversupply of apartments, but demand remains high


Water rates are rising in the city of Katy. (Nola Z. Valente/Community Impact Newspaper)
City of Katy raises water rate $0.08 for 2020

The increase is the result of a water supplier increasing its rates.

Black Rock Coffee Bar will open a location in Katy. (Courtesy Black Rock Coffee Bar)
Black Rock Coffee Bar eyes location in Katy area

“We’re excited to become a gathering place, as we establish meaningful connections in our local neighborhoods.”

Iron Supply Powersports is located at at 6117 Highway Blvd., Katy. (Courtesy Iron Supply Powersports)
Katy's Polaris West is now Iron Supply Powersports with new owners

The family-owned store sells motorcycles, utility vehicles, all-terrain vehicles and other power sport vehicles.

JPSPS Development Silver Oak Estates and 25K Morton Park.
Katy City Council denies proposed planned development district for 46-acre mixed-use project

Council members were concerned with the commercial plans for Silver Oak Estates and 25K Morton Park.Council members were concerned with the commercial plans for Silver Oak Estates and 25K Morton Park.

Fort Bend County Sheriff Troy Nehls announces campaign for Texas Congressional District 22 seat

Incumbent Pete Olson said he will not seek re-election for this position earlier this year.

American Family Care Urgent Care is now open in Katy (Courtesy Pixabay/Community Impact Newspaper)
American Family Care Urgent Care opens in Katy

The business provides walk-in medical and urgent care; no appointments or referrals are needed.

water pouring out of many pipes into a basin
Katy-area residents may see water bills increase in 2020

The authorities’ increased rates are meant to help pay for billion-dollar water infrastructure projects to reduce their dependence on groundwater.

The Greater Houston area is expected to see a net gain of 42,300 jobs in 2020. (Courtesy Fotolia)
Greater Houston region expected to see slower job growth in 2020

The Greater Houston area is expected to see a net gain of 42,300 jobs in 2020.

Downtown Katy will turn into a winter wonderland for Katy Old Fashioned Christmas Festival on Dec. 7. (Courtesy Katy Market Days)
14 things to do in the Katy area this weekend, Dec. 6-8

This weekend offers hayrides, snow fun and other holiday activities.

Fusion Grill opened in Katy. (Courtesy Fusion Grill)
Fusion Grill opens on Mason Road in Katy area

The new restaurant made its debut in November.

Harris County Commissioners Court
Harris County unanimously approves plan for Healthy Food Financing Initiative program

The countywide competitive grant program will provide funding to support healthy food retail, nutrition education and urban agriculture in underserved communities.

Back to top