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Apartment Glut Continues As Houston Is On Track To Open 26,000 Units In 2016

The construction boom is not spread equally across the region.

picture of apartment building
The Market Square Tower apartment building (shown here in June 2015) is slated to open this fall.

 

A report by apartment search website RentCafe finds 95 apartment complexes have already opened or are slated to open this year, for a total of 26,000 new units in Greater Houston.

But that may be more a picture of what happened in the past than the future.

“A lot of these projects were on the drawing board in 2011, 2012, 2013, when the economy was still booming, when we were creating 80,000, 90,000, 100,000 jobs a year,” said Patrick Jankowski, regional economist and vice president of research at the Greater Houston Partnership.

He said job growth here has slowed to a trickle – in large part due to the oil slump – and the demand just isn’t there anymore.

“From January ’13 to July ’16, we actually added 65,000 apartment units to the market,” Jankowski said. “We are already overbuilt in apartments. There is already an apartment glut, and it’s only going to get worse this year and next year.”

He said that’s bad for landlords but good news for renters. Rents have been stagnant in Houston for the last year or so.

Jankowski said in many cases renters are offered incentives like free rent for the first month, gift cards or even a cruise.

But the glut is not spread equally across the Bayou City.

Doug Ressler, a researcher with Yardi Matrix, which provided the data for the RentCafe report, said a lot more units are built in the wealthier parts of town.

“What you see is that developers typically build discretionary units,” he said. “They don’t go out and build affordable units. I mean, it just doesn’t make sense from a business model standpoint.”

Ressler said in the eastern part of Greater Houston – from east Conroe down to Galveston and Lake Jackson – only 4,000 new units are expected to come online by the end of this year.

That’s compared to 22,000 on the generally wealthier western side.

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Florian Martin

Business Reporter

Florian Martin is currently the News 88.7 business reporter. Florian’s stories can frequently be heard on other public radio stations throughout Texas and on NPR nationwide. Some of them have earned him awards from Texas AP Broadcasters, the Houston Press Club, National Association of Real Estate Editors, and Public Radio...

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