Multifamily Market Update: The Recovery From Hurricane Harvey
HOUSTON – (By Dale King, Realty News Report) – The Houston metropolitan area has spent more than a year battling back from the destructive footprint left by Hurricane Harvey midway through 2017. And the effort to recover continues to succeed, says the Q3 2018 Houston Multifamily Report from Berkadia Real Estate Advisors, LLC.
“The impact of Hurricane Harvey and the subsequent increase in demand for rental housing improved apartment fundamentals in the Houston metropolitan area during the last year,” says the report, issued for the third quarter of 2018.
“Residents displaced by flooding looked to apartments as occupancy rose 180 basis points year-over-year to 90% in the third quarter of 2018,” states the report.
The upswing moved vacancy 20 basis points, placing it just shy of the five-year average. Occupancy is forecast to remain healthy as builders taper apartment deliveries.
“Multifamily developers will still focus on areas around key employment centers, including the downtown area as projects aided by the
Downtown Living Initiative tax enterprise come online. In the last year, leasing activity significantly exceeded inventory growth to vault downtown occupancy to 83.9% in the third quarter of 2018.”
A major portion of this boost came from the Downtown Living Initiative, which is designed to promote economic development and stimulate business and commercial activity in a specific target area by providing economic and other development incentives for certain new multifamily residential mixed-use developments. The programs, which is now closed to additional new projects, provided benefits of $15,000 per unit.
Downtown offers attractions and amenities that include Discovery Green, Phoenicia Specialty Grocery, churches, hotels, three of the region’s four major sports venues and the George R. Brown Convention Center, ranked in the nation’s top 20.
Outside the core of the metropolitan area, development was also concentrated in the area of the Grand Parkway. The Berkadia report says demand in the area has been boosted by the Generation Park development and growth at the Port of Houston.
Generation Park is a 4,000-acre master planned commercial development located at the center of the Lake Houston community in northeast Houston. Anchored by Fortune 500 TechnipFMC’s 173-acre campus and its one million square foot first phase, Generation Park is positioned to be a business destination in Houston for years to come.
Surrounding Generation Park, the area offers thousands of new homes, award-winning schools and attractive parks. Within Generation Park, businesses of all types and sizes are provided with a master-planned ecosystem and infrastructure to match.
“With rising occupancy amid expanding inventory, operators in turn accelerated rent growth metro-wide. After rising 1.8% annually through September 2017, effective rent advanced 3% over the last 12 months to $1,030.”
The report also points out that as the Houston economy diversifies away from the energy industry, employment growth is gaining steam. Total nonfarm employment expanded 3.7% for the year through August 2018, more than double the 1.1% growth during the preceding 12 months.
With the upswing, the local increase outpaced the 1.6% national rise sinceAugust 2017. As residents and builders recovered from the effects of Hurricane Harvey, some 29,100 construction positions were created, for a metro-leading 13.6% growth.
Houston has gained more than 128,000 new jobs in the last 12 months, according to the Texas Workforce Commission. The strong job growth will strengthen the multifamily market.
The document goes on to say that “the future of the industry is expected to stay healthy as a backlog of work remains.”
In addition, “the natural resources and mining sector is another blue-collar field with employment gains as Texas is leading all energy-producing states recovering from the oil price collapse. For the first time this year, oil barrels exported out of the Houston-Galveston port region exceeded imports.”
Hiring was also robust among professional and business services companies. The sector expanded 7.3 percent with a metro-leading 35,300 professionals recruited since August 2017.
Nov. 13, 2018 Realty News Report Copyright 2018