Apartment demand stays strong across northwest Houston after Harvey
Apartments are in high demand in the aftermath of Hurricane Harvey in northwest Houston, and rents are increasing.
“Demand is definitely higher,” said Bruce McClenny, president of Houston-based Apartment Data Services, which analyzes apartment trends throughout the region. “We definitely see the single family home owners who had their home damaged and need a place to stay. They provide that demand.”
Nearly 11,000 apartments were rented in the Houston region between the end of August and the end of September. That is typically the amount rented in an entire year. Apartment demand has continued in October.
The demand has helped a market that had been struggling with the oil downturn, job growth sagging and a glut of new properties.
Prior to the hurricane, some apartment complexes were offering two to three months free rent as a way to fill units, McClenny said.
The apartment market had been starting to see an uptick in demand before the storm. The aftermath of the hurricane “changed the course of what otherwise would have been a slower recovery,” he said.
But it’s not permanent. The homeowners will move in two to six months, most likely, when their home repairs are complete or they purchase a new home.
“They are definitely going to move,” he said “All of a sudden we will have those units available again.”
There were also nearly 16,000 units damaged during the hurricane across the Houston region.
Complexes that stayed dry in heavily flooded areas like Spring have been slammed with new tenants. Landlords there are finding their apartments are worth much more than they were before Hurricane Harvey.
Ric Campo, CEO of Houston-based Camden Property Trust, said his company has very few units left to lease and rents are definitely inching up. At the end of September, Camden had 452 more occupied units for the month among its Houston properties.
Camden, which operates 8,600 units in the area, had one property that flooded. At that complex near Spring Creek, 80 units on the first floor took in water.
The number of new apartment buildings in northwest Houston has increased in the last two years to meet the area’s population growth. The growth has helped fill a void of multi-family housing in the area, however, the lower end, affordable units are still sparse.
Rents have continued to increase due directly to demand. Rents are up $15 to an average of $999 a month across apartments in the region. Rent has increased the most for Class A apartments, which has jumped up by $40 a month.
“And we expect them to rise a little bit more,” McClenny said. “Eventually they’ll level out because of all that shifting supply and residents moving back into their homes.”
Camden uses specialty software to price its units based on daily supply and demand. According to the system, “we’ve had some properties and unit types spike 15 to 20 percent,” Campo said. “We’re not going to do that right now, so we override the system and let it go up 20 bucks or so.”
In Tomball, the number of apartments in the area has doubled in the last few years.
There are more than 5,100 units in the area now, compared with 2,500 previously. The growth has helped fill a void of multi-family housing in the area.
There have been about 1,300 apartment units added in Tomball at four communities, including the Alexan Creekside in northeast Tomball and the Avenues at Northpointe, located off Texas 249.
And in Spring, apartment communities continue to develop in the master planned community of Springwoods Village, including The Mark City Place apartments.
After Tropical Storm Allison in 2001, rents increased 6 to 7 percent. But at that time, Houston was heading into a recession. The spike could wind up higher this time.
Single-family rentals are also in high demand.
Before Harvey, the rental market was beginning to see signs of improvement after a period of falling demand.
Harvey has accelerated the recovery by an estimated 18 months, CBRE, a commercial real estate firm, said in a special post-hurricane report.
“The spike in occupancy driven by Harvey related to leasing activity is expected to stay,” the company said.