Newest Dallas CBD & Uptown apartments getting a significant rent premium – but taking time to lease-up
Since 2017, almost 4,900 market rate apartment units have been delivered in Dallas’ CBD and Uptown areas.
November 27, 2019
- Since 2017, almost 4,900 market rate apartment units have been delivered in Dallas’ CBD and Uptown areas.
- As these new units delivered, Class A occupancy declined from low- to mid-90 percent to around 85 percent – although that has bumped up to 89 percent as the new units have been leased.
- These newest properties increased the downtown inventory by 30 percent. This sizable increase has made it difficult for older Class A projects to push rents. Between 2012 and 2017, Class A rents increased 4.4 percent annually, versus 1.0 percent since 2017.
- Overall, the new units currently achieve an effective rent premium over Class A of $335 per month – or 16 percent. Concessions are modest, averaging around 1 month free rent, although some projects report slightly higher levels.
- Lease-up is taking time. A few years ago, new projects leased at 23 to 25 units per month. Currently, the average pace is 12 to 13 units per month, unchanged from a review we did in early 2018.
- This slower average pace is a challenge for some projects. While initial leasing at opening can be fast, velocity can wane – meaning that it could take 18 months or longer to reach stabilization for larger projects.
Source: CoStar; MPF; Axiometrics; JLL Research