HOUSTON: New Rent Record
For the first time in Houston's history, average multifamily rent topped $1/SF (it only took the city 178 years!), and national investors are following the news closely. CBRE VP Clint Duncan tells us average rents are up 7% from a year ago. That's largely thanks to strong fundamentals in Class-B and C assets, which account for more than 70% of Houston's units. (B and C must stand for "big time" and "champions.") Inner Loop rents are still the highest in the metro; Clint says some one-bedroom units are achieving $2.20/SF in the Montrose/Museum District submarket. (Average rent is $1.83 there.) He's forecasting continued rent growth as the market pushes out this wave of deliveries, but at a slower pace.
CBRE's latest multifamily data showed that Houston's other fundamentals aren't so shabby, either. Overall occupancy climbed to 90.9% thanks to absorption outpacing supply. The city delivered 4,199 new units in Q1, but soaked up 5,538 units (1% of the market). That puts it on pace with 2012 and 2013, when it averaged 16,300 units of net absorption annually. There are still 22,246 units under construction (the Inner Loop tops the charts again, accounting for 8,342 of those), but we don't think the city's Millennial migration is slowing down anytime soon.
