An increase in demand for apartments in Houston’s energy-centric areas – including The Energy Corridor – is being driven by an increase in jobs and a shrinking pipeline of new apartment construction.
Demand is growing again for apartments across Houston, with absorption being highest in The Energy Corridor, Katy, The Woodlands and Spring according to Apartment Data Services and reported the Houston Business Journal. Nearly 11,000 new apartment units were absorbed in Houston in the first half of this year. For comparison, Houston saw about 4,500 apartments absorbed in all of 2016, according to Bruce McClenny, President of Apartment Data Services.
“All of a sudden, job growth has really jumped back. We’re seeing some good apartment absorptions as a result,” McClenny told the Journal. According to an April report by the Bureau of Labor Statistics, Houston saw employment increase by 41,900 jobs, or 1.4 percent, over the prior twelve months. The April increase was Houston’s eighth consecutive month of job gains.
Concurring with the Apartment Data Services findings, a report released in April by Berkadia Real Estate Advisors, stated that apartment demand in the Houston metro area surged in the first quarter of the year with absorption exceeding all of 2016’s leasing activity. “We’re absorbing more apartment units than we thought we would, so that’s a good indicator that we’re heading toward a more balanced market,” said Ryan Epstein, Senior Managing Director, Investment Sales, in a press release issued by Berkadia’s Houston office. Berkadia, a joint venture of Berkshire Hathaway and Leucadia National Company, bills itself as the nation’s largest multifamily investment bank.
“In select areas, including The Energy Corridor, there remains a strong value proposition for multifamily and mixed-use development, particularly near healthcare facilities, which are robust and stable employment centers,” said Carolyn Wolff Dorros, Executive Vice President of Wolff Companies. “In step with the increasing level of development quality in The Energy Corridor, multifamily developers are building upscale properties with premium amenities that are attractive to an extensive range of renters.”
The Houston Chronicle reports lucrative deals to renters may not be available for long as the market corrects itself. “In the second half of 2019, we’ll be in a landlord’s market with pent-up demand,” said Hal Holliday, an Executive Vice President with real estate firm CBRE, in an interview with the Chronicle . Experts predict 2018 will see the absorption of thousands of units built in recent years.
A construction slowdown has helped the market right-size itself. According to CBRE, 7,800 units are currently under construction with most scheduled for completion within the next two years. CBRE data shows multifamily permits dropped 83 percent from a record-high third quarter in 2014.
For deeper reading the Houston apartment, consider these recent articles and reports:
Wolff Companies’ Central Park offers the largest remaining parcel of land available for development in The Energy Corridor. A master-planned environment located on the north side of Interstate 10 between North Eldridge Parkway and State Highway 6, Central Park is accessible directly from Interstate 10, Park Row and the Interstate 10 Managed Toll Lanes. Central Park includes the future home of The University of Texas MD Anderson Cancer Center’s diagnostic and treatment center, now under construction. Two parcels are available – 15.3 and 10.4 acres. Projected uses include multi-family, hotel, healthcare, high-end office and retail.
Wolff Companies’ Ten Oaks, situated at the west end of The Energy Corridor, has more than 1,900 feet of frontage on Interstate 10 (Katy Freeway). One 6.6-acre parcel remains available in the development, which has uninterrupted visibility from Interstate 10 across the lakes connecting the west campuses of Houston Methodist and Texas Children’s Hospitals. Park 10, another Wolff Companies development, is located immediately east of Ten Oaks. Projected uses include multi-family, hotel, healthcare, high-end office and retail.
Carolyn W. Dorros
Executive Vice President