Trinity Groves/Oak Cliff North and Far South Dallas/Waxahachie, in that order, are the hottest apartment submarkets in North Texas, according to a ranking based on the combination of rental rate growth and absorption.
A submarket that includes downtown Dallas, the West End and Deep Ellum ranked third, followed by the Denton submarket and the Allen/McKinney submarket, according to the ranking from ApartmentData.com.
The company analyzed 37 DFW markets to get their top five.
The rent growth in the hottest submarkets and in most areas of DFW is being driven primarily by employment growth, said Brad Taylor, CEO and managing partner of JPI. The Irving-based apartment developer has 15 multifamily complexes under construction now in North Texas, including Dallas, Fort Worth, Irving, Garland, Richardson, Frisco, Grapevine, Grand Prairie, McKinney and Farmers Branch, among others.
DFW has had slightly more than two times the national job growth for the last decade, Taylor said in an interview with the Dallas Business Journal.
“As jobs are created, it creates demand for all forms of housing,” he said.
DFW also has a younger-than-average population, and younger people are more likely to rent rather than buy their housing, leading to more overall demand, Taylor said.
The highest rent growth in DFW is occurring in the downtown Dallas/West End/Deep Ellum submarket, where rents are on pace to shoot up 13 percent in the year ahead. The next highest rent growth is occurring in Trinity Groves/Oak Cliff North, where apartment units are on track for a 10.2 percent increase in the next year.
The other hot submarkets and their annualized growth rates are: Far South Dallas/Waxahachie, 3.8 percent; Denton, 4.4 percent; and Allen/McKinney, 4.1 percent.
Turning to absorption, Far South Dallas/Waxahachie led the way, absorbing 2.2 percent of the overall DFW market in the past three months. The Trinity Groves/Oak Cliff North submarket absorbed 1.7 percent of the overall market, the Denton and Allen/McKinney submarkets each absorbed 1.3 percent of the overall, and the downtown Dallas/West End/Deep Ellum submarket absorbed 0.8 percent of the broader market, ApartmentData.com’s report says.
The overall DFW operating supply of apartments totals 747,909 units in 3,164 multifamily communities.
Some 93 communities totaling 25,282 units have opened in the past 12 months in DFW. An additional 101 communities with 30,057 units are under construction, and 112 communities totaling 48,012 units are on the drawing board, according to the report.
The company also analyzed concessions, or specials on rent. That analysis determined that the average discount from market or street rent in DFW is 5.3 percent, Bruce McClenny, president of ApartmentData.com, said in an email. The company captures the effect of move-in specials, months free and other specials and prorates them over a leased term to get the percentage reduction in street rent.
Compared to other large Texas metros, the discount from concessions in Houston is 6.2 percent, the discount in San Antonio is 5.1 percent and the discount in Austin is also 5.1 percent.
Another report, this one by Apartment List, found that rents in Dallas have increased 0.1 percent over the past month, and are up 2.3 percent year-over-year. Dallas’ median two-bedroom rent of $1,137 is below the national average of $1,194.
Publication: Dallas Business Journal