Home > Market Updates, multifamily, Uncategorized > Demand for Houston apartments is at an all-time high

Demand for Houston apartments is at an all-time high

September 23, 2014 Leave a comment Go to comments

Houston’s demand for apartments is at an all-time high, according to a new national report.

CBRE Group Inc. released its quarterly multifamily market report, which found that the national apartment market continued to grow during the second quarter of 2014. The market is particularly strong in Houston.


The Belvedere

Houston is experiencing record demand for apartments like The Belvedere, built by Martin Fein Interests Ltd. in Springwoods Village, a master-planned community developed by CDC Houston.

Houston had a positive net absorption of 21,394 multifamily units over the past year, according to the CBRE report. Net absorption measures the change in occupied apartment units over a period of time and is an indicator for multifamily demand.

In fact, the Bayou City had the highest net absorption — or apartment demand — among the 50 largest U.S. markets, according to the report. Dallas and Washington, D.C., also had strong apartment demand.

Houston’s population boom and job growth are fueling this record demand for apartments, the report said.

Last year, Houston saw the largest population increase nationally after nearly 140,000 new residents flocked to the city. Since 2009, Houston gained more than 370,000 jobs — more than double the number of jobs lost during the recession, according to the report.

Despite the influx of new residents and jobs, apartment construction was “subdued” after the housing bubble burst. The number of constructed apartments dropped by two-thirds, from more than 15,000 units in 2009 to less than 5,000 units in 2011.

The lack of apartments has resulted in record-high rents and record-low vacancies, the report said.

Houston posted the second-highest annual rent increase, just behind Denver, in the second quarter of 2014. The apartment vacancy rate fell to 5.1 percent, the lowest rate in over a decade, according to CBRE.

However, apartment construction has picked back up to prerecession levels.

Last year, Houston’s multifamily developers constructed 15,000 apartments. This year, they are on track to deliver 18,000 units.

As more apartments come on board, Houston’s skyrocketing rents will begin to slow down, the report said.

By Paul Takahashi

covers residential and multifamily commercial real estate for the Houston Business Journal.

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