What’s bad for renters is good for Fort Worth’s apartment industry, as solid growth continues adding inventory even as monthly rents rise.
“Fort Worth is still raising rents at a faster pace than what we’re seeing nationally,” said Stephanie McCleskey, vice president of research for Axiometrics Inc., a Dallas-based apartment market research and analysis firm.
In its newly released Fort Worth-Dallas monthly outlook, the firm reports that landlords in Fort Worth and Dallas are charging higher rents in February.
In the Fort Worth area, annual effective rent growth stood at 6.3 percent in February, down from 6.4 percent in January. Still, that’s well above the area’s 3.4 percent rent growth from February 2014 to the same month this year.
Meanwhile, Dallas’ annual rent growth rate was 5.4 percent in February, about 70 basis points higher than the 5.3 percent reported in January and 152 basis points above the 3.9 percent in February 2014. A basis point is a unit equal to one hundredth of a percentage point.
On average, Fort Worth renters paid $894 a month in February and Dallas renters paid $1,007 in the same period.
“What we’re forecasting in Fort Worth is rent growth on an annual basis to slow down and get more in the 3 percent range by 2016,” McCleskey said.
Meanwhile, Fort Worth apartment occupancy continues slightly ahead of the national average as more tenants occupy new inventory. The national average for occupancy in February stood at 94.7 percent compared with 94.9 percent for both Fort Worth and Dallas.
“There continues to be new supply in Fort Worth,” McCleskey said.
Fort Worth added about 1,852 units in 2014, with 2,824 new units expected to be added this year. Meanwhile, Dallas gained 11,080 units in 2014, with 15,975 expected to be added this year. That’s based on new inventory under construction or planned for construction.
In Dallas, most of the new apartment inventory was in the Oaklawn and Uptown areas. In Fort Worth, the inventory is more widespread.
“It’s definitely spread across all our submarkets,” McCleskey said, referring to Fort Worth and surrounding cities.
Feeding the new inventory is employment, with Fort Worth ahead of national job growth, according to the Bureau of Labor Statistics.
“Employment in Fort Worth is increasing at a faster rate than nationally,” said McCleskey. She pointed to the city’s rate of 3.1 percent employment growth compared with the national rate of 2.2 percent, according to the BLS.
“The main driver for the apartment market is definitely employment, so this is good news,” McCleskey said.
In terms of occupancy, the Fort Worth metro area, including Arlington and other area municipalities, reached 94.8 percent in January 2015 compared with 93.9 percent in February 2014.
Meanwhile, the occupancy rate for the Dallas metro area, including Irving, Plano and other area cities, rose 14 basis points higher in February than the 94.8 percent reported in January 2015 and 63 basis points higher than the 94.3 percent in February 2014.
It speaks well for the North Texas market that both Fort Worth and Dallas continue seeing higher apartment occupancy even as new apartment inventory is added, McCleskey said.
“On a national scale, Fort Worth and Dallas are some of the strongest markets,” she said.
Higher occupancy rates follow an industry downturn that occurred from August 2014 until the end of that year.
“The blip in occupancy took place because more supply was being delivered to both markets,” McCleskey said. “That occupancy is trending upward demonstrates that much of the supply is being successfully absorbed.”