This March, I wrote here about the three major U.S. metros that have stood above the rest for housing permits: Houston, Dallas and New York City. Between 2010 and 2016, each of these three metros have approved 273,000 units or greater, while Los Angeles was a distant 4th at 160,000. Perhaps more notably is that many of their units have been multi-family apartments. While that isn't surprising for New York City, it may defy stereotypes about the underlying built pattern of the two great Texas metros. And while Houston has suffered a recent slowdown in multi-family construction, Dallas-Fort Worth (D-FW) continues to be an instructive case study in the market evolution of this built form.
According to a recent report by the Dallas Morning News, D-FW was already America's hottest market for apartments coming into this year. This has continued for Q1 2017, as D-FW has 50,588 apartments under construction (trailing only New York City), and is expected to see 30,000 of these complete by year's end. And this kind of momentum has been ongoing for years, even decades.
"Seems like forever I've been quoting folks that the pace of apartment building in North Texas is sure to slow soon," wrote Steve Brown, the paper's real estate editor. "I wouldn't count on that."
While multi-family housing growth has occurred throughout the wider D-FW region--highlighted by its 14 municipalities with populations above 100,000--it has focused primarily on the north side. According to the Dallas Morning News report, 30% of these 50k units under construction are in the proximate northern suburbs defined in the article, respectively, as Frisco-Prosper, Allen/McKinney, and Richardson. This gels with a 2016 WalletHub report which found that Frisco, McKinney and Richardson were the nation's top 3 real estate markets, out of 300 municipalities analyzed (5 of the top 10 were in D-FW's northern suburbs). The 3 cities are, not coincidentally, also at or near the top of WalletHub's index for "Affordability and Economic Environment," showing the importance that business climate can have in spurring growth. Multi-family housing growth is also strong in Dallas' core, which accounts for 11% of such construction.
The types of multi-family units going up are also notable, marking shifts in consumer demand among the countless young professionals flooding into D-FW from around the nation and world. Rather than sprawling in haphazard fashion, the way D-FW's single-family housing does, many projects fit a mixed-use, towncenter-style motif sooner associated with New Urbanism. Which is to say, they are fully-functioning internal communities that have a comprehensive retail mix, and give off a quasi-city aesthetic. They often have a luxury component, helping explain why D-FW's average monthly apartment rents have risen to $1,050.
Right now, the two largest projects by square footage under construction in D-FW are some of these New Urban-style ones, and are both in Frisco (Wade Park and Frisco Station). Other notable multi-family projects include various towers in central Dallas, and mid-rise lofts in Fort Worth.
The 3rd largest construction project right now is the Toyota Corporate Campus, in Plano, and while it is strictly commercial/office, it too provides a window into the nature of D-FW's apartment growth. This is because, abutting that campus in Plano is Legacy West, another upcoming mixed-use project that will likely house many of Toyota's workers. This has become a trademark of D-FW's corporate relocation momentum, in which mixed-use communities go within or near large company headquarters.
Aside from what's under construction, there is a great deal of towncenter-style apartment development already complete in D-FW--a trend I learned firsthand last year while living on the border of Richardson and Plano, where much of it exists. Some of the notable projects include The Shops at Legacy, a master-planned community in Plano that is centered around a lake; The Domaine Apartments, also in Plano; and Cityplace, which has become one of the most prominent hubs within Dallas' Uptown neighborhood. These construction trends are likely to continue, with new job figures growing by 100,000 per year in D-FW.
