It still remains to be seen how much property damage and economic loss Hurricane Harvey will have caused in and around Houston once the storm has finally left the metro. The region is still focused on getting people to safety and finding shelter for displaced residents.
Houston, the fourth-most populous city in the country, has roughly 6.5 million people living in its metro area. It also has a huge supply of apartments—about 662,400 units as of mid-2017, according to RealPage calculations.
Moreover, Houston has one of the lowest occupancy rates in the country, at 92.9%, down from its peak of 94.7% in mid-2015, according to RealPage. Due to the large number of apartments and relatively low occupancy rate, Greg Willett, RealPage chief economist, says the area should be able to accommodate a major influx of renters more easily than just about anywhere else across the U.S.
“Yes, a lot of people have been displaced, but what’s unusual is that we’ve actually got a lot of product for these people to move into, whether that’s temporarily or permanently,” Willett told MFE Wednesday.
He estimates there are approximately 47,000 vacant units in metro Houston.
What is unknown at this time, though, is the extent of the damage to the vacant and occupied units, as well as the units under construction (nearly 22,000, according to RealPage) in the area.
While some apartments may be damaged and have to come off line, Willett expects property managers to be busy in the coming weeks and months as leasing picks up. “What you tend to see if a lot of the housing stock has been damaged or destroyed [is] people who end up in apartments,” he notes.
In a blog post, Willett wrote that Houston’s biggest block of available existing rental housing “lies within the urban core, with just over 2,200 vacant apartments found in the Downtown/Montrose/River Oaks submarket. These are comparatively expensive units, as monthly rent in the neighborhood averages $1,769.”
Most of the available units in the metro area are luxury apartments, he tells MFE, but there are still vacant units at all price points.
Downtown/Montrose/River Oaks is also the leader when it comes to product on the way, Willett writes, as projects under construction contain just over 4,200 apartments. “Some 2,100 units are in development in the Spring/Tomball area, and about 1,200 to 1,300 units are on the way in four separate submarkets—Greenway/Upper Kirby, West University/Medical Center, Katy, and Greater Heights/Washington Avenue,” he writes.
In addition to the units under construction, a massive rebuilding effort will begin once the waters start to recede. That process will take years and require an influx of labor. It’s an issue that Willett says could pose a problem from the apartment market in Houston and beyond.
“We were already at the point where the markets in Texas were struggling to deliver product because of labor shortages,” he says. “So there’s that question of how’s that going to come into play and how quickly can Houston get going on rebuilding.
“… Is that going to slow down the delivery pace for apartments in [Dallas–Fort Worth] because you’re going to lose all your construction workers to Houston? There are lots more questions than answers at this point, but that’s just another thing to think about here.”
If you live or work in Houston, or own a property there that's been damaged by Hurricane Harvey and would like to share your story, please contact me, Brian Croce, at [email protected].
