Texas Multifamily Viewpoint - How DFW and Houston Differ in the 8-Year Texas Construction Boom April 2018
Population climbed by 1.9 million since 2010 across Texas’ two largest metros. In absolute terms, Dallas/Fort Worth (DFW) topped America’s 20 largest metros, while as a percentage, Houston took first with a 15.9% residential gain. These strong advances, combined with total employment growth of 1.03 million new jobs, were matched by a multifamily construction cycle totaling nearly 220,000 Class A units across both MSAs.
In many respects, DFW underwent a classic jobs-driven growth development cycle for the multifamily sector, while Houston took a more tumultuous path characterized by supply abundance and exogenous shocks.
Topping out at just over 115,000 new units, DFW’s Class A multifamily development cycle during this period was linked to new jobs and population gains, but was also fueled by the high number of corporate expansions and relocations occurring since 2010 such as Toyota North America, JP Morgan Chase and Liberty Mutual Insurance. Job growth through the first quarter of 2018 kept pace with 2017 figures at 2.7% annualized growth, balanced by 6,488 units delivered.
Houston’s Class A multifamily construction cycle, totaling just shy of 105,000 completed units, met an impasse in Q3 2017 as Hurricane Harvey damaged 97,212 single family homes along with more than 15,000 multifamily units. The event served as a reboot for the market driving up demand. Through the first quarter of 2018 the market appeared to be normalizing with an absorption figure of 2,956 units, pattern expected to continue this year.
In this ViewPoint, CBRE Research highlights key similarities and differences between DFW and Houston’s latest multifamily development cycle between 2010-2017.