An End; While Construction Surges to Record High Nationally lined up for Houston’s Multifamily Building Boom is

In Houston, Although the Southeast Texas multifamily building boom is coming to an end soon, Houston currently ranks third in the nation in apartment construction, following New York and Dallas, as stated by Yardi Matrix.

New York will add 26,739 new units in 2017. Dallas-Fort Worth ranks second with 24,960 completions, followed by Houston with 17,960 units delivered, as stated by the Yardi Matrix report.

Houston’s robust construction comes even as landlords have been offering as much as three months of free rent to attract tenants. Houston had an average monthly rent of $1,068 in June, down 1.9 percent from June of 2016, Axiometrics reported.

The Houston construction surge is slated to moderate next year, giving the apartment market a chance to regain equilibrium.

Hal Holliday

And by 2019 apartment construction will trickle down to about 2,000 units, as stated by Hal Holliday, executive vice president in CBRE’s Houston office.

“It’s just a matter of time until we hit equilibrium. By the second half of 2019 we’ll be in a landlord’s market,” Holliday said.

The free rent concessions will be fading soon in the Houston market, said CBRE senior managing director Mark Taylor, speaking at CBRE’s quarterly press luncheon Tuesday.

Mark Taylor

Houston and Dallas both had population growth of about 2 percent last year, a lift for multifamily. And although the energy industry has yet to recover, Houston had job growth of about 1.5 percent. That’s not spectacular job growth, but it’s positive enough to fill some apartment units.

Elsewhere around Texas, Austin ranks 13th with 7,435 new units coming online in 2017, followed by San Antonio with 7,422 units. The slowest of the nation’s top 50 metro areas is New Orleans with 501 new units this year, Yardi Matrix reports.

Overall, the nation is set for 345,000 units to be delivered in 2017, the strongest construction level in 20 years, Yardi Matrix says. That’s a 21 percent increase over the 285,000 new units delivered last year.

Why is construction so strong? For one thing, the Millennials have been slower to buy homes than previous generations. In addition, a rise in the number of immigrants has increased demand for apartments, as stated by a new study commissioned by the National Multifamily Housing Council and the National Apartment Association. More demand is slated to come as seniors become renters and the number of married couples with children declines.

For years, the pace of apartment construction has not kept pace with the demand and the housing stock has been aging. The nation needs to build 4.6 million units by 2030 to meet the upcoming demand, as stated by the NMHC/NAA study.