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Multifamily Sector Posts Record, Three-Year Absorption

HOUSTON-During the third quarter, the region posted the highest level of quarterly absorption in three years, and demand for high-end apartments is the strongest it's been since 2001. However, occupancy rates continue to decline, and rental rates are flat.

By Jennifer D. Duell | Updated on November 08, 2004

HOUSTON-Demand for multifamily housing in the Houston metropolitan area is increasing as the economy improves and new jobs are created, according to the Houston Apartment Performance Update from Houston-based research firm O’Connor & Associates. But there’s still some recovery to gain.

During the third quarter, the city recorded the highest level of quarterly absorption in three years, says the report. With 2,465 units absorbed in Q3, the year-to-date total has reached 4,961 units. By comparison, for all of 2003, the city experienced negative absorption of 1,961 units.

The class A market has posted the most impressive gains, says Richard Zigler, director of research for O’Connor. In Q3, it absorbed 2,923 units for a 12-month total of 9,141. Class A absorption numbers for 2002 and 2003 were far less impressive at 3,513 and 2,370, respectively. The total multifamily inventory in Houston is approaching 473,000 units. Of that number, more than 128,000 units are class A.

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