Dallas-Fort Worth Multifamily Market Feels More Pain

DALLAS-The Dallas-Fort Worth multifamily market has taken a step back from its second-quarter promise, with property concessions now creeping into the region’s older product.

“It’s been pretty deep at the top-end product,” Greg Willett, director of research products of Carrollton, TX-based M/PF Research Inc., tells GlobeSt.com. “Now, it’s going down into the second and third tiers.” And that is a telling factor about the state of the market.

The Dallas-Fort Worth average rent is $695 per month, right in the same range that it’s been since March 2001. Product built since 1990 is bringing an average of $930 per month. The upshot is rent dropped 1.8% overall at the quarter’s close. Metro Dallas’ rent dipped 2.5% while its sister city to the west, Fort Worth, was up 0.1%.

In a closer look, rents sunk 6% to 7 % in East Plano, Allen/McKinney and Far Northeast Dallas. Drops of 3% to 4% were felt in North Dallas, Far North Dallas, Oak Lawn, West Irving, Lewisville, the Highlands and Carrollton.

Widespread concessions and decreased demand go hand in hand, but the cause for today’s sagging numbers are primarily due to low-interest loans boosting home-buying to record levels and a steadily increasing supply. There are 13,817 units under construction, with high pockets of development in Allen/McKinney and Lewisville.

Willett says the year will end with a supply that is four to five times greater than the demand. “A supply/demand relationship that far out of balance leaves a tremendous amount of ground to make up in 2003,” he concludes.

Historically, July through September is the peak leasing period in North Texas, but that wasn’t the case this year. The fourth quarter most often has the highest net move-outs.

The region’s September occupancy was 92.1% in comparison to September 2001′s 94.7%. As with rent, Q3 occupancy in Fort Worth is better than Dallas. Fort Worth has a 93.5% occupancy overall. Fort Worth neighborhoods registering above 95% are the Intown/Cultural District, the southwest corridor of Tarrant County, South Arlington and Ridglea/Ridgmar. Dallas is resting at 91.6% occupancy, with only Richardson and Denton besting 95%. “The overall condition in the market is that it’s not strong enough to ensure success,” Willett explains, “and not weak enough to preclude success.”

Going forward, Willett believes 2003 will bring increased demand. The hint of optimism is tied to the DFW’s ability to churn out jobs in a dark economy. The region is lagging its historical job creation by 24,300 positions, but still tracking to the positive with 19,700 new jobs coming on line between January and August.