Axiometrics’ Fast Five Multifamily Rules for 2015
Multifamily was the darling of commercial real estate in DFW in 2014 and it looks to be on target for another banner year in 2015. Axiometrics research guru Jay Denton gives us five trends to watch in the coming year.
Apartment performance remained strong in 2014, Jay tells us, with the annual growth rate at 5.4% in November (the most recent figures available). The continued demand combined with limited vacant residential supply means another year with strong apartment performance, he says. Though rent growth will likely moderate from the current pace, don’t be surprised to see some of the better-performing submarkets posting 4% to 5% growth again next year. That's Jay in a snowmobile selfie with his daughter at Angel Fire a few weeks ago.
Demand isn’t going away anytime soon either, Jay says. Axiometrics is projecting that the metroplex will add an additional 100,000 jobs this year through major corporate relocations or growth of existing local businesses. DFW should remain one of the best job growth markets for 2015 in the US, he says. (Jobs may be the result from speed networking like that pictured here at a recent Bisnow DFW event.)
The new units being delivered are barely keeping up with demand, Jay tells us. While the overall market average occupancy rate is 95%, more than one-third of the properties Axiometrics surveyed reported an occupancy rate of 97% or higher for Q3. Overall deliveries for the market will increase from approximately 12,000 in 2014 to 15,000 in 2015, but they’ll likely be absorbed very quickly and have little impact on overall market performance due to strong demand, Jay says.
In 2014, suburban markets ruled with most reporting rent growth in the 4% to 7% range (compared to Dallas’ urban core growth of 1%), Jay says. Expect strong performance from the suburbs again in 2015 as the supply being delivered is scattered and rent levels more affordable. Uptown Dallas will bounce back in 2016, assuming new supply slows from its current pace, Jay tells us.
Housing prices jumped close to 20% over the last two years, making it less affordable to own a house, Jay says. There’s little available inventory (only two months of supply) and fewer houses are being built today than even the 1990s, Jay tells us. An increase in single-family construction will be needed to avoid an undersupply situation in the market (if we aren’t there already). A rise in single-family production and a slight increase in the homeownership rate would only have a marginal impact on apartment performance because it would be offset by more job creation in the market, he adds.
