April 1, 2019, Dallas Morning News - Dallas-Fort Worth apartment rents are inching higher, even though the percentage of empty rental units has risen a bit. Average rents in D-FW rose 2.6 percent from a year ago in the first quarter to an all-time high of $1,131 a month. That's slightly less than the nationwide 3.2 percent apartment rent growth, according to the latest data from Richardson-based RealPage.
But rents in the area are still growing despite record construction activity.
"Local rent growth actually has accelerated a bit," said RealPage's top economist, Greg Willett. "That upturn for the most part comes in Dallas, where annual growth has gotten to 2.3 percent, up from just 1.2 percent six months ago.
"Still, Fort Worth continues to record a rent growth premium, with pricing up 3.4 percent annually."
At the end of the first quarter, developers had opened more than 29,000 new apartment units — the most of any U.S. metro area in a 12-month period, RealPage said.
"North Texas continues to lead the country for building activity by a huge margin, with roughly 36,000 apartments under construction," Willett said. "We're anticipating that property owners and operators will continue to see a really competitive leasing environment over the next year or so, as completions will kick up even more from today's already aggressive volume.
"While the fast-growing economy in Dallas-Fort Worth will spur lots of apartment demand, it still looks like deliveries will at least slightly outstrip absorption capacity."
During the first three months of 2019, net apartment leasing in North Texas added up to an estimated 1,790 units, fewer than the 5,677 apartments added to the market, RealPage found.
"First-quarter demand in the previous three to four years came in around 5,000 units," Willett said. "Thus, early 2019 demand is on the light side.
"But it doesn't look like a red flag pointing to a pending dramatic slowdown in the market's performance. Landlords obviously aren't overly concerned, given they pushed the pace of rent growth a little."
Overall occupancy dropped slightly with all the construction. RealPage found that 94.2 percent of D-FW rental units were occupied in the first quarter, compared with 94.4 percent in early 2018. Nationwide apartment occupancy is at 95.2 percent, according to RealPage.
"As we move into prime leasing season for 2019, there will be lots of high-end new product available in some spots," Willett said. "New luxury properties are going to be scrambling to attract affluent renters.
"At the same time, vacant units available to lease can be very difficult to find in properties in the middle to lower end of the pricing spectrum."
Apartment rents are growing the fastest in markets including Midland-Odessa (up 15.2 percent year-over-year), Phoenix (8 percent) and Las Vegas (7.9 percent).
Houston is getting the least big-city apartment rent traction, with average costs to renters unchanged from a year ago.