It seems like there’s a new press release with new data in our inbox every day telling us that more and more people are moving to Dallas now than ever before. And just as often we are reading news stories about slow apartment leasing and price reductions in some areas of the market.
If you’ve been overwhelmed with the seemingly ubiquitous data-driven news showing both how fast we’re growing and how troublesome the rental market is looking, here’s a little breakdown of the most recent news regarding Dallas growth and Dallas real estate. The takeaway: Expect to see more of these guys.
The Dallas-Fort Worth area is adding 200 people every day …
… and most of them are moving to Collin County. In fact, of the 144,704 people who moved to the region in 2015, only 11,155 moved to Dallas County. Collin and Denton counties got the lion’s share of the population influx, with Collin County netting 20,861 new residents and Denton County bringing in 19,136 according to this story in The Dallas Morning News. Tarrant County bested Big D, too, attracting 18,936 new residents last year.
So why are all these people choosing other areas over Dallas?
Expansions by major employers including Toyota, State Farm Insurance, FedEx, Liberty Mutual Insurance and others are adding thousands and thousands of new jobs to D-FW’s northern suburbs.
The rate of employment growth in the D-FW area has actually improved a bit since the end of 2015, according to data from the U.S. Bureau of Labor Statistics.
“D-FW is still creating jobs out the wazzoo as opposed to Houston, which has slowed down,” [Real Estate Center at Texas A&M economist Dr. James] Gaines said. “Dallas for the rest of this year and into 2017 is dong [sic] the best of any of the metro areas in Texas — even Austin.
“We are looking at a little better than 4.5 percent growth rate for the employment market,” he said.
So, the answer is jobs. Only, the job creation isn’t happening in Dallas, so the people who are moving to our region are headed for Plano, Frisco, McKinney, etc., to work for companies like home automation giant Crestron, which chose Plano’s Legacy over other locations. But wait … what about all those apartments we’re building in Dallas?
Demand for apartment in Dallas-Fort Worth is flagging …
… and yet developers delivered 5,763 units in the first quarter of 2016. The total demand for apartment units in the first few months of this year didn’t even broach 2,000. Let’s hope that there’s a change of heart with the developers and builders and we don’t end up with more of the same boring buildings that Mark Lamster lambasts.
Here was one mediocre building after another, each virtually indistinguishable from the next. If you are familiar with Dallas, and Uptown in particular, you know the type: pseudo-contemporary blocks with Juliet balconies, some red brick detailing, pointless projections to add “visual interest,” and maybe a cornice or some other poorly scaled molding to suggest, and just barely, prestige. Their dull, endless facades discourage the kind of street life that presumably brings their very occupants to the city.
This bastardized visual language has become the de facto standard of Dallas residential architecture development. The explanation for its ever-increasing prevalence, however depressing, is fairly straightforward. Developers find something that’s profitable and want to reproduce it. Risk-averse banks are happy to lend them money given their track record, at least in the short term. Architects, stuck with low budgets, tight schedules, and conservative developers, serve to please and follow convention. And then there’s the public: in a hot market young professionals fresh out of collegiate dorms are willing to forego quality if the price, location, and surface amenities are adequate.
But, not only are we overbuilt on said ugly apartments, we’re also overpriced according to this Dallas Business Journal story:
With that, apartment occupancy dipped to 94.9 percent in the first quarter from 95.3 percent in late 2015, according to MPF research.
Even though occupancy is still relatively tight compared with historic averages, Willett said the momentum of apartment leasing has been lost at a time in the year when leasing ramps up.
And slowing demand hasn’t yet trickled into any price breaks on rent, with new leases climbing nearly a full percentage point during the first quarter.
Year-over-year, pricing is up 6.1 percent with the average monthly rent in North Texas sitting at $998.
Dallas-Fort Worth has more apartments under construction than any other market in the country, with 43,185 units currently under construction.
“With demand weakening at the same time that building activity is very aggressive, it looks like we’re headed toward a more competitive leasing environment,” he said, adding the group expects the apartment housing market to return to normal levels after a period of hyper growth.
Maybe a few price breaks can lure folks from their short commutes and great schools in Plano and Frisco to some snappy apartments in Dallas? Maybe some of those Millennials moving to Dallas are headed for all those vacant apartments? Heck, according to the American Community Survey, Dallas has the eighth cheapest rent measured against median income among major U.S. cities, so expect to see more of these guys: