04 January 2010

Apartment Vacancies At Highest Levels In 20 Years

Dallas News

Apartment vacancies in Dallas-Fort Worth have grown to the highest level in more than 20 years thanks to a combination of overbuilding and the recession.

At the end of 2009, about 11 percent of local rental units were empty. Occupancy fell by a full percentage point in the fourth quarter as several large apartment communities opened their doors, adding to inventory.

“While those numbers are bad, they actually look better than we’d anticipated a few months ago,” Greg Willett, vice president of research with MPF Research said in the firm’s report released Monday. “Several of the properties that were finished right at the end of 2009 report initial lease-up moving along pretty well, so North Texas sidestepped the seasonal net move-outs that are routine during the last few months of the year.”

D-FW renters leased an additional 1,520 apartments in the final months of 2009. But at the same time, developers were opening the doors for 7,895 new units.

“That’s the biggest quarterly block of new supply seen since savings and loan associations fueled a frenzy of overbuilding during the early and mid-1980s,” Willett said.

More new apartments were added in North Texas in 2009 than in any market in the country - 18,029 units.

Last year the sagging economy reduced demand for Fort Worth apartments.

“Job loss weakened the apartment figures seen early in the year,” Willett said.

For all of 2009, net apartment leasing was down by 890 units from 2008, MPF reports.

Overall rents in the area dropped by 2.6 percent last year to an average of $748 a month.

With the credit crunch and recessions, apartment development in D-FW and across the country has slammed to a halt.

Willett said that developers began only a handful of new projects here in the second half of 2009.

But more than 11,000 Dallas apartments remain under construction.

“Texas will be one of the last markets across the country to wrap up its construction cycle” Willett said. “Thus, despite the comparatively positive outlook foreseen for the local economy, Dallas-Fort Worth seems apt to trail the apartment market recovery anticipated elsewhere.

“It’s certainly possible that occupancy has essentially bottomed out now, but it’s going to be a while before the leasing environment is healthy enough for rents to move up again.” 

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