Dallas-Fort Worth Multifamily Market Report

Chris Nebenzahl

April 20, 2023

Category: Dallas-Fort Worth

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The Dallas-Fort Worth Metroplex remains one of the most desirable MSAs nationwide for business growth, in-migration, and development. As a result, the Metroplex represents an extreme combination of multifamily supply and demand fundamentals. With thousands of people moving into DFW each year, the demand for housing is strong, but given the relative ease of building in North Texas, developers continue to add supply in droves.

Families and businesses are attracted to the state’s abundance of jobs and business-friendly local governments. The recent economic and population growth trends, coupled with favorable existing demographics, indicate a strong demand for multifamily properties; however, ample new supply will keep fundamental growth limited in the immediate future.

Radix Rent and Operating Performance

According to Radix data, as of early March, multifamily traffic in Dallas was nearly two full tours per property per week above the national average, and leasing averaged almost a full new lease signed greater than the national average. While absolute NER and occupancy rates are below the national level, rent growth across the Metroplex over the past month and the past year has greatly exceeded national rent growth.

Traffic & Leasing

Traffic is heaviest in the Lewisville and Collin County submarkets. These two northern suburban submarkets are averaging 20.4 and 17.6 tours per property per week, respectively. Not only are these submarkets dominating traffic across the metroplex, but they also represent the fastest-growing traffic submarkets in the MSA. Over the past month, weekly traffic in Lewisville and Collin County has increased by more than 8 tours per property. Both submarkets are benefiting significantly from the northern expansion of the Metroplex. Bordering the highly sought-after Plano/Allen/McKinney submarket, Lewisville and Collin County are comparatively affordable, and demand is spilling over into these submarkets.

Dallas residents continue to sign new leases at a strong clip, per Radix data. Leading the MSA are the submarkets of Grand Prairie, Collin County, Mesquite, and I-820. While there is no denying the strength and demand in northern suburban submarkets, leasing and conversion ratios are strongest in the western submarkets between Dallas and Fort Worth.

Occupancy & ATR

Despite the strong economy and demand for housing, Dallas occupancy falls below the national average due to significant new supply impacting the market. North Texas is among the easiest places to develop multifamily. Combining a development friendly MSA with significant demand for housing will result in a robust new supply pipeline.

Occupancy is the softest in western submarkets, including I-820 and Grand Prairie. While these submarkets are seeing some of the best new lease performance, their occupancy rates have fallen significantly over the past year. Grand Prairie has also seen rents drop by more than 8%, so the leasing performance may indicate a return to stabilization in the submarket.

Despite the demand in Lewisville, there is also significant available supply and average ATR in the submarket is 35 units per property, according to Radix data.

Net Effective Rent

While occupancy has struggled amid vast new development, rent growth continues across the Metroplex. On a year-over-year basis, rents are up 1.5%, well ahead of the national average.

The fastest rent growth over the past month has taken place in South White Rock and Carrolton/Addison. NER is up 3.0% and 1.6% respectively in the two northern suburban submarkets. Tight occupancy has led to rent growth as South White Rock and Carrolton/Addison also maintain some of the highest occupancy rates in DFW. With that said, there is room for continued rent growth as both markets maintain average rents roughly $200 below the MSA average.

When looking across the metroplex, it is easy to see the growth is widespread. Northern submarkets are leading the MSA in traffic, western submarkets are leading in leasing activity, and northeastern and northwestern submarkets lead in rent and occupancy. The sprawl and expansion of the DFW metroplex continues to provide strong opportunities for multifamily growth.

New Supply Pipeline

The Dallas Fort Worth MSA currently has 332 new development projects in either planning or construction stages.

There is a heavy concentration of development along the I-30 corridor between Dallas and Fort Worth including in Uptown Dallas and Downtown Fort Worth. The northern suburbs of Frisco, Plano, Lewisville, Prosper, Denton and McKinney also have a number of new multifamily projects going up.

Population growth has been strong enough to support the extensive development, however the sheer number of new units coming online is challenging property performance, as we’ve seen in Lewisville.

Economy

Dallas has the sixth-largest economy in the U.S., and it has grown rapidly over the past 15 years. It is the most diverse economy in Texas and does not rely heavily on one or two industries like Houston, Austin, and San Antonio. DFW saw 3.1% GDP growth in 2022, representing $682 billion and making up 2.7% of the country’s GDP. Despite signs of an economic slowdown, the region’s continued job growth led by some of the largest corporations will propel the DFW economy forward.

Employment Trends

The DFW Metroplex has added jobs consistently since the recovery from the COVID-19 pandemic. Going back to May of 2020, the MSA has had net job growth in all but one month. In 2022 alone, DFW added more than 235,000 new jobs.

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Dallas-Fort Worth Multifamily Market Report

About the author

Chris Nebenzahl

Chris Nebenzahl is the Director of Economic Research at Radix, where he oversees all macroeconomic and multifamily market analysis. Chris has 15 years of multifamily experience in data analytics, research, asset management and acquisitions. Prior to his time in the multifamily industry Chris was a portfolio manager at Bank of New York, focusing in the government and commercial fixed income sectors.

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Dallas-Fort Worth Multifamily Market Report

Chris Nebenzahl

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Radix Rent and Operating Performance

Traffic & Leasing

Occupancy & ATR

Net Effective Rent

New Supply Pipeline

Economy

Employment Trends

Streamline Your Market Analysis with Radix Research and ProForma

About the author

Chris Nebenzahl

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