Downtown is the hottest rental submarket in Houston, according to a February 2018 report from Houston-based ApartmentData.com, a data website that tracks the multifamily industry.
The report looked at a combination of rental rate growth and absorption over the past three months and attributed downtown with a 12.3 percent annualized growth from November through January, while the Interstate 10 East/Woodforest/Channelview submarket came in second with a 6.6 percent annualized growth, according to ApartmentData.com.
Bruce McClenny, president of ApartmentData.com, explained downtown’s high rank is due to new properties that have come on the market, such as Aris Market Square, which opened in September 2017. The Hines luxury high-rise features a designated dog-washing room, a bike repair room and a garden terrace and patio accessible 24 hours a day.
In relation to other parts of the city, downtown didn’t have much supply to begin with, McClenny said. Currently there are 23 properties downtown with almost 6,000 units while two years ago the supply was about half of that. These mainly Class-A apartments have been slower to lease up, he said, with an average occupancy rate close to 68 percent as of the end of January.
Top five Houston submarkets for apartments by annualized growth from November-January, according to ApartmentData.com:
• Downtown, 12.3 percent
• I-10 East/Woodforest/ Channelview, 6.6 percent
• Bear Creek/ Copperfield/ Fairfield, 7.4 percent
• Greenspoint/Northborough/Aldine, 5 percent
• Brookhollow/Northwest Crossing, 3.7 percent
Three out of the five submarkets (I-10 East, Bear Creek and Greenspoint), saw Hurricane Harvey-induced rent growth, due to a diminished supply of apartments after the storm. As flooded-out homeowners looked for apartments in the area that pushed up demand for a limited pool of options. More demand and less supply typically equates to raising prices, McClenny said.
Brookhollow, the fifth-hottest submarket, is “just a steady performer,” McClenny explained, consistently performing well in relation to the city’s 42 submarkets.
Currently across Houston, the occupancy rate is 89.3 percent with an average monthly rent of $1,016 as of Jan. 31, across all apartment classes in town. Houston has a slightly lower occupancy rate than other major Texas cities such as Dallas-Fort Worth (91.4 percent), San Antonio (89.7 percent) and Austin (90.1 percent).