DALLAS / FORT WORTH, TX
Good weather. Good neighbors. Good jobs. A great future. With these attributes on its side, the Dallas/Fort Worth multifamily market is not only moving forward, it is doing so with the kind of determination that is emblematic of the Lone Star State.
Case in point: population and job growth. In 2007, the population of the Dallas/Fort Worth Metroplex—which the North Texas Commission says includes 12 surrounding counties—exceeded 5.7 million. According to a spring 2007 report by the Texas Workforce Commission, Dallas/Fort Worth expanded by 94,300 jobs in 2006, making last year the best job market in the region in six years. Citing sustained job growth and a strong economy, the commission also reported in May that unemployment had fallen to a seasonally adjusted rate of 4.1 percent, its lowest point since 1976.
And weather? Here again, Dallas improves upon the norm, with the National Weather Service reporting its average warm season, or freeze-free period, at 249 days. For the Dallas/Fort Worth multifamily market, this means good things.
MARKET FACTORS
According to a midyear estimate by YieldStar, a Carrollton, Texas-based provider of apartment market intelligence, Dallas/Fort Worth home sales in2007 are down by 5 percent to 10 percent over the year prior, and local apartment occupancy is at its highest level in more than five years. Similarly, commercial real estate research company Reis reports Dallas at an 8.2 percent vacancy rate as of first quarter 2007 and Fort Worth at a 9 percent vacancy rate for the same period.
Over the last year, average rents in the overall market increased 3.4 percent. Average monthly apartment rents in Dallas/Fort Worth as of first quarter 2007 ranged from between $450 and $515 per month for a studio to between $1,000 and $1,100 per month for a three-bedroom unit. New, similarly sized projects in hot markets are renting for as much as $1,300 to $1,500 per month.
North of Fort Worth, high-end communities such as Keller and South lake have experienced new Class A apartment and townhome construction and will likely see more in the coming years. In large part, this is due to the growth of the Alliance Corridor, a 17,000 acre mixed-used master planned community located on a 12-mile section between State Highway 114 to North Loop 820. At present, the Alliance Corridor includes more than140 companies that have generated approximately 24,000 new jobs.
B, C, AND BEYOND
According to the 2000 census, Dallas/Fort Worth grew by 30 percent in the decade between 1990 and 2000. In that same decade, and within that growth, the Hispanic market of Dallas/Fort Worth grew by 112 percent. This has breathed new life into Class B and C properties, particularly among those located in largely Hispanic submarkets such as Bachman Lake and Victory Meadow. The Ivanhoe Apartments in the Victory Meadow area east of I-75 (Central Expressway), for example, sold in November 2006 for $31,000 per unit and has just returned to market priced at slightly more than $48,000 per unit.
Even outside of these areas, Dallas/Fort Worth's B and C class units—when they are well run and maintained—are experiencing low vacancy rates and high rent growth. Indeed, this niche is proving to be a solid investment opportunity. Yet whether it be B and C class properties or Class A developments, the growing consensus is that Dallas/Fort Worth can count on more good multifamily news in the years to come. This is particularly true for properties that are managed well, as opposed to the investment tack of recent years that depended more on a strategy of flips and trades.
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