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Q3 2021 | Houston Multifamily Market Report

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Key Takeaways
  • Occupancy up quarter over quarter and annually
  • Absorption increased annually
  • 35,544 units absorbed during first three quarters of 2021
  • Average rents rose over the year and over the quarter
  • Supply increased over the quarter
2021_Q3_Multifamily_Occupancy Rate  2021_Q3_Multifamily_Net Absorption
 2021_Q3_Multifamily_Under Construction  2021_Q3_Multifamily_Monthly Rent

 

Houston Highlights

The Houston-The Woodlands-Sugar Land, TX MSA population is 7.2 million which has grown 7.3% over the last five years. The population is forecasted to grow 8.3% between 2020 and 2025. Job growth is positive increasing by 4.8% between September 2020 and September 2021. The unemployment rate is low at 5.5%. Houston’s single family home sales increased 18% year over year, pushing home prices to record levels. This in turn has boosted demand for multifamily housing, raising occupancy from 88.7% in Q3 2020 to 91.6% in Q3 2021. The average monthly rent for multifamily units increased from $1,045 to $1,165 per month, an 11.5% annual increase. Demand more than doubled over the year, with 11,814 units absorbed in Q3 2021 compared to 5,387 in Q3 2020. There are over 13,000 units under construction and another 28,600 units are proposed.

Market Indicators
2021_Q3_Multifamily_Market Indicators 
Historic Comparison
2021_Q3_Multifamily_Historic Comparison 
 
Market Fundamentals

 2021_Q3_Multifamily_Market Fundamentals

Houston’s overall occupancy rate increased 90 basis points over the quarter. The average monthly rent rose from $1,117 to $1,165.

Pricing & Sales Volume

Houston’s multifamily investment sales volume increased 116.9% year-over-year and 35.4% over the quarter between Q2 2021 and Q3 2021 according to our data provider, Real Capital Analytics. When comparing Houston to the U.S., the national annual volume increase of 76.2% was significantly less than Houston’s annual sales volume.

Houston’s median sales price per unit increased by 37.1% over the quarter from $100,087 to $137,171. The U.S. median price per unit increased by 7.7% over the quarter from $157,044 in Q2 2021 to $181,747 in Q3 2021.

Median Price per Unit
2021_Q3_Multifamily_Median Price Per Unit 
Houston Sales Volume ($)
 2021_Q3_Multifamily_Houston Sales Volume
Cap Rates

Houston’s and the U.S. multifamily median cap rate decreased to 4.7% from 5.0% over the quarter. Houston’s median cap rate decreased 30 basis points from 5.0% over the year. In comparison, the median U.S. cap rate dropped 40 basis points from 5.1% over the year. Houston’s average cap rate remained at 5.1% over the quarter.

Median Cap Rate
 2021_Q3_Multifamily_Median Cap Rate
   
  2021_Q3_Multifamily_Press Release_v2 
   
 
Dallas investor acquires luxury multifamily communities

On behalf of Sueba USA and it’s affiliated companies, Colliers has negotiated the sale of a three property luxury multifamily portfolio in the Houston metropolitan area.

The Sueba 3 Portfolio represented a rare opportunity for an investor to acquire three high-end, Class A+ multifamily communities in the dynamic Houston market,” says J. Todd Stewart, Senior Vice President with Colliers in Houston. “These assets reflect the high caliber development standards that Sueba is known for. As one of the premier developers in the Greater Houston area, Sueba is recognized for creating outstanding residential and commercial properties in key submarkets.

 

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Q3 2021 | Houston Multifamily Market Report

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Related Experts

Lisa Bridges

Director of Market Research

Houston

Lisa joined Colliers in 2010 as Director of Market Research and has 37 years of commercial real estate experience. Lisa initiates proactive market research projects to further the business goals of the company. She writes and prepares 29 market reports annually, including quarterly reports on Houston's retail, office, industrial and healthcare properties.  Further, she prepares statistical ownership reports for various clients as well as an annual Houston Economic Overview. Lisa also creates PowerPoint market presentations, trade journal articles, and other marketing materials supporting the company's business endeavors. She works with senior management in planning the company's marketing strategy and public relations support for local and national conferences, luncheon meetings, recruitment programs, and special events.  Lisa works closely with the company's brokers to develop effective custom market research material specific to existing and potential clients.

Lisa serves on the Colliers Editorial Board, the Colliers U.S. Research Council, and is a recipient of the Colliers Researcher of the Year Award.

Lisa earned the Commercial Property Research Certification (CPRC) from Colliers University.  CPRC is the first and only accreditation for commercial real estate research professionals. It offers a professional development path to increase strategic and tactical expertise in marketing/research, knowledge of the industry and capabilities with commercial real estate tools.

View expert

Todd Stewart

Senior Vice President | Houston

Houston

Mr. Stewart joined Colliers in September 2020 and is a Senior Vice President and Director of Multifamily Investment Properties. Mr. Stewart has 30 years of experience with investment properties. During the course of his career, Mr. Stewart and his partners have negotiated sales in the amount of approximately $12 billion in more than 500 transactions totaling 150,000 units throughout the United States. He has been ranked one of the top multi-housing specialists in Houston for the past 20 years and has worked with a variety of clients including individuals, private syndicators, pension funds, REITs, S&L’s, insurance companies and banks.

Prior to joining Colliers, Mr. Stewart was a Managing Director at JLL, a Senior Managing Director with HFF (Holliday Fenoglio Fowler, L.P.) and an Executive Vice President of the CBRE Houston Multi-Housing Properties Group. As a member of CBRE’s Major Accounts Group, Mr. Stewart was a top ranking regional and national multi-housing salesperson. He has been ranked as a Houston Business Journal Heavy Hitter and has received the Directors Award. 

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Chip Nash

Senior Vice President

Houston

Chip Nash joined Colliers Houston in September 2020 and is Senior Vice President and a Director of Multifamily Invest Properties.

Before joining Colliers, Nash was a Managing Director for JLL focusing exclusively on private capital investment sales of multifamily properties for eight years. Previous to JLL, Nash held similar positions at Berkadia, Hendricks and Partners, and Pinnacle International Realty Group. He has negotiated hundreds of transactions encompassing a 25+ year track record in investment sales along with a previous seven years spent in the commercial banking business for a conglomerate of banks owned by Pulte Home Corporation.

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Bob Heard

Senior Vice President

Houston

Bob is a Senior Vice President within Colliers’ Houston office and a director of Multifamily Investment Properties. Bob brings 15 years of real estate experience specializing in capital markets and multifamily investment sales. Over the course his career, Bob has been involved in all aspects of income-producing properties including the management, syndication, rehabilitation, purchase and sale of multifamily developments. Prior to joining Colliers, Bob was a Vice President within JLL Houston’s Capital Markets Multi-Family Investment Group. Prior to JLL, Bob was a Senior Associate with the multi-family investment sales group at Berkadia. Bob is a Licensed Real Estate Broker with a Series 7 License.

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Jim Humphries

Associate

Houston

Jim Humphries is an Associate at Colliers in Houston since 2015 and part of Colliers Investment Services Group (CISG). He specializes in multifamily assets with an emphasis on properties within Texas and the Southern United States.

Colliers Houston’s ISG team takes a consultative approach to commercial real estate which includes developing and executing strategies that are both consistent with its clients’ objectives as well as feasible in the current market environment.

Jim has 10 years of multifamily real estate experience. Before joining Colliers, Jim was an  analyst with the HFF Houston Multifamily group where he was directly involved in more than $6 billion in transactions. In that role, his responsibilities included underwriting and market analysis for both existing and to-be-built acquisitions and dispositions.

Jim’s primarily focus is on multifamily investment services and capital markets. His responsibilities include multifamily investment sales, business development, financial and debt analysis, market research, due diligence and offering memorandum production.

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