"Houston's rent growth is likely to accelerate during 2001," says M/PF's editorial director Greg Willett. He cites a dramatic cutback in construction and high occupancy rates as key motivators for the anticipated increase. Same-store rents had a 2% increase last year while the rest of the nation saw an average hike of about 5%. Regionally, Houston's year-end results are even more sluggish, with Austin coming in at 9.9%; Dallas-Ft. Worth, 3.8%; and San Antonio, 3.5%.

The city's tightest submarkets are the West Inner Loop, Galleria area, northeast and southeast Houston and Ft. Bend County. The high occupancy hasn't come without compromise since many landlords had offered incentive packages to bait tenants to their properties. The metropolitan's average monthly rents are now $638 while newer apartments in the prime areas typically are going for more than $1,000.

The quarterly report confirms what everyone has noticed: construction has slowed considerably in the city. At this year's start, about 5,800 units had been under construction, less than half of the 12,691 completions last year. There are exceptions and the Kingwood area is one, but the upcoming new product "appears likely to be immediately absorbable," concludes the report.