5 North Texas Suburbs Lead The U.S. In Apartment Construction Pace
Despite a sometimes aggressive response from local residents who oppose growing apartment density across Dallas-Fort Worth, five North Texas cities constructed multifamily properties at a blazing clip from 2016 to 2020, outpacing most other U.S. regions in construction volume, a new report from RENTCafé said Thursday.
During the five-year period surveyed, developers created 22,848 new apartments within five DFW suburbs: Frisco, McKinney, Garland, Farmers Branch and Grand Prairie, which represents roughly 4.5% of the 504,000 units built nationwide during the time period, according to RENTCafé and Yardi data.
Frisco ranked first in the nation for total apartment construction during the five-year period, with the suburb building 8,044 units — 42% of its apartment stock is now new product.
The North Dallas suburb of McKinney ranks second in RENTCafé's study of apartment construction, with the city building 4,843 units over five year's time, pushing its share of new apartments to 20% of its total multifamily product. The top 20 in RENTCafé's survey also features Farmers Branch (with 3,788 new apartments over five years), Grand Prairie (with 3,308 apartment builds) and Garland (2,865 units).
Suburban Texas dominated the list, locking down more than a third of the top 20 slots. The Houston suburbs of Spring and Katy also rank among the top 20 cities with the largest stock of new apartment builds, as does Georgetown near Austin. The study reached its conclusions by analyzing Yardi Matrix data.
Even with the coronavirus pandemic likely to slow construction this year, DFW is by no means suffering from apartment oversupply and maintains the type of growing population needed to justify the inflated pace of construction it has recorded since 2016, analysts say.
Frisco saw its population shoot up from roughly 152,000 in 2016 to an estimated 206,000 in 2020, according to city of Frisco data. And No. 2 on the list, McKinney, saw its estimated population jump from 155,000 in 2015 to 195,000 in early 2020, the city said in recent data.
As the population grows and the area deals with an influx of residents, multifamily is in greater demand among residents looking for affordability.
"The Dallas-Fort Worth region is not at the point of housing oversupply or saturation," Yardi Manager of Business Intelligence Doug Ressler said. "Renting has become a more affordable option due to lack of single-family housing supply and limited wage growth."
DFW's growing population of young workers in the 22-to-34 age range is another factor keeping multifamily en vogue before and after the pandemic.
"Dallas-Fort Worth has a relatively young population base. The younger millennials and the older Gen Z's are in that prime age bracket where they are demanding rental properties," Jim Gaines, former chief economist for the Texas A&M Texas Real Estate Research Center, told Bisnow.
The median age of the Dallas-Fort Worth-Arlington region hovers around 35, with nearly 30% of the population in the 20-to-39 age category, U.S. Census Bureau data shows.
As the pandemic pushes more young people and professionals toward the middle of the country in search of more affordable housing and jobs, multifamily experts believe DFW will continue to see demand for apartment products in the next few years.
That has kept price points of multifamily investment sales pretty steady during the pandemic.
"I think we are going to see a significant surge in in-migration because people are going to want to flock to where there is a positive business environment," Newmark Dallas Vice Chairman Brian O'Boyle Sr. said. "We saw virtually no price corrections, with the exception of one deal we did in the second half of the year, but all of the other deals were basically at or above our pre-pandemic pricing expectations."