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Thread: DFW Renting & Housing Market Demand

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    Super Moderator cowboyeagle05's Avatar
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    DFW Renting & Housing Market Demand

    Well if y'all haven't noticed already there has been a pretty big building boom of apartment projects in the last year due to high demand for apartments. Well a slow down to a more stable pace might be on the horizon instead of the break neck pace we have been seeing as of late.


    http://www.dallasnews.com/business/c...since-2009.ece
    The North Texas apartment boom hit a bump in the first quarter.
    Net apartment leasing fell by 270 units in the first three months of 2012.
    It was the first such decline in more than two years.

    The drop in apartment demand came as sales of preowned homes in the area rose by about 20 percent.
    "I don’t think one quarter of slight resident loss should be viewed as a big deal, especially when demand in first quarter usually is pretty mild anyway," said Greg Willett, vice president with apartment analyst MPF Research "The job numbers still look good, and a comeback for the for-sale housing sector actually could drive them higher."...

    ...

    The first quarter decline in apartment rentals ends a long streak of strong demand for rental housing in the D-FW area.
    Since the start of 2010, net apartment leasing in North Texas has added up to almost 40,000 units, according to Carrollton-based MPF Research.
    And in the fourth quarter of 2011 alone, apartment occupancies in the D-FW were up by almost 3,000 rental units.
    Willett said most of the first quarter declines in leasing occurred in the northern suburbs...

    ...

    Currently there are more than 12,000 new apartments in the construction pipeline in North Texas – more than double the number a year earlier. And developers are rushing to start more projects.
    "We’re not overbuilding yet," Willett said. "If there’s a red flag there anywhere, it’s that the new construction shouldn’t be built assuming that we’re going to sustain 5 percent to 6 percent annual rent growth."
    Apartment rents in the D-FW area were up by an average of 4.5 percent in the first quarter compared to a year earlier, MPF Research reports....

    ...

    Overall occupancy is currently 93.1 percent – up one and a half percentage points from first quarter 2011.
    Only 1,300 new apartments opened their doors in the D-FW area during the first quarter.

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    Quote Originally Posted by ayomateo View Post
    Cant find anything downtown less than 1400 a mo for 1 bedroom... Why can't some more developments get going on the giant empty loss on Ross. I just don't understand. I'm pretty bummed but i have to leave the arts apartments on Ross. They jacked my rent from 900 to 1400 a month!
    I feel ya. I'm leaving downtown too, moving to a cheaper place for six months to a year and buying a house. It's not that we can't afford the downtown rent, but we don't feel it's worth it. 90% of the time, we're going out of downtown for just about everything and although there's been major progress, after six years downtown, it's still nowhere close to thriving. And now that I work in Las Colinas, it's even less attractive. Now Uptown.. I can see paying that much rent for but unfortunately, the doucebag ratio is way too high. Downtown should be competing with Uptown, not trying to match it.

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    Mega-Tall Skyscraper Member AeroD's Avatar
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    Sky high? In 2009, I was paying $1200 in Downtown Austin....for an efficiency.
    Tighten the female dog!

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    Super Moderator lakewoodhobo's Avatar
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    I understand your frustration. Those of us who could barely afford downtown are being pushed to the outskirts. At the same time, people that I never imagined would want to move downtown are starting to consider it and actually doing it. Eventually there will be enough supply on Main St to balance out these price increases, but until then, I would suggest you check out the Continental when it opens next year. Otherwise, maybe it's time to check out Deep Ellum or the Cedars, East Dallas, Design District or Oak Cliff.

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    Call Jimmy

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    High-Rise Member Mena's Avatar
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    What is the reason for the hike from 900 to 1400? Quite a jump.

    http://www.mercdallas.com/apartments_search.aspx

    http://www.elementdallas.com/apartments_search.aspx

    http://www.wilsondallas.com/apartments_search.aspx

    Might try The Kirby too. I know I looked at a unit on Penthouse level that had assigned parking spot (other units aren't offered assigned parking) and they were willing to drop lease price from $1700 to 1600 at that time. So you might try to negotiating with properties for reduced pricing. Or concessions.

    I know the units listed above are above your $900, but come fairly close to that price.

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    Administrator dfwcre8tive's Avatar
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    All the buildings downtown are raising rents quite a bit, so the buildings affordable in the past are still pretty high. It shows there's a demand for downtown living, but the supply has dried up lately. For several years we had hundreds of units coming online every year keeping competition high and rates lower.

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    Administrator tamtagon's Avatar
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    ^It's probably time to dust-off all those big ideas about downtown Dallas that got put on hold by the three years of recession. We just might see the downtown residential inventory double in four years. It's a cinch that as soon as most of those big, old, outdated office building are converted and put back into use - and many are slated to be resident oriented - that the parking lots will begin to disappear. How long until the downtown TIF programs expire? After the municipal contribution requirement that a % of units are 'affordable' are out of the mix, I would few new downtown residential projects will offer inexpensive choices.

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    Quote Originally Posted by ayomateo View Post
    Cant find anything downtown less than 1400 a mo for 1 bedroom... Why can't some more developments get going on the giant empty loss on Ross. I just don't understand. I'm pretty bummed but i have to leave the arts apartments on Ross. They jacked my rent from 900 to 1400 a month!

    Are they offering teaser rates to new tenants? I ask because their website shows plenty of 1 BRs available for less than $1400 a month.

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    I think the simple explanation is you have plenty of high paying jobs downtown and not enough supply so the supply naturally targets the people with deep pockets first. It's not so much the street life as not having to deal with a car and instead being able to walk/take the train to the office and the convenience of being able to run home during the work day.

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    Mid-Rise Member mdg109's Avatar
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    Manor House still has decent apartments but their parking is valet, so it's an extra $125/mo. They also don't have a gym. 1 Bedrooms are going for $1075. I just checked.

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    Super Moderator lakewoodhobo's Avatar
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    Quote Originally Posted by ayomateo View Post
    (see intersection of Ross and Routh across the street from Arts Apartments), there are empty. Thats what I don't understand, the demand is there, but no construction what so ever.
    That one is such a no-brainer with its proximity to the park, it's almost inevitable that it'll someday become apartments. The only explanation I can think of is that, because the land is owned by Spire Realty (who are focused on building 2400 San Jacinto, the first phase of the Spire), we won't see anything happen there until after the Spire gets going.

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    Mid-Rise Member mdg109's Avatar
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    Don't the developers who did Arts Apartments also own the surface lot directly across the street from it?

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    Super Moderator lakewoodhobo's Avatar
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    Quote Originally Posted by mdg109 View Post
    Don't the developers who did Arts Apartments also own the surface lot directly across the street from it?
    They (JPI) did until the lenders took it back. Then in 2010 Spire Realty bought it from Compass Bank.

    http://www.dallasnews.com/business/c...-land-6102.ece

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    Quote Originally Posted by ayomateo View Post
    Exactly, I havn't drive my car in a month, walk to work everyday.. It's great. But there is just not enough supply, and then you have ugly old liquor stores and huge swaths of empty dirt lots (see intersection of Ross and Routh across the street from Arts Apartments), there are empty. Thats what I don't understand, the demand is there, but no construction what so ever.
    the answer is pretty simple...the size of the lot VS the cost of the lot VS what it cost to build enough units to make a profit VS the cost of providing parking

    it cost between 2K and 6K per surface lot space excluding land cost...it cost from 12K to 20K for a parking garage above ground and more for one that is partially or all the way below ground so right there for a single parking space per unit you are at 10K more per space at a min for small lots that need a garage that 10K is 500 per year over 20 years which is $40 per month more in rent without any borrowing or interest cost, maintenance cost, developer profits, and on and on.......and that is on the cheapest side for a garage.....you are easily looking at $100 more per month just for a single parking space so a unit with 2 spaces will easily be 200 more per month VS apartments with surface parking and probably more

    development cost.....once you go over about 7 stories high your cost per unit rises dramatically......and on a small lot that is expensive per square foot that needs to have parking with or without a garage you will start getting over 7 stories pretty quick to get enough units to spread the cost of the land and other things around

    so for a 1K sqft apartment with two garage parking spaces, on a very expensive piece of downtown land, with a building over 7+ stories high you are easily going to be looking at 40 dollars more per square foot of apartment that is 40K per unit for 1,000 sqft / 20 years = $166 more per month and probably a great deal more when you add in finance cost, developer profits, and the like.....add in land cost and you are looking at easily $200 more per month and probably $300 more per month at the min for developing the same number of apartments downtown VS somewhere with cheaper land, surface parking, and 3 to 5 stories in height

    so you are looking at a 33% increase in rent just for the vanity living of living downtown......anyone that has that type of money for vanity living will not be looking at simple fixtures like you would find in your average 3 story suburban apartments.....so add in more per sqft in finish cost.......then the fact that when demand is good and developers can actually take advantage of the fact that there people that will pay 33% to 45% more for vanity living well you might as well make all you can off of them and bump the rents up to 50%+ what it would cost to live somewhere else for the same size apartment.........suddenly you go from $1,000 a month rents to $1,600 per month rents if the developer actually wants to make any decent money on their investment

    and unlike many on this forum think there are just not that many people in dallas or the DFW metromess that are willing to pay $400 to $600 more in rent for vanity and there are even less that will pay that in rent when they can pay that in a mortgage and actually have ownership of something down the road and more than likely be as close if not closer to their place of employment since downtown dallas is 27%+ vacant and the massive amount of growth for jobs is in the northern areas of the metromess

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    Does Downtown Dallas do a demographic profile of the downtown renter, not owning resident? My guess would be late 20's - early 30's, well above average income but not a great credit score, little or negative net worth, unmarried, does not work downtown, and anticipates moving maybe to other region within 2 years. Owners would likely be the flip side of these metrics except having a much higher income.

    I am sure the developers know exactly how many people fit the profile, whatever it is. It is obvious that they do not see many people in the mix and collectively are only bringing enough product to market that equals the natural increase in this sliver as overall region increases.

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    Mega-Tall Skyscraper Member AeroD's Avatar
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    Quote Originally Posted by mjblazin View Post
    Does Downtown Dallas do a demographic profile of the downtown renter, not owning resident? My guess would be late 20's - early 30's, well above average income but not a great credit score, little or negative net worth, unmarried, does not work downtown, and anticipates moving maybe to other region within 2 years. Owners would likely be the flip side of these metrics except having a much higher income.

    I am sure the developers know exactly how many people fit the profile, whatever it is. It is obvious that they do not see many people in the mix and collectively are only bringing enough product to market that equals the natural increase in this sliver as overall region increases.
    I am more than likely the exception and not the rule, but I would not be surprise to see more things like this. I am living in a suburb in my old man's house. Where does my old man live? In a high-rise in Brooklyn. In his mid-fifties, and divorced, and kids out of college, he picked up and left to seek opportunity elsewhere. I am sure there are many other middle-aged folks who are in the same situation who can pick up and leave. Granted, the house is paid, which makes things much easier to do that, but with people living longer and working longer, you cannot confine yourself to your home.

    Urban or suburban, 30-year mortgages, no matter how cheap they may seem, do have costs. Along with that 30-year mortgage is the assumption, that your marriage will last 30-years and beyond. Ownership, or as immediate as possible ownership (10 or 15 year mortgage), can be a great thing. And on that note, I understand why people do move further out. The houses are cheaper. I am not sure you will be able to find a decent $150K home in Plano any more. Cheaper new homes are not usually found in the north, they are usually found in the east.

    People that live the suburbs are not necessarily living their because work is close. I have met people that for example live in Kennedale, but work in Frisco. When I grew up in Allen, I knew a lot of kids whose parents worked for EDS, JCPenney and Nortel. Two of those companies are gone, and one has or will reduce its corporate office significantly. Of course this was during the 90s when everybody was feeling good and thought nothing could go wrong, and the most pressing issue of the day was what the definition of "is" was.

    We are likely to see more apartments - whether urban or surburban - because of uncertainty, and people are waiting longer to get married. Yes, people may end up in the suburb to raise of family, but women are kinda in charge of that. As women outnumber men in college, women are not seeking MRS degrees. Instead of marrying at 24 or 25, it may be 34 or 35, and kids even a couple years later than that. That 10-12 year postpone is enough time to affect everything from real estate to how SSA is funded etc.
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    Administrator dfwcre8tive's Avatar
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    New study: Dallas-Fort Worth job boom means demand for apartments should meet new supply
    By Steve Brown
    9:44 am on April 24, 2013
    http://bizbeatblog.dallasnews.com/20...w-supply.html/

    Dallas-Fort Worth leads the country in apartment construction.

    With almost 23,000 units in the development pipeline, apartment building totals in North Texas are now past where they were before the recession.

    And so far, there’s no sign that builders plan to cut back on starts.

    While this might have been a problem right before the recession hit, with the current economic growth in the area, analysts at Marcus & Millichap Real Estate Investment Services said D-FW should be able to handle the thousands of new apartments that will open in the next couple of years.

    Dallas/Fort Worth’s economy will stage another impressive performance in 2013 as the region’s relative affordability lures new residents, and relocating and expanding companies,” the commercial property firm writes in a new report. “With job creation expected throughout the economy, apartment demand will strengthen across the quality spectrum.”

    Indeed, job growth in the D-FW area is currently among the strongest in the nation.

    For the 12-month period ending with March, employment in North Texas rose by 101,000 jobs. That’s the best performance in more than a decade. For 2012, D-FW created more than 83,000 jobs – behind only New York in Houston in total economic growth.

    ...


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    ^ The one that stands out to me is Oak Lawn/Park Cities: Why are rents so high (and increasingly dramatically) if occupancy is so low?

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    Skyscraper Member Mark Lea's Avatar
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    Quote Originally Posted by profbarium View Post
    ^ The one that stands out to me is Oak Lawn/Park Cities: Why are rents so high (and increasingly dramatically) if occupancy is so low?
    Simply a guess but I bet they haven't adjusted yet to newfound competition in Uptown/Downtown. People/businesses are stubborn in holding to what they think a property is worth

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    Mile-High Skyscraper Member rantanamo's Avatar
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    Quote Originally Posted by profbarium View Post
    ^ The one that stands out to me is Oak Lawn/Park Cities: Why are rents so high (and increasingly dramatically) if occupancy is so low?
    When you're talking 90% occupancy in a whole metro, that's really really high, and construction starts are lagging big time.

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    Quote Originally Posted by rantanamo View Post
    When you're talking 90% occupancy in a whole metro, that's really really high, and construction starts are lagging big time.
    That's a good point. I almost felt silly typing "so" (instead of "relatively") before "high."

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    Skyscraper Member Mark Lea's Avatar
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    Quote Originally Posted by profbarium View Post
    That's a good point. I almost felt silly typing "so" (instead of "relatively") before "high."
    And I read so high, saw the 11% and assumed that was the vacancy. I feel dumb. I blame the Rangers for keeping me up late (and not even winning :/ )

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    By what measure or standard is it lagging?

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    Quote Originally Posted by profbarium View Post
    ^ The one that stands out to me is Oak Lawn/Park Cities: Why are rents so high (and increasingly dramatically) if occupancy is so low?
    Oak Lawn is a mix bag of tricks right now and will be for the coming few years. There are a number of older apartment complexes that are either just plain old that don't lease well, properties being snatched up by developers for new projects where the tenants are slowly moving out, and brand new developments adding higher density. The new buildings always charge more. A rate that people will pay just to be in the newest building or the managing company "discounts" to sign on newbies so they feel like they are getting a deal. Either way what gets reported to these studies are the "market rate" and not the "discount" someone gets when signing leases. Since new inventory dropped to a trickle in 2009-2012 many properties enjoyed taking in higher rents. Demand was still there (a common tune sung by many developers) while lack of financing and the changing rules blocked new projects from getting off the ground. 5.1% vacancy is a low number, but to have 11.6% increase is pretty good and really shows there is a lot of activity going on in this submarket. The 11.6% figure will fall more in line with the other markets once the new developments level off, but you might be waiting for a bit. Oak Lawn redevelopment will be going on for a while.

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    ^ Thanks! That's very clear and quite helpful!

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    Super Moderator lakewoodhobo's Avatar
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    Dallas-area housing market hits an all-time high in first half of 2013
    http://www.dallasnews.com/business/r...lf-of-2013.ece

    Local pre-owned home sales in the first half of this year are running more than 20 percent higher than in the same period of 2012. They’ve set a North Texas sales record for a six-month period.
    ...
    “In the last 12 months, the D-FW area created 104,600 net new jobs — that’s a lot of jobs,” Jones said. “In that same period, the total residential permits issued in this area were 34,720.
    “We could have built twice as many homes and apartments and not overbuilt this market.”

  30. #30
    High-Rise Member F4shionablecHa0s's Avatar
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    Quote Originally Posted by Tucy View Post
    By what measure or standard is it lagging?
    Any time the price of a good is rising (as rents have been), supply is lagging behind demand.

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    Super Moderator lakewoodhobo's Avatar
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    http://bizbeatblog.dallasnews.com/20...h-of-888.html/

    Good news for StreetLights Residential and others working on new residential towers.

    Average monthly rents throughout the area have jumped to $888. And the newest apartments in downtown and Uptown Dallas are running $1,800 a month on average, according to the Carrollton-based research firm.

    Both net leasing, at 6,615 units, and openings, 3,011, were higher than in second quarter of 2013, according to MPF Research.

    With the latest rent and leasing numbers, North Texas’ already booming apartment construction market could gain even more speed.

    Apartment construction in the D-FW area is now at the highest point in almost 30 years.

  32. #32
    Frank Lloyd Wright Member
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    Since incomes are not rising at same rate, that means any growth in other retail areas can only come from new residents offset by increased share for housing for all residents. While apartment builders are happy, other shopping/eating venues cannot like that news. More pressure to consolidate locations.

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    ^ Interesting take on the puff piece that 'there is no push back from renters'. Couldn't be further from the truth. Statement should of been there is high enough demand they are able to continue increasing rents.

    For example, I recently moved to a less expensive place b/c for the first time (I was a long time tenant) the management would not work with me on the renewal (greater than a 40 percent increase). Last year I was only a little below "market" and when I moved in I was paying market (no concessions). So this past Friday there were 4 moving trucks moving people out at 7:30am. By 10am there were 3 more trucks moving out. Granted the property owners are finding replacements quickly due to high demand, but the point is there is plenty of push back from tenants. According to the moving company they have seen a spike in people moving this year in particular and the common complaint is unreasonable rate hikes and new fees such as a pet fee (ilo of a refundable deposit) with an additional monthly pet rent. Other cities / states have ways to preventl such big rate increases on tenants, but that's another discussion........
    Last edited by slfunk; 02 July 2014 at 03:08 PM.

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    Mega-Tall Skyscraper Member AeroD's Avatar
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    Apartment builders probably know the housing market will be nothing like it was before prior to 2008.

    As MJ pointed, incomes are not rising at the same rate, which on top of that lending has gotten stricter, if you want a nice new home in 'burbs saving 20 percent down on a $350K+ seems bit much. With that amount kind of money why not keep that 20 percent liquid, and not sink into it something you will probably not see a return on.
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