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Jun 30
2010
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Houston's Apartment Market Is Weak, But Showing Quarterly Progress
Posted by: Michael Cunningham on Jun 30, 2010 09:30 Tagged in: Vendor , Rent , Occupancy , Multifamily , Construction , Blogs , Apartment Development , Apartment
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Going back to early 2010, Houston's apartment occupancy rate was the worst across the 64 major metros that form the core of MPF Research's national coverage. The metro's general positioning relative to other markets hasn't changed meaningfully over the past few months, but the Bayou City's metrics certainly are beginning to look better.
Roughly 9,900 apartments were absorbed in metro Houston during the April-June period, as quarterly demand topped concurrent completions for the first time in a year and a half. In turn, overall occupancy climbed an impressive 1.4 percentage points for the quarter. And operators even managed to squeeze out a 0.3 percent bump in effective rents over that time span.
Still, that progress only brought occupancy to 88.7 percent, about 5 percentage points under the national average. And the quarterly rent increase still left effective pricing 3.7 percent under the rates seen a year ago.
With Houston already producing substantial apartment demand, what the metro needs to really get back on track is for new supply volumes to slow in the pattern seen for most other locales across the country. That's where the notable good news comes into play. After 2nd quarter's deliveries — 2,645 units — took annual new supply to some 14,200 apartments, there aren't very many properties that remain under construction. What's left on the way is limited to just under 3,100 units in total, with about half of that stock scheduled to wrap up during 3rd quarter.
By the end of 2010 to the first part of 2011, then, the focus in any discussion about the apartment market in Houston probably will have shifted to how much ground is being gained.
Statistical information presented in this post is acquired, to some degree through property management software and data collation at the city and county level.
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