ALN Apartment Monthly News

ALN Apartment Monthly News
ALN Apartment Monthly News
January 2012
Page 1 >>
Volume 21, Issue 1
ALN Apartment Data
Printable
2611 Westgrove
DFW State of the Industry Recap
Carrollton, Texas 75006
Phone: 1.800.643.6416
Email: [email protected]
On January 24 I was fortunate enough to be invited
as a guest speaker
at
the State of the Industry
Market Statistics
Market Reviews
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number.
Greater Dallas and Tarrant County. The other speakers
included Dr. Bernard Weinstein, an economist affiliated
I had forecast in the beginning of 2011 that it would be
with the SMU Cox School of Business, and Steve
that during the downturn we had a lot of new supply
Brown, the Real Estate Editor for the Dallas Morning
going vacant. These were typically Class A properties.
News.
Those owners and managers at the time had to ‟buy‟
a repositioning year for economic mix. By that I meant
occupancy and discount heavily and take whatever they
could
get
to
keep
up
their
occupancy
numbers.
and entertaining presentation on “Going from the
Therefore residents who would not normally qualify for
Great Recession to the Great Stagnation”. Among the
Class A
items he pointed out were that the construction
normally qualify for Class B properties could qualify for
industry is at a historic low.
Page One
net new units came online in 2011, another very low
Luncheon hosted by the Apartment Associations of
Dr. Weinstein spoke first and gave a very informative
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Building permits for
Single and Multifamily housing were at record low
units now could. Residents who would not
those and so on.
minimums. Also, for the last ten year real income is
During 2011 I forecasted the cycle would go the other
down for each quintile of American households, not
way. As occupancy levels leveled off toward maximum
just the middle class.
occupancy,
higher tier properties would raise rents,
forcing less qualified residents to choose lower tier
I then gave my presentation. You can download the
properties and so on.
powerpoint slides from the market news links off our
properties reached almost 95% occupancy at the end of
web site at http://alndata.com. I started off by
pointing out that in 2010 the DFW area had a
the 3rdquarter before dipping down to 93%. Effective
remarkably good year for occupancy gains.
end up at $1253 per unit. Class B properties also had
Over
23,000 Units were absorbed in 2010, yet owners had
Sure enough in 2011 Class A
rents in Class A properties rose throughout the year to
failed to capitalize on the opportunity to raise rents.
occupancy gain, even finishing the year with higher
occupancy than the Class A properties. By 2012 Class B
Rents in 2010 only rose 2.1%
properties were at 93.9% occupancy with Effective
I had predicted that in 2011 rents would rise even as
occupancy couldn‟t match the gains of 2010.
enough
in
2011,
the
DFW
market absorbed 15,600 units
wh ic h
brought
occupancy
up
to
o ve ra ll
91.6%.
Effective rents however rose
5.8% to an average of $782
per units.
On the Dallas side
Effective Rents were up over
6% averaging $814 per unit
while on the Fort Worth side
Effective rents were up 4.6%
to $701 per unit.
In January 2011 there were 29
properties with 7400 units still
in Lease-up, mostly from the
deals developed prior to the
downturn.
By January 2012
there were only 19 properties
in Lease-up with 4300 units, a
very low number. Only 5,100
Sure
rents averaging $840 per unit.
(Continued on page 3)
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Market Statistics
On a monthly basis, ALN surveys all apartment communities in each of the 23 markets that we cover and an average of 92% of these surveys
are successfully completed. The above statistics reflect only Conventional, Midrise, and High-Rise apartment communities. In addition, unless
otherwise noted, these statistics do not included Income Restricted, Student Housing, or Senior Independent Housing.
In-depth, property level research and data is available for all property types (including Senior and Income Restricted) through ALN OnLine,
which includes Market and Effective Rents, Occupancy, Floor Plan & Unit Mix information, Market & Submarket statistics, Market Surveys,
Historical Trends & Customizable Reports. By using ALN OnLine, you are able to see monthly fluctuations in any submarket you need which will
greatly enhance your ability to respond to changes quickly and efficiently.
Why Does ALN Update Monthly?
Most data providers update their data quarterly. For some, that is often enough. However, this industry moves way too
quickly and many opportunities are missed when waiting on slow reacting data providers to catch up with your market. Only
ALN can provide you with monthly updated data on 23 markets throughout the southern U.S.
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DFW Recap
(from P.1)
While the occupancy gains in Class A and B
properties slowed in 2011 compared to 2010,
in class C properties occupancy rose in 2011 at
a faster pace than 2010. Rental gains were not
as strong in 2011 suggesting that the class C
properties are about a year behind the Class A
and B properties in raising rents during this
recovery. Class C properties now average
about $625 per unit and the Class C properties
are averaging 90.8% occupancy.
Class D properties still have a way to go to see
any benefit from this recovery. It‟s going to
take full employment to get the bottom tier
showing
any
large
signs
of
occupancy or rental growth. Currently Class D
properties are at 84.6% Occupancy and $539
average renter in their properties made $65,000
8.0% Effective Rent growth, respectively.
per year. He also pointed out that the new
I also noted that we are coming up on the
30th anniversary of the big 80‟s housing boom
in DFW. From 1982 to 1986 almost 200,000
units
were
added
to
the
market.
Those
properties account for almost a third of our
market! That is a lot of aging property. Some
of those properties have not aged well.
In the near future we are going to have to
think about how this aged product will reflect
on our market. If those properties deteriorate
to the point where they are considered Class
D properties that is going to drag down our
market.
Almost as if we planned it, Steve Brown gave
get!
a presentation on the type of product that we
performed better than the year before with the
Mesquite/Balch
Springs.
Both
Rents and Occupancy were flat in the Mesquite
Balch Springs submarket. The well performing
submarkets were in the Far North Dallas Area
and the Oak Lawn/ Downtown area of Dallas.
The Preston/Frankford
submarket saw rents
rise by over 10% for the year and Carrollton
product that was being constructed 30 years
ago. The finish outs on the new products are
outstanding. It seems that at least in the
urban centers, renters are willing to give up
space for more luxurious common areas and
quality finish-outs.
Residents are no longer
choosing renting over buying as a last resort,
but rather as a lifestyle preference. He quoted
an
industry
more
per
month
mortgage
than
payment.
the
Right
average
now
people
homes
and
condos,
the
so-called
passed, at least in the DFW area, but could
become a factor if rental prices expand too
quickly.
With only 8900 units currently in some phase of
member
that
calculated
the
small
inventory
added
to
the
for rental gains.
I would like to thank the organizers from the
Greater Dallas and Tarrant County Apartment
Associations for letting me speak and I encourage
you to attend any functions like this in your own
area. I found it entertaining and insightful to
hear
from
industry
professionals
they did the same!
New Units
30000
20000
10000
2011
2009
2007
2005
2003
2001
1997
1995
1993
1991
1989
1987
1985
1983
1981
1979
0
1973
on
the
multifamily economic picture — and hopefully
40000
1971
market.
Consequently 2012 looks to be another solid year
50000
1969
„shadow
market‟ , would affect rents and occupancy has
60000
1967
are
could swing back again if rental prices go up too
much. The worry that the glut of foreclosed
70000
1965
home
choosing renting over buying but the pendulum
Dallas Fort Worth New Units
1965-2011
1977
of
are seeing these days, a far cry from the
1975
exception
Class A property now charges rent that is $300
construction we will see another year of very
per unit. Less than half of what the class A‟s
As for submarkets, all of the submarkets
products are commanding serious money. A new
1999
properties
and Plano were not far behind with 9.1% and
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