HOUSTON—Apartment demand in the Houston metro area has jumped amid an uncertain post-hurricane market. This positive news was presented in Berkadia's third quarter 2017 Houston multifamily report. In an exclusive, GlobeSt.com caught up with Ryan Epstein, senior managing director with Berkadia's Texas multifamily investment team, to discuss the report.

GlobeSt.com: According to the Berkadia report, Houston area multifamily occupancy and rent ticked up since last quarter–what's behind the numbers?

Epstein: Quite simply, the pool of renters increased after Hurricane Harvey while the supply of apartment product shrunk. Many single-family households were displaced due to the storm and became new renters, and many existing multifamily properties were damaged or uninhabitable, driving renters to relocate to other properties. In just one month following Harvey, metro-wide apartment occupancy rose 120 basis points to 90.1% in September. The same month, the heightened demand translated into a 1.4% monthly increase in effective rent to $999 per month.

GlobeSt.com: Is this likely to have a long-term impact on Houston's multifamily market–or is it simply a blip?

Epstein: For at least the near term, the lingering effects of Harvey's damage will likely reverse the supply imbalance and anemic rent growth that the metro area has been experiencing over the last few years. Some multifamily developments under construction were stalled because of damage, restricted access, temporary loss of utilities, or lack of labor or materials for repairs. Many existing properties have seen additional leasing activity and some have reduced or removed concessions altogether.

GlobeSt.com: What about investor demand for multifamily properties–has that been impacted?

Epstein: It has actually increased. Our listed properties are getting more offers and better quality offers. Institutional buyers have returned to the buyer pool in Houston and offers for strong class-A properties have become more aggressive. We expect this trend to increase as listed properties become more desirable to buyers due to rent growth, higher occupancy, stabilized oil prices and robust job growth throughout Houston.

GlobeSt.com: Do you see multifamily development shifting away from certain areas or submarkets and into other areas?

Epstein: Multifamily development can be expected to stay clear of recently flooded areas due to the unexpected release of water from reservoirs. However, these areas do not represent a sizeable percentage of land considered for development. As the Houston construction pipeline is absorbed, demand will increase in submarkets with strong occupancy and rent growth trends, as we've seen in previous cycles.

GlobeSt.com: What do you think of the newly released Downtown Houston Plan, an ambitious plan envisioning a greener, denser, more walkable downtown by 2036?

Epstein: It represents a very positive step, focusing on long-term transportation solutions like autonomous buses and bicycle corridors that will make downtown Houston a better place to live. One thing I think is missing from this 20-year vision is the role of the Houston MetroRail. Currently, the MetroRail is limited to three lines covering Downtown, Midtown, the Museum District, Texas Medical Center, Moody Park and the Northline Transit Center/Houston Community College. The role of fixed rail in the future of downtown Houston will be an important topic for government planners and industry leaders to address. If MetroRail is not expanded, it will be difficult for commuters and travelers to embrace a system that is not intermodal. Rail links to Houston's major airports, and a bullet train connecting Houston to Dallas would make downtown Houston the center of Texas commerce, tourism and entertainment.

Instant Insights /

Monthly Rent Just Shy of $1,000 After Harvey

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