Texas apartment markets have suffered setbacks due to the COVID-19 pandemic.
But the rental business is expected to recover over the next 18 months as the impact of the coronavirus subsides, according to a new forecast from CBRE.
Researchers with the commercial real estate firm looked at major apartment markets across the state.
So far, Dallas-Fort Worth is the top-performing market, with a lower vacancy rate and the smallest declines in rental rates.
“The Texas multifamily markets have many challenges over the months ahead,” Jeanette Rice, CBRE’s Americas head of multifamily research, said in the new report. “The markets may not totally stabilize until the fourth quarter.
“Yet 2021 should experience steady recovery, and Texas’s pre-COVID-19 strengths should play a big role in helping apartment demand return rapidly through 2021,” she said.
CBRE is predicting that Texas apartment markets will be back to pre-pandemic levels by the start of 2022.
While job losses in the state and business closings have spiked with the pandemic, Rice said a rebound in migration and new jobs in Texas will boost the rental market.
“In the short term, with greatly reduced employment opportunities, migration into Texas will slow, hindering creation of new multifamily demand,” she said. “Longer term, as the economy begins to get back on its feet, the major Texas metros should again attract large numbers of new residents, thereby creating high levels of market demand over the following years.”
While the apartment industry hasn’t suffered near the declines seen in hotels and retail, the economic impact of COVID-19 has caused an increase in vacancy rates and has prompted slight declines in rents in some markets.