Monday, April 06, 2009

Dallas-Fort Worth apartment occupancy drops in the first quarter

The slowdown in the local economy is hitting home for apartment landlords.

Overall apartment occupancy in the Dallas-Fort Worth area dropped by more than 2,000 units in the first quarter of 2009 as renters bailed out of the market, according to a report released Thursday.

The significant decline in apartment demand was "not a surprise, given that Dallas-Fort Worth now has joined the rest of the country in losing jobs," said Greg Willett, vice president of research for apartment consultant M/PF YieldStar. "The near-term performance outlook appears pretty dismal."

The first-quarter negative leasing comes on top of 6,000 net move-outs in the final quarter of 2008. Apartment analysts attributed the declines to renters doubling up to save money or leaving the D-FW area to look for jobs.

During the 12 months ending in March, total apartment occupancy in North Texas dropped more than 7,000 units, M/PF YieldStar estimates. That's caused overall occupancy to dip about 3 percentage points from a year ago to 90.4 percent at the end of March.

Rents remain an average of $755 a month.

Unless the economy rebounds, the situation is likely to get worse in the months ahead, analysts say. Almost 23,000 additional apartment units are under construction.

"While it will be a struggle to generate any demand when jobs are being cut, the real damage will come from the over-the-top volume of new supply in the pipeline," Willett said.

Most of the apartments being built are in Dallas' northern suburbs, including West Plano, Frisco, McKinney and Allen.

An additional 3,000 rental units are under construction in central Dallas neighborhoods including Uptown, downtown and Oak Lawn.

Until last year, the apartment sector had been one of the best-performing real estate markets in North Texas. The 5,600-unit decline in net D-FW occupancy last year was the first decrease in more than a decade.

DALLAS-FORT WORTH MARKET PROFILE

First-quarter 2009 statistics

Apartment completions 2,515 units
Apartment demand {TriDown} 2,030 units
Average monthly rent $755
Average occupancy 90.4%
Units under construction 22,951

SOURCE: M/PF YieldStar


By STEVE BROWN
The Dallas Morning News