The DFW region remains in the top three growth markets nationally, says Greg Willett, M/PF's director of research products. New supply, he adds, will be easily absorbed "as long as the economy doesn't crater."
Overall, Willett says, "it's a market with slowing construction that opens the door for potential market tightening in the near term." The 95.5% occupancy posted in early 2001 had been the highest recorded since the late 1970s. Demand of 18,600 units kept ahead of the 15,080 deliveries, resulting in a point gain in occupancy in the past year. At the second quarter close, average occupancy had registered 95.2%, a slip from the first quarter but still rosy numbers for building owners.
The analysis shows a shift in the demand areas, with northeast Tarrant County emerging as the region's newest hotspot. It's an untested multifamily submarket, but new product is rising from the ground in what "has been kind of an overlooked market," Willett tells GlobeSt.com. Of the 12,781 units under construction across the region, 3,300 are in the northeast Tarrant County communities of Euless, Grapevine, Keller, Haltom City and North Richland Hills. Plenty of open land to develop, a rising favorite landing spot for new employers and quality of life in its retail and single-family neighborhoods are giving rise to the northeastern shift from Southwest Ft. Worth, West Plano, Lewisville, Las Colinas-Valley Ranch, Grand Prairie and South Arlington. Two of those markets have no new construction while the remainder have less than 300 units in the works.
Fewer new jobs and less completions account in part for the demand slip, Willett says. Markets such as Carrollton, Richardson and Garland had been particularly hurt in the Q2 absorption standing due to aggressive rent increases ranging between 5% and 6%. The average DFW rent had climbed 3.9% in the past year as of June's end. Concessions have disappeared in West Plano, giving rise to an average rent hike of 5%. Still higher rent jumps, averaging 6%, have been recorded in East Plano and the Haltom City-North Richland Hills areas. And then there's the Allen-McKinney area, where rent actually dropped 4.3% as property owners struggled to absorb a significant number of last year's 24,000 DFW deliveries.
Not to be overlooked in the midyear report is the fact that Las Colinas-Valley Ranch and Grand Prairie, two of the prior years' leaders, had been strapped in absorption numbers because there are so few vacancies. Intown Dallas remains a strong contender in demand, absorbing about 1,000 units in the past quarter and some 1,340 in the past year. But when it comes to rent growth, the Intown section is among the lowest posting less than 1% overall.
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