Houston delivered 6,400 apartment units in Q1 while Class B absorption came in at negative 750. Michael Bull, CCIM and developer Victor Menasce break down what that means for apartment investors and developers in 2026.
Victor Menasce, Senior Partner at Y Street Capital, has developed and owned property through multiple recessions and cycles. He explains why the traditional Class B value-add playbook of adding washers and dryers and pushing rents $50 a month is running out of room, how Class A concessions are pulling renters up and out of older product, and why lease surfing stretches stabilization timelines even in brand new buildings.
The conversation also covers entitlement risk and the case for building by right, how opposition groups now organize on social media within weeks and use AI to research objections, the Austin multifamily oversupply and how long that absorption may take, and where the supply and demand mismatch actually sits today.
Victor also makes the case for active adult housing as an underbuilt segment between market rate apartments and independent living, with resident tenure averaging around nine years. Plus construction cost trends, factory built delivery, and an insurance renewal that went from $58,000 to a $350,000 quote in a single year.
In this episode:
00:00 Development Through CRE Cycles With Victor Menasce
01:28 Your Investment Thesis Ages Before the Project Delivers
02:13 Three Legs of the Stool: Capital Cost, Rents, Construction
02:47 Entitlement Risk and the Case for Building By Right
04:22 Local Counsel, Relationships, and Approval Timelines
05:04 Organized Opposition: Social Media Groups and AI Research
07:00 New Supply: Austin Oversupply and Rent Concessions
08:34 Lease Surfing and When Apartments Become a Commodity
11:19 Active Adult: The Gap Below Independent Living
12:11 Office Conversions and Mixed Use Done Right
13:35 Active Adult Demographics: 70% Singles, 9 Year Tenure
15:00 Construction Costs 2026: Labor, Trades, Supply Chain
16:03 Factory Built Delivery and Hambro Joist Time Savings
16:52 Insurance Shock: $58K Premium to a $350K Renewal Quote
18:40 Houston Q1 Data: Class B Squeezed From Above and Below
20:16 Closing Thoughts and Sponsors
Connect with Victor Menasce:
https://www.linkedin.com/in/vmenasce/
Y Street Capital Website: https://ystreetcapital.com
Connect with Michael Bull & The Show:
Michael Bull, CCIM
Bull Realty, Inc
https://www.linkedin.com/in/michaelbull/
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