Вы находитесь на странице: 1из 4


Dallas/Fort Worth Metro Area Q2/19
Exceptional Household Growth Overshadows
Vacancy Bump; Value-Add Plays Still Prevalent Multifamily 2019 Outlook

Robust demand factors unable to keep vacancy snared. Strong CONSTRUCTION:

employment growth headlines the metro’s healthy fundamentals as
Completions reach their highest mark
more than 100,000 jobs will be created this year. White-collar positions
this cycle as the building boom contin-
will remain abundant, particularly in downtown Dallas as well as the
Telecom Corridor in Richardson. Fort Worth’s central business district 30,800 UNITS
will be completed
ues. Urban areas will receive much of the
focus this year.
is also beginning to garner more interest from employers. Sustained job
creation and strong household formation will support the absorption
of almost 27,000 units this year; however, that won’t be enough to keep
vacancy from rising. Vacancy is set to move into the upper-5 percent
range as construction hits a cyclical high of more than 30,000 new units.
The influx of supply will dilute rent growth, putting gains well below the An inundation of new apartments will
shift the market’s supply-demand bal-
previous five-year average of 5.4 percent. Transitioning neighborhoods
near the core should continue to see rental increases moving forward. 30 BASIS POINT
increase in vacancy
ance, prompting vacancy to rise 30 basis
points to 5.7 percent.
Developers find opportunities in urban areas. The Metroplex will
brace for another wave of construction in 2019 as builders look to cap-
italize on the area’s marked demand facets. Dallas’ urban core is slated
to receive nearly 2,500 units this year, further densifying the area as
residents pen new leases. At the same time, Fort Worth continues its Strong supply growth will taper rent
gains as the average effective rent climbs
revitalization, adding roughly 1,500 apartments to downtown and adja-
cent neighborhoods. Additional completions in the market’s northern 2.7% INCREASE to $1,152 per month — about $250 below
the national rate.
outer-ring submarkets will push Dallas/Fort Worth’s delivery volume to in effective rents

the highest in the nation this year.

Investment Trends
• East Dallas was a favored area for value-add plays as buyers looked to
Local Apartment Yield Trends
capitalize on the proximity to major employers as well as entertainment.
Apartment Cap Rate 10-Year Treasury Rate
Although this part of the market has begun to soften in recent months, in-
12% vestor interest is still strong. Here, complexes in the 10- to 20-unit range
are widespread, producing yields in the mid-6 percent band.
• Yield-driven investors remained focused on Irving over the past year,
generating robust demand for Class C assets. Numerous longtime

owners parted with their properties as a number of private investors
combed through the metro in search of high-cash-flow options. Space
and operational upgrades were necessary for many of these assets.

01 03 05 07 09 11 13 15 17 19* • A mix of private and institutional capital homed in Arlington as a vari-
ety of 200-plus unit assets exist. In this area, doors sold for an average
of $93,000, netting cap rates in the mid-5 percent band. Quick access
to major thoroughfares and entertainment hubs boost the appeal of
Sales Trends
properties in this part of the market..
Sales Price Growth
* Cap rate trailing 12-month average through 1Q; Treasury rate as of March 29
per Unit (000s)

$120 Inc.; Real Capital Analytics

Sources: CoStar Group, 30%

$90 20%
Employment Trends
1Q19 – 12-Month Period
Local Apartment Yield Trends
Metro United States Apartment Cap Rate EMPLOYMENT
10-Year Treasury Rate
2.9% increase in total employment Y-O-Y
Year-over-Year Change


9% Professional and business services positions were in high demand
during the past year, driving the metro’s job creation to 107,500.

6% Strong hiring activity pushed the unemployment rate down 10 basis
points to 3.5 percent.
• The market’s job creation was rather diverse as three segments
-6% 0%
gained more than 20,000 employees on a yearly basis. The
09 10 11 12 13 14 15 16 17 18 19* 01 03 05 07 09 11 13 15 17 19*
information sector was the only area that lost jobs.

Completions and Absorption Sales Trends

Completions Absorption Sales CONSTRUCTION
Price Growth

40 Average Price per Unit (000s)

24,100 units completed30%Y-O-Y

Year-over-Year Growth
$90• Inventory expanded at a strong clip over the past four quarters with
Units (000s)

several northern suburbs and urban cores witnessing extensive
$60 10%
20 supply growth.

10 $30• Nine submarkets gained more than 1,000 new

0% apartments,
spearheaded by Frisco-Proper which received roughly 3,000 units.
0 $0 Approximately 2,000 apartments were finalized
-10% in Fort Worth’s
09 10 11 12 13 14 15 16 17 18 19* 09 10 11 and
downtown 12 13 14 15 16neighborhoods.
surrounding 17 18 19*

Vacancy Rate Trends

Metro United States VACANCY
20 basis point increase in vacancy Y-O-Y
Vacancy Rate

• Vacancy inched up 20 basis points to 5.8 percent year over year as

20,100 units were absorbed. In the previous period, the rate inched
up 40 basis points.

• Increasing demand for Class A units pushed the tier’s average

vacancy rate down 20 basis points to 6.4 percent. Availability for
Class C dwellings rose 40 basis points, putting the market reading at
09 10 11 12 13 14 15 16 17 18 19* 5.0 percent.

Rent Trends
Monthly Rent Y-O-Y Rent Change RENTS:
$1,200 10% 4.5% increase in the average effective rent Y-O-Y
Year-over-Year Change
Monthly Effective Rent

$1,000 5% • The Metroplex’s average effective rent advanced to $1,131 per month
during the past year. Propelling this growth are rental gains among
$800 0% Class C units, which jumped 5.0 percent to $917 per month.

• Effective rents in neighborhoods bordering downtown Dallas con-

$600 -5%
tinue to rise at a quick pace, increasing up to 10.0 percent in some
$400 -10%
areas. Garland also witnessed rents surge, climbing 9.7 percent to
09 10 11 12 13 14 15 16 17 18 19* $1,021 per month.

* Forecast
Sources: Marcus & Millichap Research Services; CoStar Group, Inc.
Demographic Highlights

Five-Year Population Growth* 1Q19 Population Age 20-34 1Q19 Median Household Income
(Percent of total population)
693,300 $72,298
Metro 21% Metro

U.S. Median $64,259

U.S. 21%

1Q19 Total Households

Five-Year Household Growth* Population of Age 25+ Rent 41%

Percent with Bachelor’s Degree+**
Metro 33% Own 59%
U.S. Average 30%
* Forecast ** 2018-2023



Trading Activity on Track to Heat Up After
Lowest Vacancy Rates 1Q19
Employment Trends Rising InterestLocal
Rates Impacted
Apartment YieldBuyer
Metro United States Apartment
• Deal flow during Cap
the past 12Rate 10-Year Treasury
months was slightly hinderedRate
by rising
Y-O-Y Average
Vacancy Y-O-Y %
Submarket 6%
Basis Point Effective
interest rates
in the second half of 2018. The softened market kept
Change Rent
asset appreciation limited.
Year-over-Year Change

South Irving 4.1% -20 $942 4.1% • The average9%cap rate slid 20 basis points since March of last year,
Northeast Fort Worth-North
stopping at 5.8 percent. At the same time, initial yields for Class C

4.2% -140 $1,099 4.6% assets dropped
6% 50 basis points to 6.3 percent
Richland Hills
Southern Dallas County 4.4% -60 $1,024 3.5% Outlook: The bidding
environment should strengthen as interest rates
are now more stabilized. Strong job growth and household formation will
Denton -6% 4.7% 0 $1,047 5.5% continue to drive
0% investment in the Metroplex.
09 10 11 12 13 14 15 16 17 18 19* 01 03 05 07 09 11 13 15 17 19*

Northwest Dallas 4.7% 170 $952 7.1%

Southwest Dallas Completions

4.8% and
70 Absorption
$892 8.4% Sales Trends
Completions Absorption Sales Price Growth
Las Colinas-Coppell 5.0% -70 $1,325 4.0%
Average Price per Unit (000s)

$120 30%
Year-over-Year Growth

North Fort Worth-Keller 5.1% -10 $1,280 5.8%

Units (000s)

$90 20%
Garland 5.2% 120 $1,021 9.7%
$60 10%
Grapevine-Southlake 5.2% 10 $1,313 3.6%
10 $30 0%

Hurst-Euless-Bedford 5.2% 30 $1,040 4.0%

0 $0 -10%
09 10 11 12 13 14 15 16 17 18 19* 09 10 11 12 13 14 15 16 17 18 19*
Overall Metro 5.8% 20 $1,131 4.5%

Minimum 6,000 units * Trailing 12 months through 1Q19

Pricing trend sources: CoStar Group, Inc.; Real Capital Analytics
Vacancy Rate Trends
Metro United States
1Q19* Apartment Acquisitions CAPITAL MARKETS
By Buyer Type
Other, 0.9% Cross-Border, 8.6%
Marcus & Millichap Capital Corporation
• International pressures weigh on domestic outlook; Fed remains
Equity Fund
& Institutions, 23.5% patient. Amid ongoing trade disputes between the U.S. and China
and slowing growth throughout the European economy, the global
economic outlook has become more cautious. Market volatility,
Private, 64.1%
Listed/REITs, 2.9% combined with muted sentiment, has sponsored a flight to the safety
of Treasurys, pushing the 10-year yield below 2.6 percent. While
domestic growth has moderated recently, the waning impact of the tax
cut stimulus will likely trim forward estimates further. As a result, the
Apartment Mortgage Originations Fed has decided to cease reducing its balance sheet reduction through
By Lender quantitative tightening by September and removed the potential for
rate increases through the remainder of the year. The bond market
has begun to price in a much more dovish Fed, with flattening interest
Percent of Dollar Volume

Gov't Agency rates reflecting more caution. Fed officials will likely focus on the
Financial/Insurance intersection of a global growth slowdown and continued labor market
Nat'l Bank/Int'l Bank strength to refine their plans moving forward, keeping interest rates
Reg'l/Local Bank
stable for the foreseeable future.
• Abundant liquidity sources balance conservative approach to
underwriting. The availability of debt for apartment assets remains
elevated, spurred by the recent pivot by the Federal Reserve. Sourcing
14 15 16 17 18
Atlanta Office: Michael
will beGlass
led byFirst
Fannie Mae and Freddie
Vice President/District Mac, in addition to a wide
Michael Fasano First Vice President/Regional Manager
* Trailing 12 months through 1Q19 array of local, regional and national banks, and insurance companies.
Includes sales $2.5 million and1100
Abernathy Road N.E., Bldg. 500, Suite 600 Loan-to-value
Cleveland Office: (LTV) ratios are trending between 65 and 75 percent
Sources: CoStar Group, Inc.; Real Capital
Atlanta, GAAnalytics
30328 5005 Rockside Road, Suite 800
(678) 808-2700 | michael.fasano@marcusmillichap.com on stabilized
Independence, OH 44131
properties. The decline in interest rates has rewidened
(216) spread between cap rates and Treasurys, reducing lender concerns

about the risks related to repayment and valuation at maturity.

Columbus Office:
230Development and value-add projects have seen more conservative
West Street, Suite 100
Columbus, OH 43215
National Multi Housing Group lending
(614) 360-9800
due to concerns surrounding overdevelopment and the length
Austin Office:
John Sebree of the business cycle, leading to a greater use of alternative financing
Craig Swanson
First Vice President, National Director ViceHousing
| National Multi President/Regional
Group Manager structures such as mezzanine loans and preferred equity to cover the
9600 North Mopac Expressway, Suite 300 Cincinnati Office:
Tel: (312) 327-5417 | john.sebree@marcusmillichap.com additional capital requirements.
Austin, TX 78759
(512) 338-7800 | craig.swanson@marcusmillichap.com Colby Haugness Regional Manager
Prepared and edited by 600 Vine Street, 10th Floor
Brandon Niesen Cincinnati, OH 45202
(513) 878-7700 | colby.haugness@marcusmillichap.com
Research Associate | Research Services

For information on national apartment trends, contact:

John Chang Baltimore Office: Tim Speck First Vice President/District Manager
Senior Vice President, National Director | Research Services tim.speck@marcusmillichap.com
Matthew Drane Regional Manager
Tel: (602) 707-9700 | john.chang@marcusmillichap.com
100 E. Pratt St., Suite 2114 Dallas Office:
Baltimore, MD 21202 5001 Spring Valley Road, Suite 100W
Tel: (202) 536-3700 | matthew.drane@marcusmillichap.com Dallas, TX 75244
Price: $250 (972) 755-5200

Fort Worth Office:

© Marcus & Millichap 2019 | www.MarcusMillichap.com
300 Throckmorton Street, Suite 1500
Fort Worth, TX 76102
(817) 932-6100
Boston Office:

John Horowitz First Vice President/Regional Manager

100 High Street, Suite 1025
The information contained in this MA
report was02110
obtained from sources deemed to be reliable. Every effort was made to obtain accurate and complete information; however, no representation, warranty or guarantee,
(617) 896-7200 | tim.thompson@marcusmillichap.com
express or implied, may be made as to the accuracy or reliability of the information contained herein. Note: Metro-level
Office: growth is calculated based on the last month of the quarter/year. Sales data
includes transactions valued at $1,000,000 and greater unless otherwise noted. This is not intended to be a forecast of future events and this is not a guaranty regarding a future event. This is not intended to provide
specific investment advice and should not be considered as investment advice. Skyler Cooper Regional Manager
1225 17th Street, Suite 1800
Sources: Marcus & Millichap Research Services; Bureau of Labor Statistics; CoStar Group, Inc.; Experian; National Association of Realtors; Moody’s Analytics; Real Capital Analytics; RealPage, Inc.; TWR/Dodge
Denver, CO 80202
Pipeline; U.S. Census Bureau Charleston Office: (303) 328-2000 | skyler.cooper@marcusmillichap.com

Benjamin Yelm Regional Manager

151 Meeting Street, Suite 450
Charleston, SC 29401