Wall Street Journal: Houston’s Apartment Market Makes a Comeback
According to The Wall Street Journal:
The Houston rental apartment market is rebounding after years of pain caused by overbuilding and the weak energy sector.
Meanwhile, the new-property supply spigot has been turned off. Building permits in November have fallen to less than 1% of total inventory, compared with more than 4% in late 2015, according to Green Street Advisors, a real-estate research firm.
Investors have begun to notice the change, boosting the shares of companies that are big owners of Houston apartments. For example, Camden Property Trust , CPT, which owns about 9,000 units in the area, outperformed its peers in 2017.
In a new outlook report, Green Street is projecting the Houston apartment market will grow the fastest over the next five years of any of the top 50 markets the firm analyzes. Last year, when Green Street published its outlook, Houston was number 20 on the list, according to Joi Mar, an analyst with the firm.
“Demand is okay, but there’s no new supply coming in,” Ms. Mar said. “That’s why we’re feeling good.”
The Green Street apartment-outlook report predicts national occupancy and rental growth in the sector should remain near inflation from 2019 to 2022. The apartment segment will outpace growth in the retail and office sectors but underperform industrial real estate, the report says.
The report points out that new supply coupled with slowing job growth decreased the pricing power of landlords in 2017, and “both of these conditions appear poised to continue in ’18.”
Read the full article from The Wall Street Journal here.