For the past few years Houston’s apartment market has struggled to stabilize itself. The root cause was development outpacing demand and creating a slump. But, a recent report from The Federal Reserve Bank of Dallas projects that the Texas economy will grow by 3% in 2018. While most of this is due to rising oil prices, a small portion is linked with the strength of the rental market.
This shift has come from a severe drop in development, which has allowed demand to catch up with Houston’s massive apartment growth. The Green Street apartment-outlook report shows that apartment rentals will continue to outpace retail and office space, falling just shy of industrial real estate.
- The Green Street apartment-outlook report for 2018 shows that Houston will be the fastest growing market for the next 5 years of all 50 markets that they analyzed.
- Post hurricane Harvey occupancy rates in the Houston area have stabilized at 96.5%.
- Average rents for Camden Property Trust have risen by $80 since August 2017.
Investors have begun to notice the change, boosting the shares of companies that are big owners of Houston apartments. For example, Camden Property Trust, which owns about 9,000 units in the area, outperformed its peers in 2017.
In a new outlook report, Green Street is projecting the Houston apartment market will grow the fastest over the next five years of any of the top 50 markets the firm analyzes. Last year, when Green Street published its outlook, Houston was number 20 on the list, according to Joi Mar, an analyst with the firm.
More recently, as demand and supply trends improved, Camden began moving forward with the project, which is now expected to be completed in 2020. “There’s not going to be another new project around me for miles,” Mr. Campo said.
The Green Street apartment-outlook report predicts national occupancy and rental growth in the sector should remain near inflation from 2019 to 2022. The apartment segment will outpace growth in the retail and office sectors but underperform industrial real estate, the report says.
The report points out that new supply coupled with slowing job growth decreased the pricing power of landlords in 2017, and “both of these conditions appear poised to continue in ’18.”
View the original article at Realtor.com