Everything you wanted to know about the Urban Core, Uptown and Downtown Dallas, Texas & Dallas Ft. Worth Area Real Estate - Its growth, prosperity, setbacks and unprecedented revitalization is told here...Randall Turner of Harvard Companies, Inc 214-373-0007, 3500 Oak Lawn Avenue, Suite 325, Dallas, Texas 75219
Apartment rents in North Texas continue to rise, outpacing many cities across the country but still remaining slightly below the national average. One reason Dallas-Fort has seen increasingly higher rents — more people are moving here to start or develop their professional lives.
Steve Brown covers news and trends in real estate for The Dallas Morning News. He details a few factors behind the rising rents in North Texas.
The rent increases and how they compare to years ago: "This last year they were up about 6 percent and that sort of doubled the increase of what it is normally. So, Dallas forever was a very cheap place to rent or own, and we still are compare to national averages, but it's nothing like it was pre-recession. And it is certainly nothing like, say, 20 years ago."
The average price for rent in Dallas-Fort Worth: "It's a bit over a $1,000 a month — about $1,040. And over the last, say, 10 years, that's up like 25, 30 percent. So, yes, it's hard on apartment renters right now, but it's also real hard if you're trying to buy something. You really can't win either way on it."
How rents in Dallas-Fort Worth compare to other cities: "We're still a little bit below. The U.S. big city average is about $1,200, but you've got to remember places like New York, San Francisco, Los Angeles, where people are spending thousands and thousands of dollars a month on rent. But obviously there are a lot of places where you can rent apartments cheaper than $1,000 a month."
Why many areas are seeing rising rents: "We're like No. 1 or 2 in the country for job growth. We're creating more than a 100,000 jobs a year here, and that's attracting a lot of young professional people. For instance, the people are moving here from Toyota — their headquarters is coming here. They're coming from Southern California, and they're coming from New York City, and they're moving a lot of them into high-rise buildings or luxury buildings and uptown, believe it or not, driving all the way to Plano. They think our prices are wonderful, because they're used to paying Los Angeles rents or New York rents."
The top three reasons behind the rent increases: "The cost of construction. The cost of land has gone up huge in uptown and downtown [Dallas]. If you haven't gone and looked, even if you have no intention of renting one, go to one of these newest apartment projects. It will blow you away with what they've got for features in there.
A luxury loft-style apartment community in Dallas' Medical District, which sits two blocks from a DART rail station, has sold to a Chicago-based investment firm.
Terms of the deal were undisclosed.
Sherman Residential, a division of a Chicago-based, family-owned firm Benj. E. Sherman & Sons Inc., acquired the Maple District Lofts, a recently-completed, 342-unit apartment community at 5415 Maple Ave. in Dallas.
"This is an exceptional asset built to the highest standards, located in one of the Dallas metro's most sought-after submarkets," said Jeff Price, a JLL managing director, in a statement.
"Developers and investors alike are keenly aware of the tenants' rising standards of living in the city's urban core, and Maple District Lofts check every box on the 'live, work, play' checklist," he added.
Mast, a senior vice president at JLL, said he expects tenant and investor demand for high-quality properties like this to persist throughout the year as the region continues to add jobs.
The four-story apartment community includes luxury finishes, such as stained concrete floors, oversized soaking tubs, stainless steel kitchen appliances and quartz and granite slab countertops.
Some of the homes in the community have private rooftop decks.
Other community amenities include a resort-style swimming pool, sport lounge with outdoor kitchen, fire pits, a bocce ball court and a life-sized chessboard.
New apartment communities are springing up in North Texas as developers up the ante, with expectations of more than 30,000 new apartments coming to the region this year.
The region is on track to deliver 30,400 apartments this year, which is a 46 percent increase in deliveries from 20,800 apartment units completed by developers through the end of 2016.
"We are about to see the number of starts slowing down nationally, but we aren't seeing that yet in Dallas-Fort Worth," MPF Research Chief Economist Greg Willett told the Dallas Business Journalearlier this year."We will still b
Dallas-based development firm Wynne/Jackson, along with New York-based equity partner Star America, has reached a deal with Balfour Beatty to start a $67 million mixed-use project at The University of Texas at Dallas campus.
The project, known as Northside 2, will help create a transit-oriented development that encourages students to live, work, study and play in the community, said UT-Dallas Vice President for Administration Calvin Jamison.
"When this project is completed, we will have more than 7,000 students living on or near campus, and this phase will offer enhanced housing and retail opportunities to support our growing campus and community," said Jamison, in a statement.
UT-Dallas — with a history for being a commuter campus — has been trying to change perception and become a destination college for student life.
Plans for Northside 2 include adding 275 apartments and townhomes and more than 6,600 square feet of retail space in a $67 million public-private partnership. In all, the project will add 900 beds to the campus.
The community will also include a resort-style pool, courtyard, fitness facility and patios. It will sit on a 12-acre tract next to the initial phase of Northside, which opened last year.
The development team — Wynne/Jackson, Star America and Balfour Beatty — has a 61-year ground lease with the university as part of the public-private partnership agreement to develop Northside 2.
Dallas-based Andres Construction will lead the overall design and build team with Architecture Demarest as the lead design firm for the project.
Renovated apartments fill niche between pricey and dumpy
Dallas’ close-in Oak Lawn neighborhood is seeing its biggest apartment boom in more than 40 years. Developers are putting up thousands of rental units to meet the needs of young professionals relocating to the area.
Most of the apartments going up in Oak Lawn and nearby East Dallas are being built in place of older units that have been knocked down.
But not all of yesterday’s apartments are being traded for tomorrow’s construction.
Dallas-based Perry Guest Co. has been snapping up aging rental properties and giving them makeovers.
“We are taking the low end and making them pretty,” said Grant Guest, who’s busy with multiple rehab projects. “We have about 700 to 1,000 units.”
Even after the full-on fixup, Guest’s apartments rent for hundreds of dollars a month less than the new units being built a block away.
“Right now there is a discrepancy in the market — there is either the A-plus apartment or what we start with,” he said. “It’s either low end or high end.”
Guest’s projects aim for a different renter. He’s just finishing up a gut job on a 26unit apartment project on Douglas Avenue near Cedar Springs Road.
“This was built in the 1960s,” he said while giving a tour of the two- and threestory buildings.
He’s renting good-as-new units for $1,250 and $1,350. In the new apartments nearby, a one-bedroom starts at about $1,700.
“No, we don’t have the same amenities the big projects have,” Guest said. “But when someone is making $50,000 a year, saving $400 a month is huge.
“And not everybody wants to live in a 300-unit building where it takes you 10 minutes to park in the garage. They like the smaller buildings.”
That’s certainly the case for Kylene Law, who rents one of Guest’s Oak Lawn apartments.
“I looked around at all the places you can rent and didn’t want to do that,” said Law, a Pilates instructor. “I don’t want to be in some huge place where I don’t know who I live next to.
“The people who go into these units stay there and aren’t hopping around. I like renting from a family business that gives you more personal service.”
In many cases, owners of older apartment buildings in North Texas are getting larger annual rent increases than the newest buildings. A shortage of affordable housing in D-FW and teardowns of many aging rental units have put a pinch on that market.
Greg Willett of apartment analyst MPF Research says that for older apartments, rent growth averages 6.6 percent “with strong increases seen in every single neighborhood.”
“Class A rents are up less than 2 percent in Uptown, downtown and Oak Lawn, and slight rent cuts are occurring in the emerging North Oak Cliff and West Dallas pocket of activity.”
Guest is spending about $1 million to remodel the building on Douglas. It’s gotten a new exterior, landscaping, decorative lighting, and quality interior finishes and appliances.
“You have to put washerdryer connections in and do granite countertops,” he said. “And you have to have gated, secured parking.”
When he bought the rundown project, average rents were about $500 a month. Now they are more than twice that.
Guest typically spends about $40,000 per unit to overhaul the properties. He’s done two more in the next block on Douglas.
“They are tearing all these buildings down,” he said. “We are making them nice but affordable.”
Most of the properties Guest is revamping were built in the 1950s and 1960s.
“I just bought a building in East Dallas that was built in the 1920s. We are redoing all the hardwood floors,” he said.
In most cases, the renovations don’t go as far as knocking down walls or completely changing the exterior architecture.
“One building we did on Live Oak was so bad, we had to tear it apart,” Guest said. “But I try not to do that.”
He pools money from investors to buy the properties and then sells them after the renovations are done and they are leased to tenants.
“Everybody thinks what I do is crazy and these buildings are teardowns,” Guest said. “I don’t have much competition. Only a few people do what I do.
“We just bought a $10 million portfolio at San Jacinto and Bennett in East Dallas — 10 different buildings.”
More than 10 million square feet of office space is under construction in North Texas, the most in nearly two decades.
More than 10 million square feet of office space is under construction in North Texas, the most in nearly two decades.
After five years of increases, building totals probably will drop off this year and into 2018.
Several of the largest office developments in Dallas-Fort Worth are scheduled to be completed this year. Developers and lenders say they’re pulling back from starting more speculative buildings.
“We have certainly been in a six-year positive cycle that is longer than most real estate up-cycles,” said Greg Fuller, chief operating officer of developer Granite Properties.
“It’s hard not to think we are late in the cycle, so we do not think there will be much speculative office space built in the near term. That and the increased regulation and uncertainty with the banks has kept them from lending on speculative buildings, which has been positive for the market.”
More than half of the office space being built in DFW is already leased to major companies including Toyota,
JPMorgan Chase, Liberty Mutual Insurance and others.
But developers also are building nearly a dozen speculative buildings being offered to a variety of tenants. Those buildings have done well, but builders and brokers say it’s probably time to cool it on higher-risk construction.
“My thought is that we see a pause in spec buildings,” said John Zogg, managing director of developer Crescent Real Estate. “We have enough on ground and under construction that we need to prove up in the market.”
Along with the buildings under construction, big blocks of empty office space will hit the Dallas market this year and in 2018 as companies move into new campuses.
“There is an incredible amount of space left when they move,” said Cushman & Wakefield vice chairman Randy Cooper. “JPMorgan Chase is going to leave behind about 800,000 square feet to fill.
“Fannie Mae will leave behind about 270,000 square feet, and Occidental Petroleum is leaving 230,000,” Cooper said. “There are some major holes to fill.”
Most of the vacant office space will be along the Dallas North Tollway. And many of the buildings will have to be remodeled, Cooper said.
The bump in office vacancy comes as businesses are cutting back on the space they lease.
Many companies moving to new locations are reducing the size of their operations by 20, 30 or even 40 percent by cramming more people into tighter spaces.
Those downsizings were a contributor to the almost 40 percent drop in net office leasing in North Texas in 2016, leasing agents say.
All these factors are more likely to make some lenders pull back on financing additional office starts without tenants lined up.
DALLAS—The Uptown submarket remains tight. The submarket had the second lowest vacancy in Dallas through fourth quarter 2016 (13.7%) behind Preston Center (10.2%), due in part to its desirable location and accessibility to walkable amenities, according to JLL.
One release on the pressure valve is 3333 Welborn, a four-story office property prominently located in Uptown. The property includes more than 48,000 square feet of rentable office space. Currently, the building offers nearly 30,000 square feet of available office space, including approximately 26,200 square feet of contiguous space. A round of spec suites are in the planning stages and are expected to be delivered later this year, according to Abby Development.
“We acquired 3333 Welborn in late 2016 and have spent the last several months designing a full-scale renovation that will feature best-in-class amenities,” said Abby Development vice president Mason Green. “In this market, it’s rare to find a building that offers a repositioning opportunity of this magnitude in such an incredible location. Our vision is to create a workplace environment unlike any in the market, featuring a full amenity package and ample parking in a boutique, neighborhood office building.”
JLL senior vice president Blake Shipley and associate Cullen Donohue will lead the leasing and marketing efforts. Caddo Real Estate Services will handle property management for the building.
“Abby Development’s investments within the property and the fact that they will be headquartered here demonstrate their commitment to existing and future tenants of 3333 Welborn,” says Shipley. “We fully expect these capital improvements to elevate this asset within the market.”
As home prices continue to climb in Dallas-Fort Worth, Fitch Ratings' latest quarterly sustainable home price report says North Texas homes are overvalued by 10 to 14 percent.
The rating comes after North Texas home prices rose 13.4 percent year-over-year, according to Case Shiller's latest home price report.
And North Texas homeowners aren't alone. Homes throughout the Lone Star state are also 10 to 14 percent overvalued, based on the Fitch Ratings report.
Texas, along with the western United States and Florida, is exceeding supporting economic fundamentals, researchers say, with a particular focus on major metro markets like Dallas, Las Vegas, Phoenix and Portland.
Each of these major U.S. markets are overpriced by 10-14 percent, according to the report.
Meanwhile, home prices in most of the United States is sustainable and supported by improving unemployment and inflation-adjusted income growth rates, researchers said.
Last year, a Fitch Ratings director told the Dallas Business Journal that home prices were rising at a much faster pace than the underlying economic
fundamentals, such as income, unemployment and mortgages rates, can support.
"With all the job growth and in-migration of companies moving to Dallas-Fort Worth, we're going to continue to see a tremendous amount of activity," Wilson said.
That being said it's getting more difficult for first-time homebuyers — or even buyers making the median income in the region — to afford to buy a home.
"Only 16.2 percent of the new homes sold are affordable to a household in Dallas making the median household income," he told the DBJ."This means if you are making under $70,000 a year, you have to look at the existing home market because there's not many new homes in that price point."
The median price of a new home is about $345,000. That is far more than the maximum amount the median household in Dallas can afford, which is about $240,000, he said.
"As rates go higher, housing will remain expensive," he added. "There's no bubble here and I've told people if you are in the market for a house and qualify, it's as good a time as any to buy."