DFW Multifamily Market Tightens, Driving Up Rent

Annual rent growth on a same-store basis is 4.1% as of the first quarter. That same statistic had hovered at 4% in midyear 2000, a time when new product deliveries had been at a high and owners were offering big-ticket lures for tenants. Between January and March, less than 1,500 units came to market due in part to a construction slowdown and impeded delivery due to the weather. From 1996 to 2000, quarterly finished product averaged about 4,200 units. "Early 2001's cutback in new supply was quite pronounced," says Willett. As the quarter draws to a close, 12,600 units are under construction in the metroplex.

In a March to March analysis, the DFW region had 18,854 units completed. In contrast, demand had been riding at 25,550 units, with 4,840 being absorbed just in this year's first quarter.

"Fewer rent concessions are now seen in the Dallas area's northern suburbs, but rent giveaways still are a key factor in the urban core's apartment marketplace," Willett says in his analysis. DFW tenants are now paying an average of $690 per month. Average rent for a unit built in the last decade stands at $928.

In the past year, west Plano has reflected the strongest demand, 4,840 units. Southwest Ft. Worth had 1,480 units absorbed while four submarkets stretching from East University to Lewisville had an absorption ranging between 1,300 and 1,400 units. In Allen-McKinney and Intown Dallas, more than 1,000 units each had been absorbed.

Occupancy and rent growth are predicted to remain healthy as construction remains in check, says Willett. Despite west Plano's high demand, only 567 units are under construction. Last year, more than 4,300 units had been added to the submarket.

Northeast Tarrant County, particularly the cities of Euless, Grapevine and Keller, more than 2,100 units are under way while Intown Dallas had about 1,900 units being built.