GlobeSt.com EXCLUSIVE: Houston's Multifamily Gains Mark of Maturity

It's shaping up to be another stellar year, says G. Craig LaFollette, senior vice president of the multifamily investment team at CB Richard Ellis Inc. In previously published reports, he pegged absorption at 4,136 units in the first quarter and 5,025 units in Q2. In an exclusive interview with GlobeSt.com, LaFollette says an extra 2,830 units were absorbed in July and August. It's an unusually healthy number for a historically slow time of year, he says. As a result, Houston's multifamily absorption is up to 11,991 units and there are still four months to go. In 2000, more than 13,000 units were absorbed.

Rent increases too are higher than previously reported, LaFollette tells GlobeSt.com. Research had shown the annualized rental rate increase from May through July was 9.5%, but now it's crept up to 9.6% as of August.

New York, Chicago and Los Angeles certainly have more high-rise residential units, considerably higher rents and more gracious amenity packages. But Houston is playing catch up as it takes on many of the same characteristics that those markets showed some time back, says LaFollette. The top three have high renter-by-choice populations, a demographic primarily made up of young professionals eager to avoid downtime from commuting and empty-nesters. And each also bear an enticing urban lifestyle and units with upscale amenities that tenants feel far outweigh the benefits of home ownership. Granite counters, wood floors, cityscape views, triple crown moldings, high-speed Internet connections and covered parking often are more alluring than a property deed. Houston is seeing the seeds sprout from just that same mindset and development, strong evidence that the conversion is here, says LaFollette.