The Dallas/Fort Worth multifamily market experienced modest downward movement in market fundamentals in Q2 due to COVID-19 and the economic downturn. The average effective rental rate declined 0.6% from the prior quarter. Occupancy edged down 30 basis points to 94.3%.
While these trends were unfavorable, especially in a quarter that usually experiences rising rents and occupancy due to seasonal leasing trends, the Dallas/Fort Worth market fared slightly better than the U.S. in terms of rent loss (U.S. was -1.0%).
One factor for the above-average performance is the economy. While Dallas/Fort Worth lost 333,000 jobs over the three-month period from February to May, the 8.6% employment loss was less severe than the nation’s 12.8% decline.
Dallas/Fort Worth achieved positive net absorption in Q2 of 3,801 units. But it added 6,319 units in the quarter and 25,625 in the past four quarters
The Dallas/Fort Worth construction pipeline is one of the highest in the U.S. at 35,865 units. With weak demand (due to the economy and low household formation) and a steady stream of new deliveries, effective rents and occupancy are expected to edge down further in the second half of the year.
In Q2, Class C rents and occupancy held up the best followed by Class B. Fort Worth market fundamentals held up slightly better than Dallas. Suburban submarkets generally outperformed urban core submarkets.