Houston Multifamily Report – Spring 2019
- May 21, 2019
Underpinned by rebounding employment gains and a robust demographic expansion, Houston’s multifamily market preserves its potential. Following three years of substantial deliveries, the metro’s rent growth is on a downward trajectory. At 92.4 percent as of February, down 140 basis points year-over-year, Houston’s occupancy in stabilized properties as of February reflected a sluggish demand, leading to remounting fears of overbuilding.
Houston added 72,600 jobs in the 12 months ending in February, with manufacturing and professional and business services accounting for almost half of the gains. A NextDecade liquefied natural gas export project might create 5,000 jobs in Cameron County, which could lead to a shortage of skilled workers. Education and health services added 11,800 positions and the sector is likely to perform well going forward, as Medistar plans to develop a 48-story mixed-use tower in the Texas Medical Center.
A cycle peak of $5 billion in multifamily assets traded last year in the metro. Investors had a slight preference for Renter-by-Necessity assets, with rents increasing by 1.7 percent. Roughly 14,000 units were under construction as of March, with more than 85 percent of them geared toward high-income residents. As deliveries are likely to top out at 6,150 units for the year, we expect the metro’s average rent to rise 2.2 percent in 2019.