Alliance Residential has placed a pair of recently built apartment properties in the heart of the Heights on the market as renters start to return to urban areas and investors look to Houston, a market where rents are poised to rise, according to Berkadia.
The properties, 15th Street Flats at 1414 N. Shepherd Drive and Heights Waterworks, 515 W. 20th St., total 646 units. Chris Curry, Todd Marix, Chris Young and Joey Rippel of Berkadia are marketing the property on behalf of Alliance, which completed 15th Street Flats in 2020 and Heights Waterworks in 2019.
The listing comes as signs that the flight to the suburbs among apartment renters amid the pandemic is beginning to shift. Last year, 93 percent of apartment absorption occurred in the suburbs, according to ApartmentData.com. As urban apartment leasing gained momentum starting in January, the share of demand in the suburbs shrank to 83 percent by March.
“People are starting to move back into town,” Curry said.
Occupancy in the Heights/Washington Avenue corridor rose to 81.1 percent in April, up from 77.7 percent in April 2020, according to real estate data firm ApartmentData.com. The supply of apartment units has increased by 13 percent during the period as new complexes have been completed.
“The Heights has had a lot of deliveries, but at the same time, people want to live there,” said Bruce McClenny, president of ApartmentData.com.
The Heights has been among the hottest submarkets in Houston in recent months based on leasing velocity and rent increases, according to ApartmentData.com. Rents have recovered to $1,550 in April, up from $1,443 in November but below the recent peak of $1,607 in March 2020.
Rents have also been rising in markets such as downtown, Montrose and the Medical Center, but are still below the rates of a year ago, according to ApartmentData.com.
For Houston overall, rents are up 0.6 percent over the year in April to $1,073 per month, according to ApartmentData.com. In Katy, the Houston region’s strongest market, rents reached $1,271 in April, up 4.2 percent from the year earlier.
Houston is attracting institutional investors such as pension funds seeking to buy properties below the cost of replacing them as building costs have risen during the pandemic, Curry said. Also, Houston is seen as an alternative to high-growth markets of Phoenix, Denver, Atlanta and Charlotte
“A lot of investors are starting to show up here because they’re getting priced out of other markets,” Curry said.
Publication: Houston Chronicle