Is Montrose-River Oaks in danger of overbuilding? Axiometrics VP Jay Denton (front and center with his team) tells us the submarket will deliver more apartment units this year than any other submarket in the country. In fact, the 3,770 units scheduled to hit the market outpaces the entire MSAs of Atlanta, Boston, San Jose, Orlando, and Nashville. But Jay says fundamentals may support it. At the end of 2012, effective rent growth in the submarket was very strong at 8.6%, and its average rent ($1,594) was $400 higher than any other submarket. Montroses occupancy rate dropped to 92.1% during the downturn but jumped to 95.6% by the end of the year.
New product is doing very well so far. Properties in lease up have an average effective rent of $1,798, and theyve been absorbing more than 20 units per month with minimal concessions (around two to four weeks of free rent). Jay shared a crazy fact: Almost one-third of the nations multifamily deliveries this year will be in just six MSAs: Houston, Washington, DC, Dallas, New York, Seattle, and Austin.
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