Markets & EconomyRentals

Houston, we have a development problem

Energy company layoffs and budget cuts indicate Houston will fall from its position as nation's most active project-start multifamily market

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For several years, Houston has represented the most active market in the country when it comes to multifamily project starts. But energy company layoffs and budget cuts, coupled with declining interest from equity sources and a vacancy rate of nearly 7 percent, indicate Houston will fall from this position moving forward. During the first quarter of 2015, developers started nearly $150 million of rental projects in H-Town compared with $318 million during the same quarter last year --this according to construction data firm CMD Group. Earlier in the year, the firm predicted overall multifamily starts would decline by 26 percent in Houston this year. If multifamily development activity in Houston mimics first-quarter figures, it’s possible that less than $600 million of new projects will break ground in 2015. If this occurs, it's fair to assume a number of proposed projects will have been nixed or delayed. When identifying unappealing markets for future investments in ground...