(To read more on the multifamily market, click here.)
HOUSTON-A recent multifamily market report shows slight growth trends, including slowing construction rates, rising demand for current inventory and a gain in rents.
"We've seen an increase in rents, especially in the Clear Lake area around NASA," says Michael Hoffman, vice president and regional manager in Houston for Marcus & Millichap Real Estate Investment Brokerage Co.
Also on a slight rise is absorption. According to Hoffman, absorption is strongest in the southwest area of the city. Construction, in the meantime, is anticipated to continue declining for the remainder of the year, with only 8,150 units scheduled to come on line."The northwest area continues to appeal to developers from a new building standpoint," Hoffman tells GlobeSt.com. "But overall, I'm not seeing an immediate impact on new development or the mentality of the builders."
Hoffman adds outside influences during the next 12 months could change the construction picture. If inflation becomes an issue and the Federal Reserve boosts interest rates as a result, it could have an impact on the housing market. And, he says, "it could impact the number of people who buy homes for the first time versus renting." Another potential impact on construction of lack of it, he notes, could be the after-effects of Hurricane Katrina on the economy as a whole, as well as on in-migration into the Houston area.
Still even with a decline in new apartments and a moderate increase in absorption, Hoffman doesn't see average occupancies reaching 90% in the 487,000-unit inventory before the year ends despite the attempts by owners to entice potential renters into the properties. "I've seen some interesting concessions, such as a year of free gas with a rental," Hoffman acknowledges, "but for the most part, the consensus is, that concessions have stabilized. What it amounts to, on average, is about a month's free rent."
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