Dallas Multifamily: Diversified Economy to Drive Apartment DemandDallas Multifamily: Diversified Economy to Drive Apartment Demandhttps://www.recenter.tamu.edu/news/newstalk-texas/?Item=102342015-04-14T13:56:00Z2015-04-14T00:00:00Z

DALLAS (Marcus & Millichap) – Though slumping oil prices will continue to temper momentum, Marcus & Millichap says the Metroplex’s diversified economy will still record strong job growth this year, driving apartment demand and keeping vacancy at historically low levels.

Thousands of luxury apartments are slated for completion this year, the firm said in its first quarter 2015 market report, specifically in the Intown Dallas, Oak Lawn/Park Cities and Richardson submarkets, where several companies are relocating and expanding.

"Financial services firms including State Farm, TD Ameritrade and Liberty Mutual are growing in northwest Dallas and plan to add thousands of jobs over the next few years, helping to drive the development of these new multifamily projects," the report said. "While office leasing is translating to strong professional job growth, the Metroplex’s industrial sector is one of the nation’s strongest. The rise of e-commerce is fueling industrial construction, and hiring in distribution, logistics and transportation throughout the market will support stronger operations in older well-located Class-C properties, supporting rent growth. A bright economic outlook is encouraging developers, and completions will reach their highest level in more than a decade this year.

"Strong economic growth will persist throughout 2015, feeding optimistic outlooks for the Metroplex. Deliveries will stay elevated this year, compared with last year’s additions to inventory.

"However, the Metroplex’s history of absorbing large influxes of supply will keep investors enthusiastic, though mindful of competition from new supply in specific submarkets. The buyer pool is expanding, especially as investors from the West Coast seek to expand portfolios in a well-performing market with higher initial yields. These buyers, many from California, are targeting Class-B or Class B-minus properties with cap rates in the low- to mid-6 percent range.

"Meanwhile, local buyers are shifting their focus to close-in Class-C assets, which may offer strong upside potential. In addition, the number of properties selling above $20 million is rising, and transactions in this price range have made up a significant share of sales during the last few years. The trend is continuing in 2015 as a large portion of deals in the first quarter had a price above $20 million."

Dallas-Fort Worth-Arlington
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