(Read more on the multifamily market.)
DALLAS-Delivering year-end numbers this week as promised, M/PF YieldStar's analysis has revealed multifamily rents climbed 4% for the year, the first time in nearly seven years that it surpassed the general consumer price inflation. Meanwhile, occupancy has hit its highest point since 2000, ringing up 94.1% across the metroplex as the curtain fell on '07.
"It's a nice solid performance," Greg Willett, vice president of the Carrollton-based research firm, tells GlobeSt.com. "I am surprised to see it that positive. It has surpassed my expectations." In November, the research firm had told conference goers that the year would end on a positive note. The reality is it ended on a high note, he says.
Willett says rents climbed in all 45 neighborhoods that the firm tracks. December ended with the average monthly rent at $741 in Dallas/Fort Worth.
M/PF's forecast is still being polished, but Willett predicts 2008 will continue to be robust despite 13,913 of under-construction units, of which 11,000 will deliver this year. Unlike 2007, Willett says this year's teardowns will amount to roughly 4,000 units, which should keep the existing 541,000-unit inventory in balance and not produce a repeat performance of minimal inventory growth. "So, you'll still be talking about an absorbable number," he says about the 2008 pipeline.
In M/PF's 57-metro territory, Dallas/Fort Worth's pipeline is second only to Houston, which has 15,123 units under construction. In the Dallas urban core, there are 3,142 units under construction, the largest block in North Texas. Addison and the Fossil Creek area of North Fort Worth are next in line, with at least 1,000 more apartments planned for each submarket this year.
In another show of market strength, the traditional slowdown in the fourth quarter didn't materialize this year despite 1,795 units delivering in the past three months. Willett says there were 1,000 units absorbed in Q4 and 8,250 units for the year, driving 2007's overall occupancy up 1.3%.
Willett says sidelined first-time homebuyers accounted for the barometric change in Q4. And, he assesses, the caveat for a particularly robust 2008 hinges on when, not if, lenders relax requirements for first-time homebuyers.
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