January 2009

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While rents continue their steady climb in the Houston market, occupancy is trending in the opposite direction and under-construction supply remains elevated.  As these under-construction units are delivered to the market, expect occupancy to continue this decline with concessions increasing followed by a leveling off in rents. Long term outlook for the market is positive given that the challenged credit-markets have effectively constrained future supply, indicating that as lease-up is attained in the current under-construction units, rents and occupancy will begin to trend upwards.

Houston apartment market occupancy decreased 0.39 points in January to 88.19%.  Occupancy is down 0.49 points over the last year.  Average rents per square foot increased $0.001 to $0.867 psf, and are up $0.014 psf since this time last year.  Average rent per unit gained $1.40 in January to $742.68, which represents an annual increase of $15.02.  Monthly absorption totaled -528 units and annual absorption totals 6,450 units.

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