Snapshots

Newest downtown apartments achieving above average rents – but pressured by slow lease-up pace

Since the end of 2012, 13,000 apartments have been delivered in downtown Dallas, with 10,800 coming to Uptown.

newest-downtown-apartments
  • Since the end of 2012, 13,000 apartments have been delivered in downtown Dallas, with 10,800 coming to Uptown. 
  • For Class A properties, occupancy has traditionally been strong, although the new deliveries have been dampening occupancy the last few years. Currently, Class A is at 88.5 percent, well off its 2012 peak of 94.4 percent . 
  • Over the period of 2012 to 2016, downtown’s strong demand fueled Class A rent gains of 5.7 percent annually. 
  • Since then, Class A rents have been flat. New deliveries since 2016, however, have been pushing rates. 
  • Currently, the average rate for new units is $2,080, or $2.23 per square foot. This reflects a 5.5 percent monthly premium over Class A – and a 12 percent per square foot premium given slightly smaller unit sizes.
  • Lease-up in the new apartments has slowed dramatically. In 2016, lease-up averaged a robust 23 units per month per project. Today, that pace is down to 12 to 13 units per month. 
  • This slow pace means the average new project will require 18 months to stabilize. As new deliveries hit the market, the attenuated lease-up is competing with first-year renewals, making it difficult to burn-off concessions and grow rents.

 

Source: MPF; CoStar; JLL Research

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