Houston’s 19,922 Apartment Units Now Under Construction
Rendering of the Alta West Alabama apartments, which are under construction by Wood Partners in Houston’s Inner Loop.
HOUSTON – (Realty News Report) – Nearly 20,000 apartment units are currently under construction across the Houston area as strong economic conditions continue, with robust job growth and low unemployment.
CBRE reports that 19,922 multifamily units are now underway in the Houston region, a sharp rise compared with the 5,077 new units delivered in 2018.
In addition, a total of 28,494 units are proposed or in planning stages, according to CBRE. While not every proposed project will ultimately break ground, the pipeline underscores the intensely active state of Houston’s multifamily market.
Atlanta-based Wood Partners, one of the nation’s largest multifamily developers, recently began construction on two Inner Loop projects: the 304-unit Alta West Alabama at 3623 West Alabama, and the 364-unit Alta River Oaks on West Dallas near Shepherd Drive.
Hines is also building a 46-story apartment tower in downtown Houston.
“Construction remains strong in Houston’s Inner Loop. The supply of land and redevelopment sites suitable for construction is tight, and high demand allows sellers to secure attractive prices,” said Mark Sikes of Deal Sikes, a Houston valuation firm. “Suburban areas that were previously overlooked, such as Clear Lake and Atascocita, are now drawing multifamily developers. With rising land costs across the region, developers are increasingly building mid-rise and high-rise multifamily properties.”
Despite the surge in deliveries in 2019, Houston’s multifamily occupancy rate remains above 90 percent.
Year-over-year rent growth in Houston has been modest: just 0.5%, trailing the Texas average of 1.7% and the national average of 1.6%, according to Apartment List.
That restrained rent growth has not deterred investors, said Clint Duncan, Senior Vice President of CBRE’s Capital Markets Multifamily Group. He noted that Houston’s underlying fundamentals are solid, and buyers are confident rents will trend upward over time.
Investors have shown particular interest in Class B and C properties, where renovations and repositioning can create value and support rent increases.
For example, Three Pillars Capital Group, a Houston-based multifamily investment firm, purchased the 122-unit Camino Del Sol Apartments in Pasadena, originally built in 1969, and plans to invest $1.5 million in improvements.
In a recent Class A deal, Alliance Residential acquired the 474-unit Archstone Toscano apartments on North Braeswood Boulevard near the Texas Medical Center for $98 million.
