Multifamily segment records positive absorption for Q2 across each of the four major Texas metros.

Houston Multifamily
By the end of Q2 2023, multifamily deliveries hit a record-high in Houston with 8,273 units completed across 33 buildings, more than doubling the previous year’s 3,520 deliveries (25 buildings). The largest deliveries in Q2 2023 included a 3-story, 338,256-sq.-ft. apartment building (378 units) at 12806 Buffalo Speedway in April 2023, and a 3-story, 323,904-sq.-ft. apartment building (360 units) at 22000 Bellaire Boulevard in June 2023. More than 70% of deliveries have vacancy rates higher than 50%, which contributed to the overall occupancy rate decreasing from 90.7% in Q1 2023 to 90.3% in Q2 2023. In addition, 4,184 units were absorbed in Q2 2023, up slightly from 4,035 units in Q1 2023, and up 31% from 3,187 units in Q2 2022. Lastly, the average monthly asking rent stood at $1,309, up slightly from $1,301 in Q1 2023.

San Antonio Multifamily
In Q2 2023, 969 units were absorbed in San Antonio’s multifamily market, moderately up from -63 units in Q2 2022. Although 7% down from Q1 2023 (1,045 units), the city has recorded positive absorption in the multifamily sector for four straight quarters. Year-to-date, absorption units totaled 2,014. Deliveries—3,060 units in Q2 2023—increased 50% from 2,031 units in Q1 2023, and almost tripled from 1,131 units in Q2 2022. However, more than 57% of deliveries have vacancy rates over 50%, contributing to the overall occupancy rate decreasing from 89.9% in Q1 2023 to 89.2% in Q2 2023.

Austin Multifamily
By the end of Q2 2023, Austin’s retail triple-net rates stood at $25.28 per sq. ft., up slightly from $25.15 per sq. ft. quarter-over-quarter, and up 12% year-over-year from $22.58 per sq. ft. This marks the highest year-over-year rent growth since Q2 2008, when year-over-year rent growth reached nearly 9%. On the quarter, the CBD submarket had the highest average rate at $39.98 per sq. ft. On the other hand, the Southwest submarket had the lowest average rate at $12.78 per sq. ft.

Dallas Multifamily
During the quarter, Dallas-Fort Worth (DFW) led multifamily construction in Texas with 66,817 units underway in Q2 2023, followed by Austin with 48,660 units. Over the prior three years, construction averaged around 47,000 sq. ft. annually. Notable projects underway in Q2 2023 included a 5-story, 475,000-sq.-ft. apartment building (435 units) along the 1-35 East Express Tollway in June 2023, and a 4-story, 457,620-sq.-ft. apartment building (384 units) at 1735 North Greenville Avenue in May 2023. In addition, deliveries increased 41% year-over-year from 5,900 units in Q2 2022 to 8,325 units in Q2 2023. As supply outpaced demand in the second quarter, the overall occupancy rate fell 10 basis points from 91.5% in Q1 2023 to 91.4% in Q2 2023. Lastly, rent growth slowed during the second quarter as the average asking rent ($1,519) remained unchanged from the previous year.

Alex Babcock
Senior Research Analyst
[email protected]
tel 713 275 9618