Tuesday, March 31, 2015
D-FW is nation’s top market for apartment leasing, construction
Apartment construction in North Texas took off during the first months of 2015 with more than 34,000 units currently under construction.
The surge in building comes as the Dallas-Fort Worth area tops the country in demand for apartment homes. Net apartment leasing in the D-FW area has totaled more than 18,000 units in the past 12 months – significantly more than any other market in the nation, according to a new report by MPF Research Inc.
Tenants leased an additional 3,537 D-FW apartments in the first quarter alone, according to the Carrollton-based apartment analyst.
With population in North Texas growing by more than 100,000 people last year, demand for rental units in the area is high. Major companies including Toyota Motor, Liberty Mutual Insurance and others are also moving thousands of workers to the area.
“You have to put all these new people somewhere,” said MPF vice president Greg Willett. “And even though we have a stronger for-sale housing market than a lot of other places, the numbers there aren’t back to historical sales.”
Spiking home prices and a shortage of inventory are making it harder for D-FW residents to buy homes.
And the prices for home purchases are rising even faster than apartment rents.
Average rents in North Texas rose 5.5 percent in the first quarter compared with the same period in 2014. The average monthly apartment rent in the D-FW area is now $927, with new units renting for substantially more.
“We saw another impressive performance with rent growth at an all-time high,” said MPF vice president Greg Willett.
New apartments are renting for an average of $1,200 in the suburbs and more than $1,700 a month in many central city locations, he said.
Only about 5 percent of D-FW apartments were vacant during the first quarter.
“Thanks to Dallas-Fort Worth’s hot economy, strong demand for apartments is keeping the stock basically full,” Willett said. “In most neighborhoods, available choices in the middle price tier are down to a handful of units.
“The only sizable blocks of units ready to rent are in the brand new projects moving through initial lease-up.”
The 34,109 apartments under construction in the first quarter are the highest for the area since the 1980s and the largest building volume in the country, according to MPF.
Willett said the construction volume shows no sign of slowing and may increase as developers start more projects this year.
“I believe that this cycle is much more sustainable and will last longer this time,” he said. “I keep looking for a crack in this picture but so far I don’t’ see it.”