(To read more on the multifamily market, click here.)
DALLAS-The region's multifamily market has hit its highest absorption level in six years on its midyear reading and best quarterly accounting since Q3 2003, according to a just-released report.
Net absorption was 90% higher than a year ago, says Wayne Williams, president of ALN Systems Inc. in Carrollton. His team's analysis shows 8,543 apartments were absorbed on a net basis since the year began, of which 4,445 were leased in the second quarter. The activity has been unparalleled since third quarter 2003 when 5,666 units were absorbed, according to ALN's data. The breakdown shows complexes built between 1987 to the present took down about 7,300 units.
"Without a doubt almost half has been in the newer product," says Bonnie Brown, ALN's senior consultant and research analyst. But, there are still concessions clouding the rebound although they have tapered significantly in recent months, she tells GlobeSt.com. She says 68% of the 2,600 surveyed complexes, representing nearly 550,000 units, offer concessions, but have cut back to just a couple months' rent or a deposit reduction.
The activity, though, isn't translating into rent hikes at this stage. "It will be a little while before rents move up," Brown contends. "It may be early 2006 before we see rents start to rise." The region's average quoted rent is 82 cents per sf, down 1% from a year ago.
ALN stats show overall occupancy crept up just a shade to 88.4% from 87.7% at the 2004 close. To put it into perspective, there have been 11 straight quarters with occupancies below the 90% benchmark. With absorption higher in newer complexes, the category's occupancy rating jumped nearly two full percentage points to 89.4% for the January through June analysis. Boring further into the numbers, complexes built between 1987 and 1996 edged up to 93.1% occupancy, an increase of just 0.05%.
ALN reports there are about 5,000 units under construction in Dallas/Fort Worth. Nonetheless, Brown says, "I think we're going to see continued rebound in the apartment market."
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