Our Fundamentals Look Great
It’s hard to worry about overbuilding when you hear stats like this: Hendricks-Berkadia senior director of research David Delich (left center, with his research team) tells us Houston’s multifamily vacancy plunged 100 bps last year to 5.8%. Not surprisingly, that activity was underpinned by our broad-based job creation. David says both white- and blue-collar hiring lifted metro-wide payrolls by 84,000 positions. (Company softball leagues are feeling a lot more competitive.) That was enough to surpass our increase in deliveries: Builders completed 9,010 units last year, up 101.5% from 2012.
Supply is still climbing: Hendricks-Berkadia forecasts developers will complete 13,600 units in 2014. But David’s not worried; he predicts hiring will accelerate so that our vacancy will still drop 10 bps. David sees the best opportunities in the Champions/FM 1960 submarket. He predicts demand will skyrocket there as Exxon starts moving in employees, there’s no new product delivering this year, and the area has room to add value. At the end of 2013, vacancy was 6.6%, and rates had increased 1.4% over 2012 up to $782 average rent. (Houston’s average: 5.8% vacancy and 3.2% rate increase to $998.)
