Demand for apartments in Dallas-Fort Worth has pushed monthly rents to record highs.
In June, the average rent reached $888, 3.9 percent higher than in June 2013, according to MPF Research. Rents on new leases signed in the second quarter jumped 2.2 percent from the first quarter, the biggest three-month increase in 50 years, the research firm said.
In Fort Worth, the quarterly rent growth was 2.3 percent, MPF Research said.
“The rent growth story is really unprecedented for a period when we’re delivering a lot of new product,” said Greg Willett, the firm’s vice president. “A sizable block of new supply in initial lease-up normally dampens the ability to push rents. What’s different now from the pattern seen in past cycles is that demand is so strong that occupancy is still trending upward despite all the additions.”
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Rents are as high as $1,800 in Dallas’ urban core, he said.
Demand for rental units has risen since the recession, when many owners were forced from their houses through foreclosure. Adding to that, DFW, with its low unemployment rate, has seen tremendous job and population growth in the past few years.
But construction of apartments during the recession did not keep pace with that growth, and now developers are trying to catch up. Apartments that once sat empty for a while are leased faster, and the market has grown tight.
Leasing outpaced deliveries in the second quarter, MPF said. Leases were signed for 6,615 units, but only 3,011 units were brought to the market. Occupancy in DFW in the second quarter was 94.5 percent, a 13-year high.
“We remain very optimistic about the market’s near-term prospects despite the big wave of further supply that’s on the way,” Willett said. “Performance levels likely will cool off a little bit, but we still expect both occupancy and rent growth over the coming year or so to remain above the long-term norm.”
Developers had 28,475 units under construction in North Texas at the end of June, tying New York for the most units on the way, Willett said.
Rent growth for new leases in the nation’s 100 largest apartment markets increased 1.9 percent in the second quarter, a 14-year high, MPF said. Monthly rents nationwide now average $1,153, it said.