Sunday, December 30, 2007

Dallas Apartment Score: 7,200 Units Built vs. 6,700 Units Torn Down

Although this year's deliveries are pushing 7,200 apartments, Greater Dallas' multifamily market is sure to come out unscathed with teardowns keeping net inventory growth at its lowest point in 17 years. The reality is the scrape-and-rebuild fever of municipalities and developers has added just 487 units to the region's total.
"I don't think people have grasped that we're not growing inventory at all in Dallas," Greg Willett, vice president of M/PF YieldStar in Carrollton, tells about the 537,000-unit grand total. In checking the past, he says 1990 had just one 243-unit project completed due to fallout from the savings and loan debacle, but this year's marginal gain is squarely tied to teardowns.
Northeast Dallas' Highlands area is leading all submarkets in terms of teardowns--3,200 apartments. Willett says the second closest competitor is 400, which is cropping up in a handful of pockets. Scraping and rebuilding is widespread, but some municipalities like Arlington and Irving are urging owners to raze vintage complexes, but they aren't gaining much ground in the arena despite the possibility of incentives. The tentative numbers show Arlington lost 71 units and Irving didn't lose any.
Willett says developers have delivered 7,155 units in Greater Dallas this year, creating the second largest block of supply to come on line in the nation. The teardown count is 6,668 units. As for the US leader in completions, it's Houston with nearly 10,000 new apartments.
"I think we're going to be in good shape in 2008," Willett predicts about Greater Dallas. "The real unknown is if demand is being inflated because people can't get loans on homes, even reasonably qualified people. And, if it changes, which it most likely will, will it unleash buyers."
M/PF's fourth quarter stats will be finalized next week. Its third-quarter report put occupancy at 93.4% at pre-1970 complexes; 92.4% for the 1970s-era construction; 94.1% for 1980s-era inventory; and 96.1% for 1990s and newer complexes. Monthly rents in the categories average $619 for pre-1970s, $606 for 1970s, $630 for 1980s, $925 for 1990s and $978 for the newest developments.
Based on the average category rents, Willett concludes residents who were forced to relocate had plenty of choices. "It's low enough that there were other places for people to go. We don't have any shortage of affordable places for people to rent in D/FW unlike other places," he says. By Connie Gore