Multifamily Market Defies Doom & Gloom Construction Trends
Houston continues to defy multifamily overbuilding fears. Multifamily construction significantly increased in Q3 with more than 6,000 more units in the dirt since mid-year.
Submarkets have maintained strong fundamentals despite an up-and-down economy, which has kept developers’ confidence levels high. (This news sharply contrasts with slowing office development.) Transwestern director of research Rachel Alexander and Rachel Andrae broke down the areas with the biggest increase in construction activity.
The suburbs brought in the most cranes: The Conroe/Montgomery area saw a staggering 1,768% increase in units under construction since Q3 2014. That's seven new projects aggregating 1,768 units, a big jump from nothing underway this time last year. Rachel says it's being driven by population growth, which is itself spurred by the expansion of large industrial and office users.
Thanks to the Grand Parkway and opening of the Tomball Tollway, Tomball/Far Northwest is enjoying a 711% increase year-over-year. Five projects totaling 1,459 units have broken ground in the last 12 months.
On the other hand, suburban submarkets that had been building up in the last cycle dropped: Katy/Far West has 39% fewer projects underway and West Memorial/Briar Forest dropped 16% in units under construction.
Inside the Loop, the largest increase in percentage of units under construction belongs to the bustling Eado and Downtown areas with a 109% increase from Q3 2014. That's 11 projects and 3,461 units added to the roster. Rachel says that's largely thanks to a surge in new construction Downtown as higher density, urban communities have drawn young professionals back to the city’s core.
The Med Center comes in second with a 63% increase, driven partially by the growth of major hospitals in the area. (That's eight new communities and 2,267 units.)
The Montrose/Museum District area (much discussed as an area of potential overbuilding) also rose 6%, with 13 projects totaling 3,687 units breaking ground in the past year. The popular Heights boasts a 2% increase in units under construction—four communities with 1,312 units. Overall, there are 40 multifamily projects under construction inside the Loop, totaling nearly 12,000 units.