Ryan Epstein says Houston will remain compelling for investment due to labor's continued growth.
HOUSTON—Multifamily activity in the first quarter highlighted a Houston market with a slowdown in occupancy due in part to residents returning home after Hurricane Harvey, yet consistent job growth playing a role in achieving supply/demand equilibrium. Those findings were part of Berkadia's recently released first quarter 2019 multifamily market report.
Development is now focusing on the downtown/Montrose/River Oaks submarket, with developers still tapering deliveries this year across the region, exemplified by what may be considered a low 681 units year to date. Demand remains strong even as Houston's multifamily market continued pace to reach equilibrium between its inventory of more than 685,000 units and the demand for apartments.
“Tapered deliveries will increase Houston's competitiveness, as capital continues to chase deals in an area with solid fundamentals,” Tucker Knight, Berkadia senior managing director tells GlobeSt.com. “Even with interest rates remaining unchanged or possibly rising, Houston's job growth will maintain the flow of capital into the multifamily market for some time to come.”
Specifically, employment figures continue to increase, growing 2.5% annually since January 2018, up from 1.5% the year before. With continued job creation and a decrease in deliveries, operators have also increased effective rents to $1,088, a 1.5% increase since first quarter 2018.
“Regardless of a decrease in absorption figures and lower occupancy rates, Houston will remain a compelling area for investment because of the labor market's continued growth,” Ryan Epstein, Berkadia senior managing director tells GlobeSt.com. “With a strong employment outlook, subsequent demand will bring equilibrium in a region that just recently had an oversupply of units coming online.”
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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.
