Where is all the multifamily development?

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By Walter Bialas, August 24, 2018

Is there a mismatch between supply and demand?

Apartment development in DFW has been especially robust during the last few years to accommodate our ongoing growth of 100,000+ jobs each year.  We’ve watched the number of apartments under development drift higher as the affordable home building market has struggled to deliver product.  Quite simply, we’ve been growing so fast it is difficult to meet new housing demand from that sector given rising land and construction costs – especially at relatively close-in locations where the jobs are being created.

With so many apartments now under development, it is hard to keep track of the “players without a score card”.  Because of that, we tallied all the projects that recently delivered and those under construction from a variety of sources to get a true scale of the pipeline.  Right now, 55,000 units are set to deliver between the last half of this year and 2021.  While new units are being added across the Metroplex, the lion’s share is in Dallas and in the intown to north central suburbs.

Although there looks to be a slowdown coming in 2020, this is more because of the timing of the development cycle than a shift in activity.  As long as our growth remains high, we should look forward to a full pipeline of new apartment units.  The challenge here, as we always point out, is matching the pipeline with demand – at the right rents.

The DFW multifamily pipeline:

Source: CoStar, MPF, JLL Research

  • DFW’s multifamily pipeline remains robust to accommodate the region’s fast growing population driven by the 122,000 jobs added in the last year.
  • During 2016 and 2017, 51,000 units were delivered.  Vacancy in these properties, which are either stabilized or are in late-stage lease-up,  now averages 17.1 percent.  Another 12,500 units were delivered in the first half of this year.
  • Based on the pipeline for the remainder of this year, 2018 deliveries should total almost 31,000 units, with a similar level scheduled to hit the market in 2019. 2020 and 2021 projects are in early planning and not yet finalized.
  • Development focus continues to be in central Dallas, where half of the development pipeline – 28,000 units – are under construction, although all parts of Dallas and Fort Worth are active.

 

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