Houston ranked No. 3 for apartment “absorption” in the U.S. and in Top Ten markets for year-over-year rent growth
HOUSTON (April 18, 2018) – Houston’s apartment market appears to have turned a corner, with demand outpacing deliveries by more than two-to-one, according to Berkadia’s Q1 2018 Houston Multifamily Report. Renters newly occupied 2,971 apartment units during the first quarter of the year – more units, by far, than any other metro area, except Dallas-Fort Worth and New York City (which saw 4,340 and 3,148 units newly occupied respectively), according to Berkadia’s Q1 2018 National Trends Multifamily Report.
The increase in demand and slow-down in new deliveries resulted in a 4.6 percent increase in rents year over year, which is nearly 2 percent higher than national average and makes Houston one of the cities with the fastest growing rents in the country. It ranks number 7 nationwide, according to Berkadia.
“Houston is really exceeding expectations and outperforming many other multifamily markets across many metrics,” said Ryan Epstein, Senior Managing Director of Berkadia Houston. “Investment activity reflects these more healthy dynamics, and we anticipate this trend to continue as the Houston area economy continues to see growth.”
“There continues to be a lot of capital in the market looking for deals. While interest rates are rising, they are still historically low and Houston is well-priced relative to other major markets,” added Tucker Knight, Senior Managing Director of Berkadia. “As a result, we anticipate continued investor interest and deal activity in the year to come.”
Other highlights of the report:
- Houston saw 1,242 new apartments units delivered in Q1 2018, or 7,547 since March 2017
- Houston’s occupancy reached 89.7 percent – an increase of 140 basis points since Q1 2017
- Effective rent this quarter stands at $1,022 – an increase of 4.6 percent over Q1 2017
- Occupancy was highest in the FM 1960 East/IAH Airport Submarket at 95 percent, as no new inventory came online
- The Highland Village/Upper Kirby/ West U submarket saw rent advance a metro-leading 9.5 percent annually to $1,738 per month in March 2018
- Metro annual rent share of wallet is at 19 percent, lower than the national average of 26.3 percent
- Houston’s metro wide hiring accelerated to 2.2 percent (non-farm) annually as of February, outperforming the national average of 1.5 percent, and shows no signs of slowing
- Driving factors in Houston’s employment growth leading to increased demand include the completion of Amazon.com Inc.’s $135 million fulfillment center in the Pinto Business Park, followed by a 420,000-square-foot fulfillment center in Katy which will be operational in the first half of 2018. Together these centers will add 3,500 jobs to the metro area