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Dallas Multi-Housing Market to Grow in 2015 Due to Significant Job Growth

Tuesday, February 17, 2015

Dallas/Fort Worth (DFW) employers added 103,000 jobs in 2014, surpassing the strong 2010-2013 average of 72,000 jobs per year. The 2014 job gain figure was a 3.3 percent increase from the previous year. Employment and Population Totals With Toyota headquarters and the FedEx corporate campus moving to the DFW area, another 106,000 jobs are predicted for 2015. Though new apartment supply back to pre-recession levels, job growth has been strong, and new supply is being absorbed well.

According to Axiometrics, "do not think of the DFW apartment market the way you have the in the past. The cutback in supply during, and immediately following, the recession allowed occupancy rates to climb to a level the market has not seen in a very long time. Yes, it is one of the top multi-housing construction markets in the country, but the new units are needed to house all of the people moving to this area for employment. Overall residential supply, including single-family housing, still remains low relative to the amount of jobs being created. Over the next five years, expect steady and solid results in DFW due to supply and demand being in balance.”

Dallas Multi-Housing Development

More than 15,000 units were delivered in 2014, resulting in inventory growth of 2.5 percent. New deliveries are projected to rise to 17,000 units in 2015, increasing demand for multi-housing buildings. Another reason new supply has not had a major impact on performance is that it has been spread throughout the market. For 2015, Axiometrics shows new deliveries in 25 DFW submarkets, with most delivering fewer than 500 units. Areas closer to major employment hubs, like the Dallas CBD, will see more concentrated levels of supply.

Multi-Housing Building Occupancy and Absorption

Despite high levels of new multi-housing buildings and apartment supply, DFW had an occupancy rate of 94.7 percent in 2014, its highest rate in the past 18 years. While new supply is projected to outpace absorption in 2015, it should be noted that the market absorbed close to 72,000 units during the past five years while only 47,000 new units were delivered. The occupancy rate is forecast to moderate to 94 percent during 2015 and 2016, but remain well above the long-term average of 93 percent.

DFW Occupancy DFW Completions and Net Absorption

Rental Rates for Multi-Housing Buildings

DFW’s annual rent growth improved from 3.6 percent in 2013 to 5.1 percent in 2014 due to very strong demand. Many of the inner-ring suburban neighborhoods experienced rent growth greater than 6 percent.

DFW Rental Rates DFW Annual Rental Rate Growth

Contact HFF Dallas for more information regarding multi-housing properties on the market in this area.

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