Slowing Construction, Solid Demand Push Up Occupancy and Rents in the Dallas/Fort Worth Apartment Market
(April 2, 2001) — The Dallas/Fort Worth apartment market registered a notable jump in occupancy during 1st quarter 2001. This tightened leasing environment allowed more property owners and managers to drop or at least reduce the rental rate concessions that had been commonplace in many neighborhoods.
Apartment occupancy across Dallas/Fort Worth averaged 95.5 percent in March, according to the latest edition of M/PF Research’s Dallas/Fort Worth Apartment Report. Current occupancy tops the year-ago figure by 1.8 points and is the highest occupancy rate recorded in D/FW since the late 1970s. The annual rent growth pace, measured on a same-store basis, reached 4.1 percent in 1st quarter to roughly catch up with the metro’s overall consumer price inflation rate. Previously, annual rent growth had bottomed around 2 percent in the middle of last year, when deliveries of new product peaked and leasing competition among individual properties was so intense. 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.
The typical apartment in Dallas/Fort Worth now costs $690 per month, while rates for a unit built during the past decade average $928.
“A big drop in the pace of deliveries resulted in an especially favorable supply/demand relationship during 1st quarter,” said Greg Willett, M/PF’s director of research products. “Properties completed in the January-March time frame totaled fewer than 1,500 units, reflecting the slowdown in starts seen throughout 2000 and then the recent weather-related construction delays that pushed building activity past scheduled finish dates. Quarterly deliveries averaged nearly 4,200 units during the building boom of 1996-2000, so early 2001’s cutback in new supply was quite pronounced.”
Completions during the 12 months ending in March totaled 18,584 apartments. In comparison, demand during the past 12 months totaled 25,550 units, including 4,840 units absorbed in 1st quarter 2001.
“Apartment demand in Dallas/Fort Worth remains solid,” said M/PF’s Willett. “Although layoffs are occurring in some sectors of the local economy, net job growth is holding at a healthy level as D/FW is outperforming the nation as a whole. These job additions translate to continued strong housing demand. Furthermore, concerns about job prospects and the stock market’s performance likely are prompting some would-be home buyers to delay their purchase decisions.”
Apartment demand was especially strong in the West Plano area during the year-ending 1st quarter, reaching 4,840 units. Southwest Fort Worth followed with 1,480 units absorbed, while demand between 1,300 and 1,400 units was realized across East University-Vickery, Carrollton/Farmers Branch/Addison, Las Colinas/Valley Ranch, and Lewisville. Annual demand surpassed 1,000 units in two additional neighborhoods: Allen/McKinney and Intown Dallas.
Even if slower economic growth diminishes apartment demand in Dallas/Fort Worth during the near term, M/PF Research expects the market’s occupancy rate and rent growth level to remain fairly healthy due to the slowing pace of new building. Ongoing construction at the end of 1st quarter totaled 12,600 units.
The cutback in new development is particularly striking in West Plano. Ogoing construction now is limited to two properties with a total of 567 units, compared to more than 4,300 units added during the year-ending 1st quarter 2001. Apartment development remains notable, however, in two pockets of Dallas/Fort Worth. More than 2,100 units now are under way in the Northeast Tarrant County cities of Euless, Grapevine and Keller, while Intown Dallas contains roughly 1,900 units under construction.
|Dallas/Fort Worth Apartment Market Profile
1st Quarter 2001
|Annual Employment Growth||106,300 jobs|
|Annual Apartment Completions||18,584 units|
|Annual Apartment Demand||25,550 units|
Change in Past Year
|Average Quoted Rent
Change in Same-Store Rents
|$690 per month
This information is summarized from M/PF’s Dallas/Fort Worth Apartment Report, a quarterly publication that includes data and analysis addressing the local economy and trends in apartment demand, supply, occupancy and rents. Information is summarized on the metro level and detailed for 45 submarkets.
Founded in 1961, M/PF Research is the trusted national expert in apartment market research, each quarter conducting primary research on property performance in more than 50 U.S. metropolitan markets. M/PF is retained by investors, developers, owners and lenders to prepare project-specific market studies and to produce broader, strategic market selection analyses and reports. M/PF Research, located in Carrollton, Texas, is a wholly owned subsidiary of RealPage, Inc., a leading provider of property management software and web services.