INVESTMENT FORECAST

MULTIFAMILY 2020
Dallas/Fort Worth Metro Area

Companies Expand Footprint in Dallas, Fueling Housing Economic Trends

Demand; Area Remains Top of Mind for Buyers HH Growth Employment Change (%)

New HH Formations (thousands)

60 5%
Job creation keeping apartment developers active. The building boom will continue in the

Year-over-Year Change
Metroplex this year as more than 21,000 units will be delivered. Dallas’ urban core will receive 45 4%

nearly 2,000 of those apartments as developers look to capitalize on the area’s growing employ-
30 3%
ment hub, headlined by Uber’s new campus. Corporate expansions and relocations to downtown
Dallas have become an increasingly popular trend; however, the northern suburbs remain the top 15 2%
target for many high-profile firms seeking a presence within the Metroplex. Fueled by employment
0 1%
growth, strong household formation in communities like Frisco and Richardson will provide a 11 12 13 14 15 16 17 18 19* 20**
boost to construction efforts this year and help alleviate some relatively tight conditions. South
Irving and Northwest Dallas boast even lower vacancy rates, although apartment availability will
stay limited in these areas as new development remains sparse, giving rents some room to grow. Completions vs. Absorption
This will support stable marketwide rent growth in 2020 as Dallas/Fort Worth’s average effective Completions Net Absorption
rent surpasses $1,200 per month.
28

Revitalization in East Dallas continuing to draw interest from collection of buyers. Dallas/Fort

Units (thousands)
21
Worth’s strong demographics and healthy fundamentals will continue to keep buyers active in the
market. The Metroplex’s strong bidding environment has compressed the metro’s average cap rate 14

260 basis points to 5.8 percent since the end of 2009. East Dallas remains among the most highly
7
targeted areas as a variety of smaller Class B/C complexes garner attention from value-add buyers.
Cap rates for these properties average in the low-6 percent range, although assets requiring con- 0
11 12 13 14 15 16 17 18 19* 20**
siderably more rehab may produce yields up to 8 percent. Fort Worth is also gaining traction with
investors as increased employment growth has expanded the renter pool, strengthening bidding
Atlanta Office: Michael Glass First Vice President/District Manager
climates and pushing cap rates into the mid-5 percent band. Vacancy and
michael.glass@marcusmillichap.com Rents
John Leonard First Vice President/Regional Manager
1100 Abernathy Road N.E., Bldg. 500, Suite 600 Cleveland Office: Vacancy Rent Growth
Atlanta, GA 30328 5005 Rockside Road, Suite 800
12%
(678) 808-2700 | john.leonard@marcusmillichap.com
2020 Market Forecast
Independence, OH 44131
(216) 264-2000
9%
Columbus Office:
Employment Following an average of roughly 100,000 jobs created each of the previous 230 West Street, Suite 100
Rate

6%
up 2.2% five years, 85,000 positions will be added in 2020 as tight unemployment Columbus, OH 43215
(614) 360-9800
restrains some hiring activity.
Austin Office:
3%
Cincinnati Office:
Craig Swanson Vice President/Regional Manager
Construction Developers will surpass
9600 the
North20,000-unit mark
Mopac Expressway, for
Suite the fifth consecutive year
300
Colby Haugness
0%
Regional Manager
Austin, TX 78759 11 12 13 14 15 16 17 18 19* 20**
21,400 units as they try to keep pace
(512)with the| craig.swanson@marcusmillichap.com
338-7800 sustained wave of new households. 600 Vine Street, 10th Floor
Cincinnati, OH 45202
*(513) 878-7700
Estimate; | colby.haugness@marcusmillichap.com
** Forecast
Vacancy Strong leasing activity will push market vacancy down to 4.9 percent, build- Sources: CoStar Group, Inc.;Sales
RealPage, Inc.; Real Capital Analytics
Trends
down 10 bps ing on the 50-basis-point drop in 2019.
Average Price Price Growth
Average Price per Unit (thousands)

$120 21%
Rent After a 5.9 percent boost last Office:
Baltimore year, rent growth will moderate in 2020 as the Dallas Office:
Year-over-Year Growth

up 3.6% average effective rent rises to $1,232 per month. $90

Tim Speck First Vice President/District Manager 14%
Bryn Merrey Senior Vice President/Division Manager
100 E. Pratt St., Suite 2114 5001 Spring Valley Road, Suite 100W
Baltimore, MD 21202 Dallas,$60
TX 75244 7%
Investment Tight conditions across the Mid-Cities will keep investors interested in (972) 755-5200 | tim.speck@marcusmillichap.com
Tel: (202) 536-3700 | bryn.merrey@marcusmillichap.com
communities such as Irving and Lewisville, where cap rates average 6 per- $30 0%
cent for stabilized Class C properties. Fort Worth Office:
$0 -7%
Mark McCoy
10 11Regional
12 Manager
13 14 15 16 17 18 19*
Metro-level employment, vacancy and effective rents are year-end figures and are based on the most up-to-date information available as of November 2019. Effective rent 300 Throckmorton
is equal Street,
to asking rent Suite 1500Average prices and cap rates are a function of
less concessions.
Boston Office:
the age, class and geographic area of the properties trading and therefore may not Fort Worth,
be representative of the market as a whole. Sales data includes transactions valued at $1,000,000 andTX 76102
greater unless otherwise noted. Forecasts for employment and apartment
data are made during the fourth quarter and represent estimates of future performance. No representation, warranty or guarantee, express or implied may be made as to the accuracy
(817) or reliability
932-6100 of the information contained herein. This is not intended to be a
| mark.mccoy@marcusmillichap.com
John Horowitz
forecast of future events and this is not a guaranty regarding a future event. This is not intendedFirst Vicespecific
to provide President/Regional
investment adviceManager
and should not be considered as investment advice.
100 High Street, Suite 1025
© Marcus & Millichap 2020 | www.marcusmillichap.com Boston, MA 02110
(617) 896-7200 | tim.thompson@marcusmillichap.com
Denver Office: