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C REPORTDALLAS-FORT WORTH
MULTIFAMILY | Q3 2018
Dallas-Fort Worth | Q3 2018
Q3 CRE Report / 2
Greysteel’s CREport focuses on any subject that potentially impacts, or relates to, the commercial real estate sector, ranging from
studies of the performance of a specific asset type or region to economic and demographic studies, and anything in-between. Readers
will benefit from our professionals’ expertise and insight into the economic and market trends that affect all sectors of commercial real
estate, as well as our expansive knowledge of local markets. For more information about the CREport, or to request information for a
specific region, please contact [email protected].
DALLAS-FORT WORTH MULTIFAMILY INVESTMENT SALES CONTACTS
DALLAS-FORT WORTH MULTIFAMILY DEBT & STRUCTURED FINANCE CONTACTS
GREYSTEEL RESEARCH & MARKETING CORPORATE LEADERSHIP
SOURCES & METHODOLOGY
DOUG BANERJEEManaging [email protected]
KEELEY BYERLead Research Analyst
DANIEL HARTNETTSr. Finance [email protected]
ARI FIROOZABADIPresident & CEO
REBECCA WILEYDirector of Marketing
ANDREW MUELLERSenior Investment [email protected]
BOYAN RADICManaging [email protected]
JASON LANCESenior Designer / Media Coordinator
MITT PATELFinance [email protected]
JACK STONEInvestment [email protected]
MOISES MALDONADOInvestment [email protected]
DUERK BREWERChief Operating Officer
YASSI FARZANEHDirector of Corporate Services
NICOLE CAPOBIANCODirector of Transaction Services
SCOTT SIMONSenior Investment [email protected]
JOHN MARSHALL DOSSSenior Investment [email protected]
ANDREW HANSONSenior Investment [email protected]
All data is obtained from sources recognized as reliable but Greysteel makes no guarantees as to the accuracy thereof.
(1) Rental & occupancy trends take into account only multifamily assets larger than 50 units, except in the case of development and transactional analysis.
(2) The Dallas-Fort Worth Metro Area, as defined by Greysteel Research, is comprised of the following counties: Collin, Dallas, Denton, Ellis, Hood, Hunt, Johnson, Kaufman,
Parker, Rockwall, Somervell, Tarrant, and Wise.
(3) Affordable properties and market-rate properties with an affordable element are not analyzed in this report; this includes, but is not limited to, LIHTC, Section 8, HCVP, senior housing, military housing, corporate housing, and student housing.
(4) Data provided courtesy of Greysteel Research, CoStar Realty Information, Inc., REIS, Bureau of Labor Statistics, Bureau of Economic Analysis, and the U.S. Census Bureau.
* For more information or to inquire about Greysteel, please contact
Ari Firoozabadi, CEO & President ([email protected] | 202.417.3873)
DALLAS-FORT WORTH
Dallas-Fort Worth | Q3 2018
Q3 CRE Report / 3
Dallas-Fort Worth leads nation in population growth
The Dallas-Fort Worth metro area is the fourth most populated MSA in the U.S. and continues to be one of the fastest growing metros
in the nation. The Metroplex added more than 146,000 residents last year, the most of any metro area, while non-farm employment
increased by 3.2% over the past 12 months. Major corporate relocations and expansions across the metro have generated thousands of
new jobs, resulting in a massive influx of new residents capitalizing on those opportunities and driving the apartment market forward.
Even though Dallas-Fort Worth is leading the nation in home building, single-family houses are being built at half the rate of the previous
cycle, contributing to a tight housing market.
DFW is the top U.S. metro in deliveries and absorption
Approximately 36,800 market-rate apartments were under
construction in the Metroplex at the end of Q3 2018.
However, completion volumes are expected to decline next
year and after with a decrease in multifamily starts and
permitting. Despite near-record levels of supply, vacancies
are still below the metro’s historical average of 8.4% since
2000. Moreover, Dallas-Fort Worth led all major U.S. metros
with nearly 22,700 units delivered and more than 23,400
units absorbed over the past 12 months, ahead of New York
and Washington, D.C. With absorption outpacing deliveries,
the vacancy rate dipped to 7.2% at the end of September
and effective rents reached $1.29 PSF, a 3.2% increase from
one year ago.
Northern suburbs leading construction boom
For the past two decades, cities like Allen, Frisco, and McKinney
have experienced some of the fastest growth in the country, and
publications like Forbes continually rate these cities as some of the
best places to live in America. Strong population growth combined
with major corporate expansions and relocations by companies such
as AmerisourceBergen, Fannie Mae, FedEx, Liberty Mutual, State
Farm, and Toyota, will keep multifamily demand strong in northern
suburbs of the Metroplex. The Frisco-Prosper submarket leads
development in the metro with over 3,750 units under construction
and another 3,900 units proposed as of Q3 2018. The average
asking rent in Frisco-Prosper reached $1,364 per unit at the end of
September, an increase of 14.6% since 2015 and one of the highest
asking rents in the Metroplex.
TRENDLINES
GEO
GRA
PHIC
BRE
AK
DO
WN
DALLAS COUNTY Class A Class B Class C
Effective Rent Growth (Y-O-Y) -0.2% 2.6% 3.1%
Vacancy Rate 12.8% 6.2% 5.3%
Net Absorption (12-Month Trailing) 8,215 1,995 87
TARRANT COUNTY Class A Class B Class C
Effective Rent Growth (Y-O-Y) 2.3% 3.6% 4.0%
Vacancy Rate 10.1% 5.8% 5.0%
Net Absorption (12-Month Trailing) 3,139 1,343 162
COLLIN COUNTY Class A Class B Class C
Effective Rent Growth (Y-O-Y) 0.6% 1.4% -1.6%
Vacancy Rate 10.5% 6.2% 6.4%
Net Absorption (12-Month Trailing) 4,268 476 -80
PIPELINE VS EFFECTIVE RENTAL RATE PSF
Pipeline vs Effective Rental Rate PSF
$0.60
$0.70
$0.80
$0.90
$1.00
$1.10
$1.20
$1.30
$1.40
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD
Under Construction Delivered Effective Rent PSF
UNITS EFFECTIVE RENT PSF
NET ABSORPTION VS VACANCY
Net Absorption vs Vacancy
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
11.0%
12.0%
0
3,000
6,000
9,000
12,000
15,000
18,000
21,000
24,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD
Net Absorption Vacancy %
UNITS
2009 2010 2011 2012 2013 2014 2015 2016 YTD2017
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
$0.70
$0.60
24,000
21,000
18,000
15,000
12,000
9,000
6,000
3,000
0
12.0%
11.0%
10.0%
9.0%
8.0%
7.0%
6.0%
5.0%
4.0%2009 2010 2011 2012 2013 2014 2015 2016 YTD2017
Dallas-Fort Worth | Q3 2018
Q3 CRE Report / 4
Trade, Transp. & Utilities
Prof. & Business Services
Ed. & Health Services
Government
Leisure & Hospitality
Financial Activities
Manufacturing
Mining, Logging & Const.
Other Services
Information
KEY ECONOMIC INDICATORS
LABOR Q3 2017 Q3 2018 Change
EMPLOYMENT 3.60M 3.72M +3.2%
UNEMPLOYMENT RATE 3.8% 3.6% -0.2%
PEOPLE 2010 2018 2023 Projected
POPULATION 6.42M 7.51M 8.25M
% CHANGE — +17.0% +9.7%
HOUSEHOLDS 2.32M 2.68M 2.93M
% CHANGE — +15.5% +9.3%
HOUSING UNITS 2.53M 2.87M 3.13M
OWNER-OCCUPIED 1.43M 1.59M 1.77M
RENTER-OCCUPIED 887K 1.09M 1.16M
MEDIAN HH INCOME $56,349 $64,460 $72,373
% CHANGE — 14.4% 12.3%
38.0%
55.2%
OwnerOccupied
RenterOccupied
6.8%
Vacant
HOUSING PROFILE
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
18-24 25-34 35-44 45-54 55-64
2010 2018 2023 Projection
POPULATION COUNT BY AGE
2010 2018 2023 Projection
30.1%of Dallas-Fort Worth rental units are occupied by Millennials (aged 25-34)
52.3%of Dallas-Fort Worth rental units are occupied by renters aged 25-44
The chart above is middle‐right on page 40.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
2,800,000
2,900,000
3,000,000
3,100,000
3,200,000
3,300,000
3,400,000
3,500,000
3,600,000
3,700,000
3,800,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Employment Unemployment rate
EMPLOYMENT VS UNEMPLOYMENT RATEEMPLOYMENT SECTORS
Trade, Transp. & Utilities
Prof. & Business Services
Ed. & Health Services
Government
Leisure & Hospitality
Financial Activities
Manufacturing
Mining, Logging & Const.
Other Services
Information
21%
17%
11%
11%
12%
8%
8%
6%
2%3%
2009 2010 2011 2012 2013 2014 2015 2016 20182017
10.0%
9.0%
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
3,800,000
3,700,000
3,600,000
3,500,000
3,400,000
3,300,000
3,200,000
3,100,000
3,000,000
2,900,000
2,800,000
18-24 25-34 35-44 45-54 55-64
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
2008
Dallas-Fort Worth | Q3 2018
Q3 CRE Report / 5
PIPELINE & DELIVERIES
2,800REMAINING COUNTIES
36,800TOTAL UNITS
MARKET RATE UNITS UNDER CONSTRUCTION:
3,100DENTON COUNTY
7,300TARRANT COUNTY
7,500COLLIN COUNTY
16,100DALLAS COUNTY
Under Construction Planned
UNITS
HOT SUBMARKETS
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Frisco-Prosper
Farmers Branch-Addison-Carrollton
Garland-Rowlett
Plano NorthwestFort Worth
East Dallas DowntownDallas
SouthwestFort Worth
Under Construction Planned
Percentage of Frisco- Prosper Inventory Under Construction
Percentage of Farmers Branch-Addison- Carrollton Inventory Under Construction
DALLASFORT WORTH
DENTON
CARROLLTON
PLANO
McKINNEY
RICHARDSONFARMERSBRANCH
FRISCO
DEVELOPMENT UNDER CONSTRUCTION. THE LARGER THE AREA OF THE CIRCLE, THE MORE UNITS UNDER CONSTRUCTION.
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
3.4%
19.2%
Dallas-Fort Worth | Q3 2018
Q3 CRE Report / 6
PROPERTY CITY SALE DATE UNITS CLASS YEAR BUILT
Pine Oaks Mesquite Sep-18 240 B 1983
Retreat at Stonebridge Ranch McKinney Sep-18 464 A 2008
Canyon Grove Grand Prairie Sep-18 312 B 1983
Crossroads at Arlington Arlington Sep-18 216 C 1984
Brandon Mill Apartments Dallas Sep-18 300 C 1985
Capitol at Stonebriar Frisco Sep-18 424 A 2016
Trails at Creekside Allen Sep-18 457 B 2013
The Ranch at Ridgeview Plano Aug-18 288 B 1998
RiverVue Fort Worth Aug-18 375 A 2016
Spring Parc Dallas Aug-18 304 B 1986
Century 380 Aubrey Aug-18 416 A 2016
Villas del Estancia Irving Aug-18 206 C 1972
Vine on North Park Grapevine Jul-18 216 B 1985
Magnolia Creek Dallas Jul-18 436 C 1988
Pioneer Creek Townhomes Arlington Jul-18 213 C 1969
Cortland Waters Edge Dallas Jul-18 606 A 2016
RECENT TRANSACTIONS
TRANSACTIONAL TRENDS
Sales velocity in Dallas-Fort Worth is down slightly year-over-year, with approximately 391 assets trading compared to 435 properties
sold through the third quarter of 2017, but is on pace to reach 520 sales by the end of the year. From 2013–2017, the Metroplex
set new records for volume as investors sought more affordable opportunities away from expensive coastal metros such as Boston,
New York, and San Francisco. Investors continue to be attracted to the strong fundamentals despite loads of supply, long-term
demand drivers, and above average rent growth that Dallas-Fort Worth has to offer. This substantial investor interest has driven up
pricing, especially in the urban and premier suburban areas of the Metroplex. Even as prices increase, investment in Dallas-Fort Worth
multifamily properties remains extraordinary.
SALES VELOCITY MOST ACTIVE SUBMARKETSSales Velocity
135 18
5
203
300
418 46
6 498 55
6 580
391
0
100
200
300
400
500
600
700
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
700
600
500
400
300
200
100
0
NW DALLAS
SW FORT WORTH
ALLEN-MCKINNEY
RICHARDSON
GARLAND-ROWLETT
ARLINGTON
FB-ADD-CARROLL*
EAST DALLAS2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD
Most Active Submarkets (YTD)
0 1,000 2,000 3,000 4,000 5,000
East Dallas
FB-Add-Carr
Arlington
Garland-Rowlett
Richardson
Allen-McKinney
SW Fort Worth
NW Dallas# of units sold (YTD)
FB-Add-Carr: Farmers Branch-Addison-Carrollton submarket
0 1,000 2,000 3,000 4,000
*FB-ADD-CAROLL: Farmers Branch-Addison-Carrollton submarket
Dallas-Fort Worth | Q3 2018
Q3 CRE Report / 7
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