Apartment rents are expected to rise 4.2 percent next year, the biggest increase since the short-term boost in 2017 when Hurricane Harvey displaced thousands of Houstonians from flooded homes, new data show.
The increase would be well above the area’s 20-year average annual increase of 3.2 percent, according to a report from multifamily consulting and research firm ApartmentData.com.
“It’s not exorbitant, but was needed for the industry, which has been lagging over the last several years,” Bruce McClenny, the firm’s president, said.
Rent growth slipped to 1.2 percent a year after Harvey and has been steadily growing. The average apartment rent was $1,054 per month at the end of August.
Occupancy among Houston-area apartment complexes is expected to remain flat next year at around 90 percent, even as supply is expected to grow. Some 17,000 units are slated to open in 2020, up from 15,000 this year.
At the end of August, there were 22,319 units under construction and 28,279 proposed.
“With the job growth we’re expecting, we should be OK with this level of construction,” McClenny said.
Much of the new growth is in the the Katy/Cinco Ranch area and inside the 610 Loop.
The hottest urban areas are the Heights/Washington Avenue and Montrose/Museum/Midtown which have 3,020 and 2,068 units under construction, respectively.
While the Houston employment market is holding up, the number of high-paying energy jobs have moderated and newer, luxury apartment buildings have been slower to fill.
Occupancy in the high-end buildings developed in 2017 is 88 percent, McClenny said. Normally after a year to 15 months, landlords aim for at least 90 percent occupancy.
Publication: Houston Chronicle