Professional Documents
Culture Documents
MULTIFAMILY
Dallas/Fort Worth Metro Area Q2/19
Exceptional Household Growth Overshadows
Vacancy Bump; Value-Add Plays Still Prevalent Multifamily 2019 Outlook
Investment Trends
• East Dallas was a favored area for value-add plays as buyers looked to
Local Apartment Yield Trends
capitalize on the proximity to major employers as well as entertainment.
Apartment Cap Rate 10-Year Treasury Rate
Although this part of the market has begun to soften in recent months, in-
12% vestor interest is still strong. Here, complexes in the 10- to 20-unit range
are widespread, producing yields in the mid-6 percent band.
9%
• Yield-driven investors remained focused on Irving over the past year,
generating robust demand for Class C assets. Numerous longtime
Rate
6%
owners parted with their properties as a number of private investors
combed through the metro in search of high-cash-flow options. Space
3%
and operational upgrades were necessary for many of these assets.
*
0%
01 03 05 07 09 11 13 15 17 19* • A mix of private and institutional capital homed in Arlington as a vari-
ety of 200-plus unit assets exist. In this area, doors sold for an average
of $93,000, netting cap rates in the mid-5 percent band. Quick access
to major thoroughfares and entertainment hubs boost the appeal of
Sales Trends
properties in this part of the market..
Sales Price Growth
* Cap rate trailing 12-month average through 1Q; Treasury rate as of March 29
per Unit (000s)
$90 20%
Employment Trends
1Q19 – 12-Month Period
Local Apartment Yield Trends
Metro United States Apartment Cap Rate EMPLOYMENT
10-Year Treasury Rate
6%
12%
2.9% increase in total employment Y-O-Y
Year-over-Year Change
3%
•
9% Professional and business services positions were in high demand
during the past year, driving the metro’s job creation to 107,500.
Rate
0%
6% Strong hiring activity pushed the unemployment rate down 10 basis
points to 3.5 percent.
-3%
3%
• The market’s job creation was rather diverse as three segments
-6% 0%
gained more than 20,000 employees on a yearly basis. The
09 10 11 12 13 14 15 16 17 18 19* 01 03 05 07 09 11 13 15 17 19*
information sector was the only area that lost jobs.
Year-over-Year Growth
$90• Inventory expanded at a strong clip over the past four quarters with
Units (000s)
20%
30
several northern suburbs and urban cores witnessing extensive
$60 10%
20 supply growth.
Rent Trends
Monthly Rent Y-O-Y Rent Change RENTS:
$1,200 10% 4.5% increase in the average effective rent Y-O-Y
Year-over-Year Change
Monthly Effective Rent
$1,000 5% • The Metroplex’s average effective rent advanced to $1,131 per month
during the past year. Propelling this growth are rental gains among
$800 0% Class C units, which jumped 5.0 percent to $917 per month.
* Forecast
Sources: Marcus & Millichap Research Services; CoStar Group, Inc.
Demographic Highlights
Five-Year Population Growth* 1Q19 Population Age 20-34 1Q19 Median Household Income
(Percent of total population)
693,300 $72,298
Metro 21% Metro
*2018-2023
3%
South Irving 4.1% -20 $942 4.1% • The average9%cap rate slid 20 basis points since March of last year,
Northeast Fort Worth-North
stopping at 5.8 percent. At the same time, initial yields for Class C
Rate
0%
4.2% -140 $1,099 4.6% assets dropped
6% 50 basis points to 6.3 percent
Richland Hills
-3%
Southern Dallas County 4.4% -60 $1,024 3.5% Outlook: The bidding
3%
environment should strengthen as interest rates
are now more stabilized. Strong job growth and household formation will
Denton -6% 4.7% 0 $1,047 5.5% continue to drive
0% investment in the Metroplex.
09 10 11 12 13 14 15 16 17 18 19* 01 03 05 07 09 11 13 15 17 19*
$120 30%
40
Year-over-Year Growth
$90 20%
30
Garland 5.2% 120 $1,021 9.7%
$60 10%
20
Grapevine-Southlake 5.2% 10 $1,313 3.6%
10 $30 0%
75%
Gov't Agency rates reflecting more caution. Fed officials will likely focus on the
Financial/Insurance intersection of a global growth slowdown and continued labor market
Nat'l Bank/Int'l Bank strength to refine their plans moving forward, keeping interest rates
50%
Reg'l/Local Bank
stable for the foreseeable future.
CMBS
25%
• Abundant liquidity sources balance conservative approach to
underwriting. The availability of debt for apartment assets remains
0%
elevated, spurred by the recent pivot by the Federal Reserve. Sourcing
14 15 16 17 18
Atlanta Office: Michael
will beGlass
led byFirst
Fannie Mae and Freddie
Vice President/District Mac, in addition to a wide
Manager
michael.glass@marcusmillichap.com
Michael Fasano First Vice President/Regional Manager
* Trailing 12 months through 1Q19 array of local, regional and national banks, and insurance companies.
Includes sales $2.5 million and1100
greater
Abernathy Road N.E., Bldg. 500, Suite 600 Loan-to-value
Cleveland Office: (LTV) ratios are trending between 65 and 75 percent
Sources: CoStar Group, Inc.; Real Capital
Atlanta, GAAnalytics
30328 5005 Rockside Road, Suite 800
(678) 808-2700 | michael.fasano@marcusmillichap.com on stabilized
Independence, OH 44131
properties. The decline in interest rates has rewidened
the
(216) spread between cap rates and Treasurys, reducing lender concerns
264-2000