Houston’s Hot Apartment Market

HOUSTON – (By Dale King, Realty News Report) – Despite some negative factors impacting the Houston housing arena as a whole, the rental marketplace seems to be doing well in 2022, says Colliers’ newly issued report on leasing activity for the year’s first two quarters.

“Demand for multifamily housing increased between quarters, recording 3,185 units of net absorption compared to 1,853 in the previous quarter,” Colliers reported.

“The average monthly rent for multifamily units increased 3 percent, from $1,212 per month in Q1 2022 to $1,248 per month in Q2 2022. There are more than 15,000 units under construction and another 35,200 units proposed.”

“Occupancy,” the report adds, “remained steady over the quarter at 91.4 percent and increased over the year from 90.6 percent in Q2 2021 to 91.4 percent in Q2 2022.”

What’s up in Houston Rental Market? Answer: Demand, Absorption, Rents

Houston’s average monthly rent rose 5.1 percent, from $1,188 in Q2 2021 to $1,248 in Q2 2022, Coliiers said.

Inventory of existing units also took an upward turn, with 697,113 in Q2 2021, 711,020 in Q1 2022 and 714,352 in the second quarter of this year.

New Downtown Multifamily Tower Hits Market

One major high-rise apartment, the 373-unit Brava in downtown started accepting its initial tenants in February and it’s now 44 percent leased, said Chris Rector, managing director and chief operating officer of the Southwest Region for Hines. Construction of 46-story downtown tower is expected in September or October. Monthly rents in the Brava tower range from $1,814 to $6,325.

Hines, along with investment partners Cresset-Diversified QOZ Fund and Levy Family Partners, developed the tower at 414 Milam in a Qualified Opportunity Zone which allows investors to be excluded from paying capital gains tax if they hold the new project for a significant amount of time.

Overall, across Houston the multifamily market has remained strong as a sharp rise in mortgage rates has discouraged some would-be homebuyers.

The Houston unemployment rate hit mid-year at a respectable 4.3 percent. Employment rose 6.1 percent. And by July of 2022, the spot price for a barrel of light, sweet crude oil was $106. But by mid August it was trading around $92 a barrel,

Houston apartment occupancy spiked to just over 91 percent after a major slide in Q4 2020 and Q1 2021. After 12 quarters of fairly stable rent prices starting in Q2 2018, the cost of a lease ticked up a hair for the five quarters ending in Q2 2022.

File: Houston’s Hot Apartment Market

Image: New Brava tower. Courtesy Hines