Dallas/Fort Worth's Multifamily Market Marks Best Showing in Five Years

DALLAS-In a year-end analysis, Dallas/Fort Worth's multifamily market made its strongest gains in five years and its second best showing since the mid-1980s, according to a just-released report from locally based M/PF YieldStar.

"It's a solid performance. It's not a gangbuster," Greg Willett, vice president of research for M/PF YieldStar, tells GlobeSt.com, "and it's not an overnight turnaround, but it's good progress." When the calendar flipped, overall occupancy was 91.9% or 2.7 points higher than a year ago. Rent, though, was fairly flat, up just 0.7% to an average of $689 per month. Still, he adds, conditions could produce a 4% to 5% rent gain this year for owners.

Willett credits the strong showing to a decline in home buying, building materials' costs and a chokehold on construction, with just 8,528 units added to the region's inventory last year. Historically, 10,000 units are added each year. In the fourth quarter, 2,799 units came on line. This year started with a construction pipeline of 7,500 apartments and another 9,536 ticketed to deliver in 2007. "It certainly looks like everything under way right now is justified," Willett says. "It's a reasonable level."

In-town Dallas is the construction leader, with 1,400 units underway. Lewisville and the Las Colinas areas have 1,000 apartments pushing out of the ground and North Fort Worth has 850 units rising. At last count, the region was supporting 550,000 units.

Submarkets hovering 95% occupancy are in-town Dallas, Oak Lawn, Far North Dallas, Las Colinas/Valley Ranch, West Plano and Allen/McKinney. The down side, Willett says, is none of the submarkets are experiencing rent gains. "The neighborhoods actually in the best shape are a group where occupancy tends to be a little lower, around 94%," he says. The latest research shows owners were able to hike rents 2% to 5% over the past year in Duncanville, Mesquite, Downtown Fort Worth and its neighboring cultural district, Northeast Tarrant County near Grapevine and North Fort Worth in the Fossil Creek area.

On the demand front, Willett says the region's absorption totaled 22,160 units for the year. In 2000, absorption surpassed 26,000 units. He says 840 units were filled in the fourth quarter, a usually sluggish and high move-out time. "Hurricane evacuees continuing to filter out into DVW apartments provided some support," he says in the report, "but the bigger impact on quarterly demand came from the completion of sizable properties that leased well in select neighborhoods, notable Las Colinas/Valley Ranch, West Plano and Oak Cliff."