Underpinned by favorable demographic trends and steady employment, Houston’s economy has improved significantly. During the past four years, the metro’s multifamily market has been through a lot.
Houston gained 82,900 jobs in the 12 months ending in June, of which 17,600 were in professional and business services. Additions in office-using sectors have prompted improvements in the metro’s slowly recovering office market. Alight Solutions signed for 180,000 square feet in a new build-to-suit property in The Woodlands, while the 754,000-square-foot Bank of America Tower opened with an 88 percent preleasing rate. The construction and manufacturing sectors also gained a combined 25,300 jobs. Developments underway include Texas Medical Center’s 37-acre expansion, as well as the airport’s $1.2 billion overhaul. Moreover, about half of the 239 projects under Harris County’s $2.5 billion flood bond package are underway.
More than $5.1 billion in multifamily assets traded last year, a record level. The metro’s rate of deliveries began its path to moderation in 2018, following two years of intense development activity. The uptick in completions has put downward pressure on occupancy in stabilized properties, leading to a drop of 90 basis points year-over-year, to 92.7 percent as of July. We expect the average Houston rent to advance 1.9 percent in 2019.