Chris Deuillet: North Texas is attractive to multifamily investors.

DALLAS-Plenty has been written about Texas in recent years; how the state weathered the Great Recession more effectively than other states and how job growth continues. The job growth has led to apartment demand – according to MPF/RealPage’s recent figures, the Dallas-Fort Worth area saw demand for 11,194 units during the year-ending first quarter of 2013.

The fundamentals, combined with continued low interest rates, are luring more multifamily buyers to North Texas. Other factors also have appeal including no state income tax and a pro-business political climate. As a result, “it’s competitive,” comments CBRE first vice president Chris Deuillet. “If anything, buyers are trying harder to make the deal, instead of killing the deal.”

In an interview with, Deuillet says that a lot of capital is coming into North Texas and not just from North Texans – investors from California and Mexico as well as overseas (such as China and Israel) are interested in putting their money into Dallas-Fort Worth apartment complexes. “DFW weathered the Great Recession better than other areas, and investors see that Fortune 500 companies are here and the cost of living is low,” Deuillet observes. “It’s all a magnet for the investors right now.”

The investors are buying everything from core class A product to value-add class B and class C properties, but Deuillet notes that for a value-add deal to sell, it needs to have some kind of a story. Otherwise, North Texas seems to be going through a usual cycle with apartments, without a whole lot of foreclosures. “What you’re seeing is a lot more apartment complexes that aren’t distressed situations, but they’re either a value-add or stabilized deal,” Deuillet says. “Owners are putting some of these on the market to see what they could sell for. There are some constants out there to support aggressive pricing.”

Even as the competition and pricing for multifamily product is becoming more aggressive, Deuillet isn’t seeing a price bubble. “A lot of the buyers aren’t over-leveraging themselves when they get a loan; that’s keeping things in check,” he says. “Everyone is building in a little wiggle room, though some are underwriting some sort of rent growth during the next two-to-three years in their analyses.” Whether this is over-optimism or not remains to be seen – researchers such as AXIOMetrics and MPF/RealPage point out that new product coming online could slow effective rent growth.

In the near term, Deuillet says the apartment activity in 2013 will likely mirror that of 2012 with low interest rates to continue. “In 2012, we saw a sprint because of the interest rates; a lot of buyers wanted to lock those in,” he comments. “But with Fannie (Mae) and Freddie (Mac) keeping the rates low, lots of buyers are in a jog or marathon, versus a sprint.”