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.
- 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