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The cost of renting a roof over your head in Dallas-Fort Worth has reached new levels.
At midyear, average apartment rents in North Texas are up almost 4 percent from a year ago. That’s the largest growth rate ever reported by longtime analyst MPF Research.
Average monthly rents throughout the area have jumped to $888. And the newest apartments in downtown and Uptown Dallas are running $1,800 a month on average, according to the Carrollton-based research firm.
“The rent growth story is really unprecedented for a period when we’re delivering a lot of new product,” said MPF Research vice president Greg Willett. “Demand is so strong that occupancy is still trending upward,” despite a huge surge in new construction.
During the second quarter, net leasing of D-FW apartments outpaced new units opening by more than 2 to 1.
Both net leasing, at 6,615 units, and openings, 3,011, were higher than in the second quarter of 2013, according to MPF.
Willett said apartment leasing in the D-FW area — which leads the nation in employment gains — is running about a third higher than in other major cities including Houston, Washington, Los Angeles and Atlanta.
At the end of June there were 28,475 apartments under construction in North Texas. D-FW and the New York metro area are tied for the nation’s largest apartment development volume.
Only 5.5 percent of local apartments are empty — the lowest overall vacancy in 13 years.
Builders say they are trying to walk a line between meeting higher development costs and not overpricing new rentals.
“The cost of construction is moving up faster than rents are right now,” said Doug Chesnut, CEO of Dallas-based apartment builder StreetLights Residential. “When we move past the ability of renters to afford that, we are in trouble.”
Because Dallas-Fort Worth wages are growing faster than in many areas of the country, renters haven’t pushed back on higher rents. But developers are aware that there’s a limit to how much renters will pay, especially in the urban core, where costs and rents are higher.
At an average rent of $1,800, an Uptown renter would need to make $65,000 a year to qualify for the unit, Chesnut said.
Developer Ted Hamilton — whose firm is converting the former Lone Star Gas buildings in downtown Dallas to loft apartments — said his firm’s rents are rising by 3 percent to 5 percent because of higher costs for everything from construction to taxes.
“We are definitely in the increase mode,” Hamilton said. “We really aren’t losing a lot of people.
“We value our customers and don’t want to gouge.”
With the latest rent and leasing numbers, North Texas’ already booming apartment construction market could gain even more speed.
Apartment construction in the D-FW area is now at the highest point in almost 30 years.
“D-FW is a much bigger place than it was three decades ago, so the inventory growth pace isn’t nearly as aggressive,” Willett said. “We remain very optimistic about the market’s near-term prospects, despite the big wave of further supply that’s on the way.”
Construction continued on the Elan City Lights apartments on Live Oak Street near downtown Dallas last month.
By STEVE BROWN
Real Estate Editor
stevebrown@dallasnews.com
Published: 02 July 2014 09:45 PM
Updated: 02 July 2014 09:45 PM
The cost of renting a roof over your head in Dallas-Fort Worth has reached new levels.
At midyear, average apartment rents in North Texas are up almost 4 percent from a year ago. That’s the largest growth rate ever reported by longtime analyst MPF Research.
Average monthly rents throughout the area have jumped to $888. And the newest apartments in downtown and Uptown Dallas are running $1,800 a month on average, according to the Carrollton-based research firm.
“The rent growth story is really unprecedented for a period when we’re delivering a lot of new product,” said MPF Research vice president Greg Willett. “Demand is so strong that occupancy is still trending upward,” despite a huge surge in new construction.
During the second quarter, net leasing of D-FW apartments outpaced new units opening by more than 2 to 1.
Both net leasing, at 6,615 units, and openings, 3,011, were higher than in the second quarter of 2013, according to MPF.
Willett said apartment leasing in the D-FW area — which leads the nation in employment gains — is running about a third higher than in other major cities including Houston, Washington, Los Angeles and Atlanta.
At the end of June there were 28,475 apartments under construction in North Texas. D-FW and the New York metro area are tied for the nation’s largest apartment development volume.
Only 5.5 percent of local apartments are empty — the lowest overall vacancy in 13 years.
Builders say they are trying to walk a line between meeting higher development costs and not overpricing new rentals.
“The cost of construction is moving up faster than rents are right now,” said Doug Chesnut, CEO of Dallas-based apartment builder StreetLights Residential. “When we move past the ability of renters to afford that, we are in trouble.”
Because Dallas-Fort Worth wages are growing faster than in many areas of the country, renters haven’t pushed back on higher rents. But developers are aware that there’s a limit to how much renters will pay, especially in the urban core, where costs and rents are higher.
At an average rent of $1,800, an Uptown renter would need to make $65,000 a year to qualify for the unit, Chesnut said.
Developer Ted Hamilton — whose firm is converting the former Lone Star Gas buildings in downtown Dallas to loft apartments — said his firm’s rents are rising by 3 percent to 5 percent because of higher costs for everything from construction to taxes.
“We are definitely in the increase mode,” Hamilton said. “We really aren’t losing a lot of people.
“We value our customers and don’t want to gouge.”
With the latest rent and leasing numbers, North Texas’ already booming apartment construction market could gain even more speed.
Apartment construction in the D-FW area is now at the highest point in almost 30 years.
“D-FW is a much bigger place than it was three decades ago, so the inventory growth pace isn’t nearly as aggressive,” Willett said. “We remain very optimistic about the market’s near-term prospects, despite the big wave of further supply that’s on the way.”
Original article by STEVE BROWN
Real Estate Editor, Dallas Morning News
Ben Torres/Special Contributor
Published: 02 July 2014 09:45 PM