Net Move-Outs Occur in Dallas/Fort Worth Apartment Market During 1999’s 4th Quarter; Demand Robust for Calendar Year
(January 4, 2000) – The Dallas/Fort Worth apartment market suffered move-outs during 1999’s last quarter. On net, the number of occupied apartments dropped by 700 units during the October-December time frame, according to the latest issue of M/PF Research’s Dallas/Fort Worth Apartment Report. “Weak demand in the 4th quarter is a routine seasonal trend, said M/PF Research president Ron Witten. “We’ve now seen net move-outs during the holiday period for 11 straight years.”
Demand in calendar 1999 registered at a robust 15,210 units. Those move-ins topped 1998 absorption by 30% to reach the highest level of demand seen since 1986.
Apartment completions in the 4th quarter totaled approximately 4,190 units. Shortages in materials and labor continued to impact apartment finish dates. Properties totaling more than 2,000 apartments did not meet scheduled delivery targets in late 1999, delaying completion until early 2000. Deliveries in calendar 1999 reached 16,980 units, but net new supply was slightly lower because a few properties were demolished or converted to condominiums.
“Supply and demand remained in better balance than we were anticipating in 1999,” said Witten. “Demand proved a little stronger than expected, mainly because new job production surpassed the levels predicted by most economists. More important, however, was the delay in the completion of new supply. A year ago, construction time tables called for new supply in 1999 to top 23,000 apartments, but more than one-fourth of the product that was scheduled to be finished during calendar 1999 is still under construction.”
Apartment occupancy in Dallas/Fort Worth registered at 93.9% as of December 1999. That occupancy figure is 0.2 points above the year-ago level, but 0.8 points below 3rd quarter’s seasonal peak.
Signs of a competitive leasing environment are most apparent in the modest pace of rent growth. Same-store monthly rents, net of reported leasing concessions, increased an average of 2.6% in metropolitan Dallas and 2.1% in metropolitan Fort Worth over the past year. In comparison, annual increases of 4% to 5% were the norm from the mid-1990s through early 1999.
Neighborhoods experiencing the strongest apartment demand in the Dallas Area during the past year included West Plano (absorbing 2,830 units), Lewisville (2,160 units), Intown Dallas (1,540 units), Las Colinas/Valley Ranch (1,500 units), Far North
Dallas (1,200 units), Richardson (870 units), Allen/McKinney (720 units) and Carrollton/Farmers Branch/Addison (580 units). In the Fort Worth Area, apartment demand leaders during the past year were Hurst/Euless/Bedford (570 units), Southwest Fort Worth (550 units) and Haltom/Richland (430 units). All of those submarkets also added significant blocks of new supply in recent months.
In the neighborhoods where apartment construction was most extensive, competition among new projects in lease-up generally held rent growth to limited levels. Same-store rents actually declined slightly in a handful of areas, notably Allen/McKinney, Las Colinas/Valley Ranch, West Plano and Intown Dallas.