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Sales Up, But Near Term Looks Dull for Multifamily

HOUSTON-A seasoned vet in Houston says the near term outlook isn't very promising. New construction and slow job growth will pressure rent as will a new law that forces upgrades if water costs are going to be passed to tenants.

By Jennifer Brenner Andrade | Updated on December 17, 2002

HOUSTON-A seasoned veteran of the Houston multifamily industry says new construction and slow job growth will translate into higher vacancies in the near future. Multifamily rents will likely experience slow growth as well, but for different reasons.

Jeff Eisenhardt of the Houston office of Hendricks & Partners predicts to GlobeSt.com rent growth will be slow–if not flat–due to a property owners’ rush to be grandfathered for legislation that takes effect Jan. 1 and requires installation of energy-efficient fixtures and toilets if they intend to pass water costs to tenants through individual metering or per unit assessments. The legislation takes into consideration that units can be switched only at renewal time or when new deals are struck.

Eisenhardt says it is going to be difficult for property owners to hit tenants with a water bill for the first time along with rent increases. He says rent growth could slip due to the new law, but it won’t be a sign that the market is ailing. Ultimately, he believes property owners will improve the bottom line through the water allocation system.

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