January 2010

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January was a challenging month for the Houston area multi-family sector as a sustained decline in overall occupancy coupled with significantly negative absorption dominated the market. This was mainly due to the influx of newly delivered communities, however, the area benefited from a hefty increase in rental rates per unit over the month, with per square foot rates carrying on the rising trend. Class A properties continue to lead the way, leaving rental rates per unit a great deal higher than they were twelve months ago. With almost 75% of the 9,000 units under construction currently pre-leasing, expect the trends of declining occupancy paired with rising rental rates to linger.

Houston apartment market occupancy decreased 0.42 points in January to 85.41%.  Occupancy is down 2.88 points over the last year.  Average rents per square foot increased to $0.004 psf and are up $0.016 psf since January 2009.  Average rent per unit increased $3.54 in January to $761.38, which represents an annual increase of $16.62.  Monthly absorption totaled a negative 1,565 units, while annual absorption (rolling twelve months) was a negative 3,549 units.

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