North Texas' boost in apartment leasing
D-FW apartment leasing surges after slowdown early in the pandemic North Texas leads the country in third-quarter apartment leasing. More than 40,000 apartments are under construction in the D-FW area
Dallas-Fort Worth’s apartment market turned its back on the pandemic with a surge in third-quarter leasing activity.
Net apartment leasing in North Texas totaled almost 9,000 units — the most of any U.S. metro area, according to the latest survey by RealPage.
Leasing more than doubled from the 3,832 net apartment total in the previous quarter, which reflected the worst of the COVID-19 shutdown.
“The key storyline for the country as a whole is that demand has bounced back in a big way from the weak level seen in the spring, with Sun Belt markets leading the way,” said Greg Willett, chief economist of the Richardson-based apartment industry service firm. "Dallas-Fort Worth is the nation’s top apartment demand center once again, with the quarterly increase in the number of occupied apartments coming in at 8,957 units. “That demand total is just a hair under the 9,504 units absorbed in third-quarter 2019.” The rebound in apartment leasing in North Texas helps to erase fears that the pandemic would sink what has been one of the country’s fastest-growing rental markets. “While there’s still work to do getting the local economy back to its pre-pandemic status, job additions in the past two to three months have been strong enough to allow new household formation to begin again,” Willett said. “The return of solid apartment demand is encouraging, especially given that home sales volumes also have been substantial.” North Texas' overall apartment occupancy at the end of September was 94.6%, down from 95.7% a year earlier but slightly higher than at midyear 2020.
Apartment rents in the third quarter were down about 1% in the Dallas area and were 1% higher in Fort Worth, RealPage found.
North Texas apartment rent averages $1,187, which is basically flat from the second quarter. “Property owners are scrambling to fill as much product as possible before the arrival of the seasonal slowdown in leasing activity. They’re holding back on pricing,” Willett said. Blake Taylor, senior vice president of Irving-based JPI, one of the area’s biggest apartment builders, says his company has seen a significant uptick in leases. “Certainly the leasing numbers show a big difference vs. April through June,” Taylor said. The number of local rental units offering concessions to attract tenants during the pandemic has risen significantly.
“Everyone has been focused on keeping their existing residents, but we’ve certainly seen a sustained uptick in leasing activity on communities with substantial inventory — even if we’ve had to offer a little more incentive concession to get that velocity,” said Michael Blackwell, senior managing director of Mill Creek Residential. Dallas-Fort Worth tops the U.S. in apartment demand.(RealPage )The D-FW area continues to lead the nation in apartment building by a wide margin. At the end of the third quarter, 40,349 D-FW units were under construction.
Along with the D-FW area, Atlanta, Houston and Phoenix also saw big increases in third-quarter apartment leasing.
In contrast to the apartment demand comeback in the Sun Belt, Willett said, there’s been less leasing success in expensive markets. “New York and San Francisco are continuing to suffer huge net move-outs, and demand remains stalled in places like Los Angeles, Seattle, Chicago and Boston," he said.
North Texas' boost in apartment leasing comes as employment in the area is down by 141,000 jobs from where it was in August 2019.
And the rise in rental unit leases comes amid growing concerns about a pending wave of tenant evictions because of the economy. “Missed payments in professionally operated apartments, which tend to be bigger properties, aren’t yet a significant problem in most areas,” Willett said. "Those who have lost jobs and can’t afford to pay rent by and large are moving in with family or friends rather than running up debt.
“Any sizable upturn in evictions probably will occur among those living in small multifamily properties or rental single-family homes with mom-and-pop ownership.” D-FW apartment leasing outpaced new unit completions in the third quarter.(RealPage )
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