Flat MF Performance No Surprise

HOUSTON-As 2009 passes its midpoint, figures released for Q2 multifamily housing came as little surprise to area experts. Though occupancy and revenues aren’t a whole lot better from last year’s figures, Houston is still one of the country’s best-performing markets when it comes to multifamily housing, the experts tell GlobeSt.com.

“We’re still holding our own in the job scenario, and prospects look good despite some loss of jobs,” points out Matt Rotan with Apartment Realty Advisors’ Houston office. “With the port, the (Texas) Medical center and the Army Corps of Engineers doing a lot of infrastructure work, along with the I-10 expansion, it’s all helping us prop up in the downturn.”

“While you’re losing jobs in Houston, you’re not losing as many in other parts of the country,” adds Greg Willett with MPF Research in Carrollton, TX. “Also the other markets have a big shadow market product. In Texas it exists to some degree, but not as severe.”

The second quarter figures from MPF Research in Carrollton, TX say that occupancy area-wide was 89.7%, down just a hair from March’s total, and off 1.1 points since June 2008. The total inventory stands at 510,700 units, with about 14,000 units remaining in the pipeline. Rotan says the figure is an improvement. “It’s down from 21,000 that had been planned not so long ago,” he remarks.

Once those units are online, that will be it for new construction. “We were in a meeting recently with some large developers, and they said they don’t see bringing any new units to the market before 2012,” comments Craig LaFollette with CB Richard Ellis’ Houston office. “These guys have a good view of the big picture, and from what they’re suggesting, it will be tough through the remainder of this year. They don’t want to add to it.”

Nor is 2010 going to be the panacea turnaround everyone is hoping for, LaFollette continues. “We’re still pegging 2011 as the recovery year,” he notes.

However, rents continue to hold steady and concessions aren’t being jacked up in response, though they do exist. Willett points out that about 38% of the product on the market today has some sort of concession, with the typical giveaway hovering at a 9% discount, which translates to a little more than one month of free rent. Still, “that really hasn’t moved,” Willett remarks. “We’ve been at that 9% figures for awhile.”

Both Rotan and LaFollette say that the infill locations are faring better than the outer submarkets, which are giving away up to two months free rent. LaFollette goes on to say that the properties with outstanding management are going to be the ones that hold on during this period.

“There’s no time like now to really take a good look at your management,” he advises. “If you have weak management, it’ll hurt you exponentially worse.” That’s being seen now, he adds. “On the same block, you can find guys with better management and personnel that are taking tenants from those that aren’t so well-staffed,” he remarks.