Friday, March 21, 2008

North Dallas Multifamily Market

The teardown of aging apartments to make way for new, denser mixed-use developments is the latest trend in North Dallas’ multifamily market, according to Mark Stymiest, executive vice president with CB Richard Ellis in Dallas. “This is evident in many North Dallas areas like North Central Dallas near North Park Center Mall, the Galleria and Addison,” Stymiest says.
Two urban mixed-use projects near the Galleria demonstrate this trend. Columbus Realty Partners developed Village on the Green, a 202-unit mixed-use development with more than 90,000 square feet of high-end retail, while Alliance Residential is nearing completion of its Broadstone Parkway, a 333-unit mixed-use development containing approximately 40,000 square feet of retail, Stymiest says.
In addition to Broadstone Parkway, a number of significant multifamily projects are underway or on the horizon for North Dallas, including PM Realty Group’s high-rise and mid-rise developments at Park Lane Place, which is located across Central Expressway from North Park Center Mall. United Dominian Realty Trust’s (UDRT) Brookhaven project in Addison, a redevelopment of approximately 2,400 aging apartments, and the continued redevelopment of The Village, Lincoln Property Company’s massive apartment development just east of Central Expressway, also will make an impact on the market. New multifamily developers to the North Dallas market include SNK Realty Group, Worthing Southeast, Zale/Corson, American Realty Trust and Legacy Partners.
As evidenced by projects such as Park Lane Place and Brookhaven, most of the new developments in North Dallas, which generally are of a mid- or high-rise nature catering to young, professional renters-by-choice, are occurring in urban, infill locations, according to Stymiest. These areas include Uptown/Intown Dallas (2,941 units currently under construction), Oak Lawn (1,177 units completed during last 12 months), Addison and the Las Colinas Urban Center. “In addition, since Collin County is one of the fastest growing counties in the country, the cities of Plano, Frisco, Allen and McKinney also will see a significant amount of new supply coming on-line in the next 12 to 18 months.”
According to Stymiest, rental rates in Uptown/Intown Dallas for Class A multifamily properties typically range from $1.25 to $1.40 per square foot, with rents for high-end, newly constructed properties being over $1.50 per square foot. Rental rates in North Dallas for Class A multifamily properties typically range from $0.95 to $1.15 per square foot, with rents for the higher-end, newly constructed properties being over $1.20 per square foot. Class A multifamily occupancy rates in the North Dallas submarkets typically range from 93 percent to 96 percent.
The submarkets located in the fairway — between Central Expressway and the Dallas North Tollway — are well situated for continued rental increases, high occupancy and solid demand, Stymiest says. “These submarkets include Uptown/Intown Dallas, North Dallas, Addison, Richardson, Plano, Frisco and Allen/McKinney, which is currently one of the fastest growing areas in the country.”
Overall, record-level employment and population growth has led to strong demand for the Dallas/Fort Worth multifamily sector in 2007, and this growth is expected to continue into the foreseeable future. “This demand has led to occupancy gains (increased by 1.3 basis points in 2007) and rent growth (4 percent same store in 2007) that is closing the gap to pre-2001 levels,” Stymiest says. “In addition, the re-pricing of risk currently occurring in the single-family home market will force would-be first-time buyers to continue to rent, in favor of owning.”
— Mark Stymiest