Dallas Multi-Family Outlook Remains Strong
A recent report by Fannie Mae, ‘Multifamily Metro Outlook: Dallas Winter 2018' provides a positive outlook for multifamily investing in the Dallas/Fort Worth Metro region. Dallas’ strong fundamentals are evident in its population growth, job growth, rent growth, and low vacancy rate. The combination of these aspects continue to make Dallas a thriving market for multifamily investors. Our partners in the Dallas/Fort Worth area continue to see strong fundamentals driving returns in their portfolios and creating opportunities for investment. This is a key reason that Hardscrabble Investments is strategically partnering on investments in the Dallas/Fort Worth market and bringing these opportunities to our investors.
Population growth is one of the main indicators that the Dallas/Fort Worth Metro will continue its economic growth, driving returns for multifamily investors. Fannie Mae’s article points out that due to the expanding economy and job growth, the area continues to a see a strong in-migration trend from around the United States. Further, the Dallas/Fort Worth Metro has the highest proportion of residents in the prime renter cohort, renters aged 20-30. This cohort is expected to expand by between 8-10% through to 2022, enhancing renter demand even further.
The Dallas/Fort Worth Metro is diversifying its job base and becoming a hub for financial service jobs in the Southwestern US. The region has seen employment in the financial sector increase 3.9% since late 2017. This is 2.2% more than the national average of 1.7%. Many high profile financial companies such as State Farm, Liberty Mutual, and Toyota have relocated to the Dallas Metro, which now accounts for 8% of all financial service jobs in the Southwestern region. This has allowed the city to become less dependent on the oil production sector while building a broad base of diverse jobs that will create a strong and resilient economy unlike many other Texas cities. As of September 2017, the Dallas Metro has supplied over 67,000 jobs year over year for the area's population. This is an expansion of 2.7%, almost doubling the national rate of 1.4%.
The coming two years will likely see an uptick in unit delivery for apartment buildings in the Dallas/Fort Worth Metro. Since 2012, 65,000 apartment units were delivered and a further 53,000 are expected to be delivered in the next few years. Along with this, 13,000 condominium units have been built since 2006, with a further 1,000 expected through 2018. These numbers raise questions about the current stage of the multifamily market cycle and whether it is entering an oversupply situation. An increase of 2% or more over the existing base is seen as sustainable. However, the Dallas/Fort Worth Metro could see an incoming supply of around 4.7% which is something that we are watching at Hardscrabble. We remain optimistic that continued strong population and job growth will offset the influx of future apartment supply.
This data supports a continued positive outlook for the Dallas/Fort Worth area and supports our reasoning for making it a key market for our investors. The continued population and job growth look exceptional and show the potential to offset the incoming new supply of apartments set to hit the area. The Dallas/Fort Worth area is still seeing modest rent growth and low vacancy rates, supporting our optimism for this market. With these strong metrics, we are continuing to seek out great opportunities for our investor group to enjoy the potential returns the Dallas/ Fort Worth Metro is offering. If you have any questions about investing with Hardscrabble Investments or our outlook on the Dallas Metro market, please contact us and we will be happy to help.
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