Updated 01/07/2025

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Stay tuned for the next NHD CRE Market Report!
Discover historical facts, stats, and growth trends at northhouston.org/cre.

Why We Do These Reports
Our mission is to shine a light on the unique dynamics shaping North Houston’s real estate market. By offering a hyperlocal perspective, we deliver actionable insights that go beyond the scope of national or citywide reports. Whether it’s tracking logistics and industrial growth or the resilience of office spaces, we cover it all—helping you stay ahead in a rapidly evolving landscape

Robert Fiederlein, our Vice President of Planning and Infrastructure and in-house real estate expert, expertly curates the North Houston District’s Commercial Real Estate Market Reports. These reports deliver hyperlocal insights, offering a detailed view of market trends and shifts within the North Houston District’s boundaries. Gain an insider’s perspective on industrial, office, retail, and multifamily dynamics, all tailored to the unique characteristics of our area.

Multifamily Starts Drop Dramatically – A Precursor to Future Rent Growth

By Robert Fiederlein, Vice President, Planning & Infrastructure

Often times, graphs and charts can make a point better than words.  In this quarter’s CRE report I am going to let the graphs and charts make the point with just a little narrative to go along with it.

For Q4 2024, the main point is the classic principle of economics – supply and demand and its impact on prices.  As we all know the principle is that as supply tightens and demand either stays strong or grows, prices rise.  The first half is well underway both nationally and locally in the multifamily market and the latter, in the form of rent growth, is perhaps just around the corner.

Multifamily Starts Falling Chart - A bar graph tracks quarterly multifamily starts from 2019 Q1 to 2024 Q3. Starts peaked in 2021 and 2022 before declining sharply, with levels in 2024 among the lowest in the timeline.

Chart 1

Source: CoStar, November 2024

 

Nationally multifamily starts are at their lowest in over 5 years and have declined for 6 straight quarters going back to Q1 of 2023 (Chart 1). Nowhere has this been more dramatic than in Houston (Chart 2).  In Houston, per CoStar data, starts have dropped a whopping 97% from Q1 of 2022 to Q3 of 2024, from 9,200 units to 300 units.  Austin and Dallas-Fort Worth have seen similar drops but not quite as dramatic as Houston’s drop.

Multifamily Markets Starts Chart - A grouped bar chart compares multifamily starts in various U.S. markets between Q1 2022 and Q3 2024. Markets like Houston, Austin, and New York show significant reductions in starts over this period.

Chart 2

Source: CoStar, November 2024

Annual rent growth appears to have hit bottom in Houston in recent quarters, settling out at just under 1%.  CoStar projects a base case of rent growth over the next two years plateauing out at around 2.8%, slightly above long-term trend (Chart 3). 

A line graph shows annual rent growth trends from 2014 to 2027. Three scenarios—base case, moderate upside, and moderate downside—project a rent growth rebound starting in 2025 after a dip in 2024. A dashed line represents the 10-year rent growth average.

Chart 3

Source: CoStar, December 2024

A harbinger of future rent growth is that for the fourth month in a row the number of Houston apartment complexes offering concessions has dropped (Chart 4).

Concessions Eased Chart - A bar graph shows the percentage of properties offering concessions from February 2020 to October 2024. After a peak near 60% in late 2020, the rate declined, stabilizing around 30%, with easing trends over the past four months.

Chart 4

Source: CoStar, October 2024

Relative to demand, employment in the Houston region appears to be around 60,000 for 2024 (Chart 5).  This is about trend for Houston when you exclude boom and bust years.  This level of employment should provide healthy demand for apartment units.

Job Growth Chart - A bar graph displays annual job growth in Houston from 2014 to 2024. Strong growth in 2021 and 2022 is followed by slower growth in 2023, with 2024 showing a notable decrease in new jobs added.

Chart 5

Source: U.S. Bureau of Labor Statistics, November 2024

The above trends are evident in the North Houston District as well.  The District presently counts 80 complexes totaling just under 19,000 units within its boundaries.  Annual rent growth appears to have bottomed out in mid-2024 and ticked up slightly from 1.4% to 1.5% from Q2 to Q3.  In short, similar to national trends, the North Houston District multifamily market appears well on its way to a robust next several years.

Questions? Connect with us.

Robert Fiederlein

Vice President Planning and Infrastructure
Direct: 281-874-2132

Mobile: 713-816-5413
rfiederlein@northhouston.org