HOUSTON—One may expect multifamily absorption and occupancy to taper off as people move back into their homes throughout the year, however, thanks to strong population growth and an improving economy, Houston's multifamily market continued its positive momentum through first quarter 2018, according to JLL research. In fact, occupancy rose across all multifamily classes for a market-wide occupancy rate of 89.7%.
The market recorded positive net absorption of approximately 3,000 units. Of note, class-A apartments accounted for nearly half of all absorption, GlobeSt.com learns.
This strong demand and slowing construction has resulted in rising prices and fewer tenant concession packages with rental rates increasing 4.5% quarter-over-quarter. Average asking rent is now $1,022 per unit market-wide, according to JLL.
As an example of the demand for apartment investments amid shrinking supply, Waterton recently acquired Carrington at Barker Cypress, a 330-unit rental community at 7202 Barker Cypress Rd. in Cypress, approximately 25 miles northwest of downtown Houston.
“Houston as a whole has seen a decline in multifamily supply, which has made investing in the area particularly compelling,” said Matt Masinter, senior vice president of acquisitions at Waterton.
Built in 2007, Carrington at Barker Cypress offers a mix of one-, two- and three-bedroom townhome-style apartments ranging in size from 830 to 1,567 square feet. Select units feature attached garages with individual driveways and private entries. Shared amenities include a pool with sun deck, poolside grilling area, car care center, and clubhouse featuring a fitness center and yoga studio, game/billiard room and business center.
“Waterton intends to renovate all of the units to a modern finish level, installing stainless steel appliances, granite countertops, new cabinet fronts and tile backsplashes,” says Masinter.
In addition to offering access to nearby shops, restaurants and entertainment venues, the apartment community is adjacent to Langham Creek High School and Holmsley Elementary School. It also offers access to Houston's employment centers in the energy corridor along Route 290 and in the northwest industrial submarket.
Carrington at Barker Cypress marks Waterton's first multifamily acquisition in 2018. The firm owns and manages two other rental communities in the Houston area totaling nearly 570 units.
Looking forward, with 10,114 units under construction, higher delivery is expected in upcoming quarters than what was recorded in the first quarter. Occupancy levels are likely to continue the current trajectory to hit a stabilized level of 90%, says JLL.
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Lisa Brown
Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.
