Why Dallas-area apartment builders, analysts expect starts to slow in 2017

Dallas - Fort Worth and Houston among top3  apartment markets in USBy Steve Brown and the Dallas Morning News

With more than 28,000 apartments set to open in North Texas next year, will there be enough renters to fill them all?

As long as Dallas-Fort Worth’s economy keeps growing at current levels, demand for new rental units will remain high, apartment analysts and developers say.

But developers say that tougher financing requirements and affordability issues could put a ceiling on rising apartment construction in the year ahead.

More than 50,000 apartments are under construction in North Texas — more than any other metro area in the country.

“Dallas-Fort Worth has really had a tremendous run in this cycle,” said John Sebree, national director with commercial real estate firm Marcus & Millichap. 

“It seems like a lot, but you have had 130,000 new jobs in the last 12 months, so it’ going to be OK,” Sebree said. “I’m not seeing anything that leads us to believe we are getting out over our skis.”

But other factors are likely to reduce apartment starts next year, even in D-FW, Sebree told hundreds of apartment builders and managers meeting in Dallas Thursday morning.

“About six months ago, the lenders really started pulling back on new construction,” he said. “They started increasing the equity and requirements.

“There is a possibility that in 2018 we actually see a drop in new construction deliveries.”

Apartment builders say they are having to put more money into new projects at the same time construction costs are jumping and rent resistance is growing. Read More >