DFW Apartment Occupancy Dips After Construction Boom

North Texas apartment occupancy shrank last quarter for the first time in a year after rapid supply increases.

Multifamily occupancy dipped to 93.8 percent in the third quarter, reversing a 12-month rise and leaving a second-quarter peak, according to Colliers. 

Despite the quarter-over-quarter decline, Class B and C properties are still fuller than they were a year ago, with occupancy rates at 94.1 and 92.9 percent, respectively. However, Class A occupancy declined year over year to 94.6 percent.

The pool of occupants may have settled at a lower level as supply broadened. Supply grew in the third quarter with 8,835 units delivered, almost 500 more than the previous quarter.

Property owners are resorting to concessions to renters more often, with some owners offering two months of free rent, following a historic period of multifamily supply growth.

Dallas/Fort Worth is one of the top markets in the country for multifamily development, but construction has slowed. 

Almost 11,000 units opened in the third quarter of last year, and over 55,000 were under construction. More than 48,000 units were under construction in the second quarter, and 43,500 were under construction last quarter. 

New construction is expected to halve by next year, with Colliers forecasting just 20,600 units in the third quarter of next year.

Neighborhoods just north and west of Dallas are enjoying the highest occupancy rates in the Metroplex. 

The Addison/Bent Tree area — immediately north of Dallas, at the intersection of the Dallas North Tollway and the Interstate 635 loop — was the only locale with an occupancy rate exceeding 95 percent. Downtown Dallas and Las Colinas tied for second with vacancy rates at 94.9 percent.

Among Class A properties alone, Northwest Dallas, an area neighboring Addison just south of 635 and west of the tollway, led the pack with an occupancy rate of 97.6 percent.

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