Houston Multifamily Marketview
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Occupancy Avg. Rental Rate Net Absorption Under Construction Completions Houston’s multifamily market started the year with The Northwest absorbed more than 1,100 units or leasing demand on a sound note, absorbing nearly roughly 38% of the total absorption this quarter, 3,000 units in the first quarter of 2018 and most likely stemming from homeowners still continues to showcase tightening fundamentals; displaced by Harvey. The construction pipeline overall occupancy increased 30 basis points over continues to subside for now with the market the quarter to 89.7% and rents grew an annualized currently holding just under 11,000 units 4.5% to $1.16 per sq. ft. across all classes. underway, far below the 5-year active average construction level of 18,580 units. According to reports from Apartment Data Services (ADS) the Central submarket cluster was a hot bed of activity this quarter. The cluster accounted for three of the five hottest submarkets for the quarter Moody Analytics is forecasting Houston to add with Downtown, Heights/Washington Ave, 72,700 new payrolls this year, up from 70,500 in Montrose/Museum /Midtown – Downtown 2017. Using the conventional demand benchmark absorbed 3.6% of its market inventory and saw a of 6:1 for new leasing growth, the outlook this year rental growth of 22.5% annualized. is for Houston to absorb approximately 12,000 units based on sustained job growth. Robert C. Kramp Director, Research & Analysis– Texas-Oklahoma Division +1 713 5771715 [email protected] E. Michelle Miller Research Operations Manager– Texas-Oklahoma Division +1 214 9796584 [email protected] CJ Mgbeahuru Research Coordinator– Texas-Oklahoma Division +1 713 577 1720 [email protected] CBRE Houston 2800 Post Oak Blvd, Suite 500 Houston, TX 77056 To learn more about CBRE Research, or to access additional research reports, please visit the Global Research Gateway at www.cbre.com/researchgateway. MARKETVIEW Houston Multifamily, Q4 2017 Robust absorption pushes market toward equilibrium 89.4% $1.15 PSF 9,010 Units 9,751 Units 2,499 Units *Arrows indicate trend from previous quarter. Figure 1: Development Pipeline and Net Absorption Units (000) 25 20 15 10 5 0 2011 2012 2013 2014 2015 2016 2017 Deliveries Absorptions Source: CBRE Research, Apartment Data Services, Q4 2017. DECADE-HIGH NET ABSORPTION PUSHES RATES FALLING CONSTRUCTION WILL CONSTRAIN AND OCCUPANCY HIGHER SUPPLY IN THE NEAR-TERM Q4 2017 CBRE Research © 2018 CBRE, Inc. | 1 MARKETVIEW HOUSTON MULTIFAMILY Figure 2: Key Indicators Net Under Delivered Proposed Unit Rental Rate Occupancy Submarket Property Count Absorptio Constructio Construction Construction Count ($/SF/Mth) Rate (%) n Units n Units Units Units CENTRAL Montrose/ Museum/ Midtown 50 12,501 1.83 90.0 396 1,771 0 3,122 Highland Village/ Upper Kirby/ West U 63 16,619 1.76 91.2 343 0 199 598 Med Center/ Braes Bayou 79 23,361 1.46 88.2 173 652 270 0 Heights/ Washington Ave 46 10,625 1.71 90.7 595 931 0 1,423 Downtown 23 5,951 2.05 67.1 281 220 886 1,800 TOTALS 261 69,057 1.76 85.4 1,788 3,574 1,355 6,943 SOUTHWEST Galleria/Uptown 102 24,306 1.45 88.2 489 281 357 356 Woodlake/ Westheimer 37 12,233 1.12 90.7 331 0 0 0 Energy Corridor/CityCentre/Briar Forest 100 31,554 1.25 86.7 470 1,383 0 920 Westchase 50 14,922 1.16 91.6 361 0 0 0 Alief 110 26,897 0.98 92.5 315 0 0 0 Sharpstown/ Westwood 106 25,538 0.88 91.5 157 0 0 0 Westpark/Bissonnet 57 16,900 0.91 91.6 (234) 0 0 0 Braeswood/ Fondren SW 82 21,786 0.92 87.7 (11) 0 0 0 Almeda/ South Main 26 4,770 1.01 88.1 99 0 0 0 Sugar Land/Stafford/Sienna 51 12,896 1.24 90.0 136 0 132 417 Richmond/ Rosenberg 29 4,766 1.11 92.0 (12) 0 0 0 TOTALS 750 196,568 1.09 90.1 2,101 1,664 489 1,693 NORTHWEST Brookhollow/Northwest Crossing 90 19,711 1.01 90.7 237 293 121 0 Memorial/Spring Branch 108 21,771 1.02 92.6 143 133 0 758 Inwood/ Highway 249 31 5,828 0.89 95.7 74 0 0 0 Willowbrook/Champions/Ella 157 38,963 1.02 90.4 458 0 0 0 Jersey Village/Cypress 62 15,281 1.08 92.8 254 0 0 443 Bear Creek/Copperfield/Fairfield 59 16,240 1.16 90.7 403 0 0 0 Katy/Cinco Ranch/Waterside 90 24,753 1.24 88.0 351 713 0 1,326 Tomball/ Spring 55 12,959 1.21 84.2 385 292 150 701 Woodlands/ Conroe South 67 19,364 1.22 89.7 239 340 0 900 Conroe North/Montgomery 47 8,649 1.00 86.5 159 0 0 680 TOTALS 766 183,519 1.09 90.1 2,703 1,771 271 4,808 NORTHEAST I-10 East/ Woodforest/ Channelview 57 11,651 1.02 81.7 191 546 0 0 I-69 North 27 3,605 0.91 94.8 46 350 0 0 Northline 47 6,294 0.90 91.2 (44) 154 0 0 Greenspoint/Northborough/Aldine 67 17,349 0.89 84.2 586 0 0 0 FM 1960 East/ IAH Airport 46 8,778 0.97 95.0 96 0 0 0 Lake Houston/ Kingwood 49 12,674 1.18 85.7 160 320 0 1,100 Northeast Houston/Crosby 21 3,278 0.88 81.7 16 0 0 0 TOTALS 314 63,629 0.96 87.8 1,051 1,370 0 1,100 SOUTHEAST Hwy 288 South/ Pearland West 46 11,844 1.17 86.4 168 571 0 400 U of H/I-45 South 107 17,554 0.91 89.2 113 0 0 191 Beltway 8/I-45 South 47 13,204 1.00 90.6 146 0 0 0 Pasadena/Deer Park/La Porte 120 23,205 0.97 91.0 281 135 0 0 Friendswood/ Pearland East 28 5,458 1.15 93.6 13 108 0 126 Clear Lake/Webster/League City 95 24,030 1.21 91.8 289 558 0 0 Baytown 54 10,056 1.04 87.3 198 0 384 480 Dickinson/Galveston 74 11,330 1.04 91.8 60 0 0 0 Alvin/Angleton/Lake Jackson 66 10,525 1.06 85.6 99 0 0 0 TOTALS 637 127,206 1.06 89.7 1,367 1,372 384 1,197 HOUSTON TOTALS 2,728 639,979 1.15 88.6 9,010 9,751 2,499 15,741 Source: CBRE Research, Apartment Data Services, Q4 2017. Q4 2017 CBRE Research © 2018 CBRE, Inc. | 2 MARKETVIEW HOUSTON MULTIFAMILY Figure 3: Deliveries and Occupancy Units (000s) (%) 8 92 91 7 90 6 89 5 88 4 87 86 3 85 2 84 1 83 0 82 Q2'10 Q4'10 Q2'11 Q4'11 Q2'12 Q4'12 Q2'13 Q4'13 Q2'14 Q4'14 Q2'15 Q4'15 Q2'16 Q4'16 Q2'17 Q4'17 Deliveries Occupancy Source: CBRE Research, Apartment Data Services, Q4 2017. Figure 4: Sales By total ($) Billions ($) 7 6 5 4 3 2 1 0 Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Quarterly Vol Rolling 12-mo. Total Source: CBRE Research, Real Capital Analytics, Q4 2017. Q4 2017 CBRE Research © 2018 CBRE, Inc. | 3 MARKETVIEW HOUSTON MULTIFAMILY CONTACTS CBRE OFFICES CENTRAL SOUTHWEST NORTHWEST NORTHEAST SOUTHEAST C1 Montrose/Museum/Midtown SW1 Galleria/Uptown NW1 Brookhollow/Northwest Crossing NE1 I-10 East/Woodforest/Channelview SE1 Hwy 288 South/ Pearland West C2 Highland Village/Upper Kirby/West U SW2 Woodlake/Westheimer NW2 Memorial/Spring Branch NE2 I-69 North SE2 U of H/I-45 South C3 Med Center/Braes Bayou SW3 Energy Corridor/CityCentre/Briar Forest NW3 Inwood/Highway 249 NE3 Northline SE3 Beltway 8/I-45 South C4 Heights/Washington Ave SW4 Westchase NW4 Willowbrook/Champions/Ella NE4 Greenspoint/Northborough/Aldine SE4 Pasadena/Deer Park/La Porte C5 Downtown SW5 Alief NW5 Jersey Village/Cypress NE5 FM 1960 East/IAH Airport SE5 Friendswood/Pearland East SW6 Sharpstown/Westwood NW6 Bear Creek/Copperfield/Fairfield NE6 Lake Houston/Kingwood SE6 Clear Lake/Webster/League City SW7 Westpark/Bissonnet NW7 Katy/Cinco Ranch/Waterside NE7 Northeast Houston/Crosby SE7 Baytown SW8 Braeswood/Fondren SW NW8 Tomball/Spring SE8 Dickinson/Galveston SW9 Almeda/South Main NW9 Woodlands/Conroe South SE9 Alvin/Angleton/Lake Jackson SW10 Sugar Land/Stafford/Sienna NW10 Conroe North/Montgomery SW11 Richmond/Rosenberg Disclaimer: Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE. MARKETVIEW Houston Multifamily, Q3 2017 Dramatic apartment demand swing in post-Harvey Houston Total Occupancy Avg. Rental Rate Net Absorption Under Construction Completions 88.3% $1.13 PSF (4,170) Units 12,105 Units 2,487 Units *Arrows indicate trend from previous quarter.