HOUSTON – (By Dale King) – A combination of increasing demand and less new inventory in a particular housing market may not always be a healthy amalgamation.
But in Houston right now, the combo seems to be working well, at least in the multifamily housing sector, says Berkadia’s second quarter 2017 report.
“Continued apartment demand, coupled with less new inventory, has elevated apartment occupancy since December 2016 to 88.9%,” the document says. “Since the start of 2017, 9,620 apartment units have been delivered.”
“Renters newly occupied 11,636 units during the first half of 2017, surpassing the 4,474 units absorbed in all of 2016,” the report states.
“The growing local economy and the decreasing amount of construction in the pipeline are leading to improved multifamily fundamentals across the Houston region,” said Ryan Epstein, senior managing director, Investment Sales, in Berkadia’s Houston office. “Apartment demand is returning, and a slim pipeline of future development is translating into much more investment activity interest in Houston.”
A stable market for apartments may have been in the cards for Houston this year. Berkadia’s first quarter report for 2017 showed multifamily demand in the Houston metropolitan area skyrocketing. In fact, residents newly occupied a net total of 4,916 rental units during the first three months of the year, exceeding the aforementioned net of 4,474 apartments absorbed throughout all of 2016.
Other highlights from the report include:
- Rental demand was strongest in the Inwood/Highway 249 submarket, which had an occupancy rate of 95.3% during the second quarter. Other regions with hefty habitation levels included Northline, 93.4% and I-69N, 93.3%.
- The occupancy rate for Downtown hit the skids, coming in at 63.2 percent, the lowest on the list. A number of new projects have opened in downtown recently and are still in lease-up mode.
- Metro-wide effective rent increased to $982 per month in June 2017, a 1.6% increase since the first quarter of 2017 (and a 0.1% decrease year over year).
- The 463-unit Market Square Tower in downtown was the largest property to have units begin lease-up in December 2016, while the majority of theremaining units are scheduled to come online in the third quarter of 2017.
The report also includes good news on Houston’s overall economy: employers accelerated hiring in the last year, underpinning the rise in rental demand. Government agencies added a metro-leading 12,700 positions and hiring was also robust in the leisure and hospitality industry, where 12,300 positions have been added since May 2016.