By: Walter Bialas
We continue to watch our local multifamily development market. Because construction is still near all-time highs, it is good to take its pulse from time to time to understand market momentum and direction.
Last year, we profiled the CBD and Uptown areas and looked at how the newer properties (those delivered after 2000) were performing – as well as how lease-up and rent were faring in the newest deliveries. At that time, occupancy had softened slightly because so many new units were delivering. Absorption and rent, however were extremely strong.
Today, the story is much the same. Although occupancy for newer units in both the Dallas region and the urban core have edged down in the last few quarters, they are still good. In fact, the Dallas region is still close to 94%, which characterizes a market that is pretty balanced. Newer units in the urban core are now at 91.4%, which is a function of the construction activity taking place now.
On the surface, occupancy at this level might be something to begin worrying about, however, the new deliveries in our urban core are performing well. Based on our review, absorption now is tracking at 23 units per month / project. Although slower than the 30 unit average pace last year, this remains a healthy lease-up pace.
More importantly, rents are strong in these new offerings. Last year, the average rent for the new urban core units was $1,780 per month. This year, average rents are coming in at just over $1,900 per month – a 7% increase. On a per square foot basis, this equates to an increase of fully 10 cents per square foot.
Because DFW multifamily development continues to make the news locally and nationally, we will do a quick “health check” periodically to monitor the market’s direction.
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