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2012 Texas Apartment Industry Forecast

Interview with Bruce McClenny, President, Apartment Data Services

As we wrap up 2011, we have a few questions about the Texas apartment industry heading into the New Year. Hire Priority Staffing met with Bruce McClenny, President of Apartment Data Services for an insightful forecast of what the future holds.

On Job Growth:

In 2011 the Texas market showed positive job growth in all four major Metro areas of Houston, DFW, Austin and San Antonio. One of the most interesting stats, in our industry, is the jobs-created to additional apartments-rented ratio. Prior to the mortgage meltdown and credit crisis, Houston was filling one additional apartment for every six to seven jobs created.  Now that potential homeowners need at least a 20% down payment and a strong credit history, this ratio has moved from 6-7 /1 to 4.5/1.  San Antonio is also 4.5/1 and Austin 6/1.  Job growth in Texas has had a positive impact on the apartment industry and it looks to continue in that same direction in 2012.

On “Class A” Rent Growth:

Recently we have seen very little new construction. In 2011, 5500 and 700 units were delivered to the Houston and Austin markets respectively.   This put “Class A” product in a unique position of having no new competition which made raising rents a very successful strategy. We’ve actually seen strong double-digit increases.  In 2009, Texas was in a recession and rents retreated. In 2010 we were recovering, and in 2011 we saw strong rent growth. We should see rents continue to head north in 2012. However, with an increase in deliveries “Class A” may see some pressure. More than likely 2013 will be the year that we look at to assess how the new product affected the market.

On Class C in Houston:

Houston is and will continue to experience distress in Class C if something doesn’t change. “Class A” needs to continue to raise rents with confidence, this way Class B will ensue, followed by Class C.

On Need:

We need more construction.  Now is the time to get projects started, especially since rents have been raised with such ferocity in 2011. There is not enough supply and demand is very strong. However, the reality is that it will be another year before we can deliver more units to be leased.


In 2012 we should see great success in Texas. Austin should do very well across the board, “Classes A through D”.   For 2012, I don’t think Houston will have as great of rental growth as in 2011 but it should still be a very good year. Year’s like 2011 are very rare.

2013 is a pivotal year as we will have a lot more available units with the economy still being a question mark. In addition, the single-family market will stage a comeback eventually. This will be a “let’s see what happens” kind of year.

Apartment Data Services Inc. has been reading and tracking markets in the Texas area since 1986.  Contact with any questions.

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