After decades of spreading to the suburbs, multifamily development renews interest in downtown Dallas
Multifamily developments have incrementally spread outward from the Dallas CBD
July 31, 2019
- Multifamily developments have incrementally spread outward from the Dallas CBD. Starting in the 1990s, more properties were built in the McKinney and Frisco area. In the last decade, there has been a resurgence of new apartment construction in Uptown and downtown Dallas.
- The vacancy rate for apartments in the DFW Metroplex has held steady at 6% since 2012, and is virtually fully occupied for properties built before 2010. Properties built after 2010 have a vacancy rate of 13.3%, which can be partly attributed to newly built properties still being in the lease-up phase.
- Asking rent per square foot has increased each decade. Properties built after 2010 have an average asking rate of $1.69/SF, a 20% premium compared to properties built a decade earlier, and $0.52/SF higher than properties built before 1960. Older Class B and C properties, especially those located near the urban core, present the opportunity to significantly increase rental rate through renovation. Due to high occupancy rate for properties built before 2010, it will take time to complete total property renovation because owners will have to renovate unit by unit or wait for all leases to expire. If multifamily trends continue, investors will see high return but it may take time. Additionally, much of the new construction in Uptown and the CBD has been in high-rise properties, which demand higher rents compared to the wrap or garden product popular in previous decades.
Source: JLL Research, CoStar