HOUSTON – (Realty News Report) – Houston has seen a drop in apartment occupancy, due to Covid-related economic contraction and the weak energy markets, analysts say
Thousands of new units are under construction because the market was strong before the coronavirus suddenly changed the outlook for multifamily.
The Houston economy has lost approximately 250,000 jobs since the coronavirus emerged in March, according to Patrick Jankowski, economist with the Greater Houston Partnership.
Filling up apartments when the city is losing jobs is a difficult task. Typically, job growth is a reliable trigger for multifamily absorption.
Houston apartment occupancy declined to 88.8 percent in the second quarter, down from 90.2 percent a year ago.
“The apartment industry as well as many others are still vulnerable to COVID-constrained demand,” says ApartmentData.com. “There are (in Houston) around 22,000 units in lease-up plus another 17,000 units under construction which will face challenging lease-up times.”
The absorption of available apartments has rebounded somewhat in June and July, the ApartmentData.com report says. It notes the market absorbed only 759 new rental units during April and actually registered negative absorption of 46 units in May before jumping back up to 2,460 units in June and 2,505 in July.
The Houston overall apartment market gained back $2 in average rents on the monthly lease that was lost to the forces of the pandemic. Between March 31 and July 30, average rents lost $11, or about 1 percent.
“Class A has taken the worst hit from the pandemic as its rent level is $58 less now than it was in March,” says the survey. “Class B has a mere $6 deficit from its March level while Classes C and D are holding flat since March.”
Houston’s multifamily market is performing better than expected.
“The softening market conditions area a concern to all industry players, but so far, Houston’s market has held up better than many had expected given the weak energy sector on top of the impact from COVD-19 and the broader economy,” CBRE said in its second quarter multifamily report.
Publication: Realty News Report