Montgomery County is well-positioned for moderate rent growth and average to above-average apartment occupancy for 2020 and 2021, said Jordan Brooks, market specialist at ALN Apartment Data, a multifamily data platform.
The county’s tight labor market coupled with its burgeoning population are factors in the apartment market, Brooks said in his presentation Feb. 18 at the Houston Apartment Association’s Montgomery County State of the Submarket Breakfast.
The county’s population has grown 29% since Q1 2010, compared to the Houston metro’s 19% gain, Brooks said.
“Montgomery County is attracting residents at a higher rate than the Houston metro area and Texas overall,” he said.
Meanwhile, the county’s unemployment sits at 3.2%, similar to Houston and Texas overall.
“From an employment picture, things are strong both locally and regionally,” he said.
The average effective rent growth is expected to be around 2.5% for this year, and average rent and occupancy have trended upwards since 2017, according to ALN.
Average occupancy in Montgomery County in the last 36 months is 91.3%, and the average effective rent per unit is $1,166, according to ALN.
In the region’s submarkets, average occupancy ranges from about 87.5% in Kingwood to about 94% in Tomball in the last 12 months. The Conroe/Montgomery area averaged around 93%, and The Woodlands averaged around 91%.
Montgomery County saw an addition of 2,173 new multifamily units in the last 36 months, according to ALN.
In the last two years, the Kingwood area saw an addition of 336 units; The Woodlands area had 340; and the Conroe/Montgomery area and Tomball area had 0.
Looking at unit type, Brooks said Montgomery County is not bringing online as many efficiency units, which are small units that combine living and sleeping space, as Texas and the nation.
“There’s been a real trend in the last handful of years, especially the last three years, of construction around the country [going] towards more efficiency units. Those are coming at the expense of the one or two bedrooms,” he said. “Montgomery has not followed that trend .”
Looking ahead, the majority of Montgomery’s new construction—1,962 units out of 4,653—are in the preconstruction phase, meaning they may not come online this year, Brooks said. For comparison, the Houston metro has 14,892 out of 52,692 total units in preconstruction phase.
“Montgomery County still has a big percentage of pipeline in preconstruction phase, which is good. It adds flexibility to the market,” he said. “Those are properties that can be put on hold.”
Overall, Brooks said he believes the county’s apartment market is doing well.
“This is a growing area and a good place to be," Brooks said.