Multifamily's Hottest Submarket

You may be surprised: start driving north on 635 in Mesquite and look to your right all the way until you hit I-75. (Or maybe glance, keep your eyes on the road for the most part.) The top three submarkets for Q2: Mesquite, Garland, and Far Northeast Dallas. 

Those submarkets averaged between 6% to 8% annual rent growth this quarter, says Axiometrics research VP Jay Denton (here, with his kids on Father’s Day, he's the tall one). Jay tells us those markets are strong for several reasons. For one, those submarkets recovered later in the cycle. The urban core had 10% rent growth in 2011, but Mesquite was only at 3%. Because of that, they didn't attract new supply the way that other submarkets did because growth was slower during the early recovery. And there's practically no new competition in those three submarkets.

Occupancy rates hovered in the 95% to 96% range in Garland and Mesquite, which gave pricing power to landlords especially with no new supply hitting the market. In the area between the TI plant and Jupiter Road in Far Northeast Dallas, the occupancy rate was only 90% in Q2 '14, but it was the hardest hit submarket during the downturn. Occupancy rates fell to 79% during 2009. But they've made a major comeback, which is why we are seeing so much strength in rent growth now, Jay says. But, don’t call Jay to ask for more stats today, he’s hitting the links.