Multifamily

23Q4
Houston

The Houston multifamily market finished 2023 with overall positive

absorption year-over-year, jumping 135% from 2022, which supported
the abundance of new supply added to the market. As a result, vacancy
increased slightly for the year even with 45% more units being completed in
2023 compared to the prior year.
On the investment front, transactions remained depressed primarily driven by
the significant increase in the cost of capital coupled with elevated insurance
rates that collectively created a broader gap between buyers and sellers.
Looking ahead, with interest rates potentially declining in 2024 and overall
positive population growth continuing for the state of Texas, the multifamily
investment market should begin to return to a more normal state
compared to the previous 12 months of challenged activity.
Danny Rice | President

Accelerating success.
 Multifamily Key Takeaways

Houston
23Q4
• Net absorption up for year, down from prior quarter
• Construction starts up
• Average rents drop
• Occupancy remains constant
• Overall sales volume plunges near cyclical lows

YOY YOY Under YOY Overall Class A YOY

Occupancy Rate Net Absorption Construction Effective Monthly Rent
89.0% FORECAST
3.0K Units FORECAST
23.3K Units FORECAST
$1,720 FORECAST

Houston Highlights
Overall net absorption dropped 5% to 3,125 units during the fourth quarter due to a softening in Class A properties, but the
2023 year-end total of 10,805 absorbed units indicated a significant 135% increase from 2022’s absorption of 4,602 units. The
construction pipeline increased slightly from the prior quarter to 23,323 units, representing a 12.7% increase year-over-year.
Occupancy remained flat at 89.0% while adding 3,128 new units, a 35% drop from Q3 2023. New units delivered in all of 2023
totaled 22,251, a 44.7% jump from 2022’s 15,780 units. The number of proposed units also rose to 34,493 units. Average monthly
effective rent decreased from recent highs to $1,261 per unit in Q4 2023, but rents are up 0.6% year-over-year.

Market Indicators Market Fundamentals

3.8% 2.3% $72 Monthly Rent Occupancy
Houston Houston annual WTI Spot Price, $1,400 92.0%
Unemployment % change in U.S. benchmark
$1,200
Rate employment for light sweet 91.0%
crude $1,000
90.0%

Historic Comparison $800

89.0%

22Q4 23Q3 23Q4 $600

88.0%
$400
Total Inventory
723,126 742,249 745,377
(Existing Units) $200 87.0%

New Supply $0 86.0%

2,531 4,817 3,128
(Units Delivered)

Demand
(969) 3,148 2,985
(Units Absorbed) Monthly Rent Occupancy

Occupancy 90.3% 89.0% 89.0%

Houston’s overall occupancy rate remained constant quarter to
Under quarter but is down 130 basis points since Q4 2022. The average
20,700 21,711 23,323 monthly rent dropped 1.4% from third quarter to $1,261 per unit,
Construction (Units)
yet this is up 0.6% year-over-year.
Average Monthly Rent
$1,254 $1,279 $1,261 Source: MRI ApartmentData
(Effective)

Colliers’ Transactions/Assignments

Sale Sale Listing

Oak Bend Place Clear Lake Apartment Homes Deer Springs
Tomball | 152 Units Clear Lake | 244 Units Humble | 128 Units
Houston
Multifamily

23Q4
Sales Volume & Pricing Cap Rates
In Q4 2023, Houston’s multifamily investment sales Houston’s multifamily median cap rate climbed 90 basis
volume fell to $510 million, representing the second lowest points to 6.1% in Q4 2023, while Texas and U.S. median
quarter-over-quarter level in a decade. Similarly, the rolling cap rates also rose from 5.2% to 5.9% and from 5.5% to
four-quarter sales volume dropped to $2.9 billion during 5.7%, respectively. On an annual basis, Houston’s median
the fourth quarter, which marks a 73.9% decline on a year- cap rate rose from 5.1% to 6.1%, while median cap rates
over-year basis. also increased from 4.8% to 5.9% in Texas and from 5.0%
to 5.7% in the U.S.
Houston Sales Volume ($)
Rolling 4-Quarter Volume Quarterly Volume Median Cap Rate
$25 U.S. Texas Houston
ŝůůŝŽŶƐ

6.50%
$20

$15 6.00%

$10 5.50%

$5
5.00%

$0
4.50%

4.00%

Source: MSCI Real Capital Analytics

Source: MSCI Real Capital Analytics

Houston’s median sales price per unit decreased 13.7%
to $116,544 from the previous quarter’s $135,097 and
is down 24.2% year-over-year. Likewise, the Q4 2023
Texas median price per unit fell by 8.6% year-over-year
to $134,482. The U.S. median sales price per unit also
decreased from third quarter but rose 12.9% to $174,045
since Q4 2022.

Median Price per Unit

U.S. Texas Houston
$200,000

$180,000

$160,000

$140,000

$120,000

$100,000

$80,000

Source: MSCI Real Capital Analytics

Colliers | Houston | 23Q4 | Multifamily Report

 Houston | 23Q4 | Multifamily | Market Statistics

Avg Monthly Current Previous Current Previous

Rent per Absorption Absorption Occupancy Occupancy
Houston # of Units Unit # of Units # of Units Rate (%) Rate (%)
Class A 201,428 $1,720 3,054 4,473 84.4% 84.2%

Class B 280,481 $1,244 (453) (723) 91.5% 91.7%

Class C 208,764 $973 199 (610) 90.2% 90.1%

Class D 54,704 $763 185 8 88.8% 88.5%

Total Market 745,377 $1,261 2,985 3,148 89.0% 89.0%

Source: MRI ApartmentData

Colliers finalizes sale of Clear Lake

Apartments
Colliers has announced the sale of Clear Lake Apartments, a 244-
unit multifamily community located at 300 Cyberonics in Clear
Lake. The Seller, WWC, XLI, was represented by Chip Nash, Bob
Heard and Jaleel Adatia with the multifamily team at Colliers.

Built in 1979, Clear Lake Apartment Homes offers 244 units

ranging from 1- to 3-bedrooms. This community benefits
from robust resident demand occurring throughout the Clear
Lake submarket. The community is minutes away from NASA,
Spaceport, Clear Lake Medical Center, and the University of
Houston-Clear Lake. It is close to premier shopping at Baybrook
Mall in addition to dining and entertainment found at Kemah
Boardwalk.

The property is located in Houston’s Clear Lake/Webster/League

City apartment submarket, which consists of 25,805 units within
105 properties. Currently 89.5% occupied, the average monthly
rental rate is $1,286 per unit in the submarket.

FOR MORE INFORMATION

Chip Nash Bob Heard Patsy Fretwell
Executive Vice President Executive Vice President Research Director
Multifamily Investment Properties Multifamily Investment Properties Houston
+1 713 830 2170 +1 713 830 2172 +1 713 830 2125
chip.nash@colliers.com bob.heard@colliers.com patsy.fretwell@colliers.com

Jaleel Adatia William Uhalt

Senior Associate Research Manager
Multifamily Investment Properties Houston
+1 713 830 2259 +1 713 830 2137
jaleel.adatia@colliers.com william.uhalt@colliers.com

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