Dallas 2Q23
Multifamily Market Report

$1,587

average rent

93.5%

average occupancy rate

$1.9B*

ytd sales volume

2.3%

YoY rent change

-2.7 POINTS

yoy occupancy change

60*

ytd individual transactions

* Metroplex Total

Supply & Demand

2Q23

3,013 Units

QUARTERLY DEMAND
YTD: 2,762

4,797 Units

QUARTERLY COMPLETIONS
YTD: 8,614

Annual Demand vs Completions

2018
19,517
20,085
2019
20,933
20,177
2020
13,784
19,597
2021
38,183
20,552
2022
-5,955
14,765
2023 YTD
2,762
8,614
  • Planned
    Completions
  • Pre-Planned
    Demand

Demand Trends

  • Q2 2023 marked a positive turnaround for the Dallas-Plano-Irving, TX apartment market, with over 3,013 net units being absorbed. This shift broke a four-quarter streak of negative absorption, demonstrating the resilience of the Dallas apartment market.

  • Among the 34 Dallas-Plano-Irving, TX submarkets, 23 reported positive net absorption, with the Frisco submarket leading the pack by absorbing 733 units. This figure nearly matched the 820 units that were delivered to the market in the same period.

Completion Trends

  • In Q2 2023, Dallas’ apartment inventory expanded by 4,797 units. The Frisco submarket contributed the most to this increase, adding 820 units, while the Allen/McKinney submarket ranked second with 529 new units.

  • Frisco has recently experienced a surge in completions. Over the past year, a substantial portion of new supply has emerged in the northern suburbs, with Frisco single-handedly accounting for 24% of the total deliveries.

Demand Outlook

  • In the upcoming four quarters, the Dallas apartment market is predicted to maintain a positive demand outlook, with an estimated absorption of 40,913 units. This indicates that demand will likely outstrip the available supply during this period, pointing towards a favorable market condition.

  • Specifically, the Frisco and Allen/McKinney submarkets are expected to see significant demand, with projected annual absorption totals reaching 5,660 and 5,327 units, respectively.

New Supply Outlook

  • The Dallas apartment market is poised for significant inventory expansion over the next four quarters, with a substantial increase of 36,871 units projected.

  • The Frisco and Allen/McKinney submarkets are set to contribute significantly to this growth, with anticipated additions of 6,031 units and 5,523 units respectively.

Occupancy & Rent Trends

RENT VS OWN
MONTHLY PAYMENT

$2,395

Average Monthly Mortgage Payment

$1,587

Average Monthly Rent

Occupancy trends

In the year leading up to Q2 2023, the Dallas market experienced a decline in occupancy rate by 270 basis points year-over-year and 20 basis points quarter-over-quarter, resulting in an overall rate of 93.5%. Analyzing various product classes, Class A units showcased the highest average occupancy level at 93.8%, which is marginally below its five-year average. The Hunt County submarket emerged as a high performer with an impressive occupancy rate of 96.3% in Q2 2023, whereas the Rockwall/Rowlett/Wylie and Southwest Dallas submarkets presented slightly lower rates. Looking forward, it is anticipated that the Dallas market will witness a rebound in occupancy to around 94.4% over the next year, as demand is expected to outpace the projected new supply.

RENTAL TRENDS

Aligning with a nationwide trend, the pace of rate of rent growth in Dallas has slowed compared to the previous year. In Q2 2023, rents for new leases saw a modest year-over-year increase of 2.3%, a figure below the market’s five-year average of 5.7%. Nonetheless, this performance is consistent with trends seen in other southeast markets. With an average rental rate of $1,587 per month, Dallas offers far greater affordability than expensive coastal markets, making it attractive for inbound migration. Dissecting the product classes, Class A units led the pack with a 2.7% annual effective rent change, followed by Class C at 2.9% and Class B at 1.8%. Submarkets like Southeast Dallas and Northwest Dallas experienced robust double-digit annual rent changes. Looking ahead, rents in the Dallas-Plano-Irving area are expected to accelerate in the upcoming year.

Submarket Rent & Occupancy

SubmarketAverage OccupancyAnnual Occupancy ChangeAverage Monthly RentAnnual Rent Change
Addison/Bent Tree93.8%-2.6%$1,5741.5%
Allen/McKinney93.5%-2.6%$1,663-0.8%
Carrollton/Farmers Branch94.5%-2.2%$1,6043.9%
Central/East Plano93.5%-3.1%$1,6151.1%
Denton94.1%-2.7%$1,4134.4%
East Dallas94.1%-2.5%$1,8494.0%
Ellis County95.0%-2.6%$1,4484.6%
Far East Dallas92.2%-3.7%$1,2205.8%
Far North Dallas92.8%-3.6%$1,360-1.0%
Frisco93.9%-2.1%$1,8031.4%
Garland93.7%-2.1%$1,4153.9%
Grand Prairie93.0%-3.0%$1,4951.7%
Hunt County96.3%0.8%$1,0599.7%
Intown Dallas93.3%-1.9%$2,1270.5%
Kaufman County92.2%-5.7%$1,4487.3%
Las Colinas/Coppell93.4%-3.0%$1,7791.7%
Lewisville/Flower Mound94.2%-2.1%$1,5791.2%
Love Field/Medical District93.8%-2.4%$1,5561.9%
Mesquite93.3%-3.6%$1,2718.1%
North Dallas92.9%-2.9%$1,4614.0%
North Irving93.1%-3.5%$1,4353.5%
North Oak Cliff/West Dallas93.6%-2.4%$1,5413.4%
Northeast Dallas92.5%-3.0%$1,2232.1%
Northwest Dallas93.6%-4.2%$1,24910.0%
Oak Lawn/Park Cities93.2%-2.0%$2,3090.7%
Richardson93.8%-3.0%$1,7122.5%
Rockwall/Rowlett/Wylie91.6%-3.9%$1,616-1.6%
South Irving94.3%-2.6%$1,3084.7%
Southeast Dallas94.1%-2.5%$1,14912.3%
Southern Dallas County93.2%-2.8%$1,3672.7%
Southwest Dallas91.8%-3.4%$1,1765.7%
The Colony/Far North Carrollton94.6%-1.9%$1,7482.7%
West Plano93.8%-2.1%$1,8332.2%
Zang Triangle/Cedars/Fair Park94.6%-1.9%$1,427-1.6%
Dallas-Plano-Irving, TX93.5%-2.7%$1,5872.3%

Units by Submarket Delivering in 2023

57,225

Units Under Construction

36,871

Units UC Delivering In the Next 4 Quarters

Units Under Construction

Addison/Bent Tree - 799
0%
Allen/McKinney - 10,430
0%
Carrollton/Farmers Branch - 758
0%
Central/East Plano - 2,127
0%
Denton - 4,167
0%
East Dallas - 801
0%

Units Delivering Next 4Q

Addison/Bent Tree - 512
0%
Allen/McKinney - 5,523
0%
Carrollton/Farmers Branch - 727
0%
Central/East Plano - 1,385
0%
Denton - 2,455
0%
East Dallas - 568
0%
SubmarketUnits Under Construction% of Total UCUnits UC Delivering In the Next 4 Quarters
Addison/Bent Tree7991%512
Allen/McKinney10,43018%5,523
Carrollton/Farmers Branch7581%727
Central/East Plano2,1274%1,385
Denton4,1677%2,455
East Dallas8011%568
Ellis County1,6373%797
Far East Dallas560%56
Far North Dallas8972%657
Frisco8,64715%6,031
Garland1,1442%459
Grand Prairie3,0395%3,007
Hunt County1520%152
Intown Dallas3,9267%1,921
Kaufman County1,4072%702
Las Colinas/Coppell2,0244%1,060
Lewisville/Flower Mound2,6495%2,117
Love Field/Medical District1,3492%878
Mesquite00%0
North Dallas4391%234
North Irving00%0
North Oak Cliff/West Dallas1,6003%1,098
Northeast Dallas9482%830
Northwest Dallas00%0
Oak Lawn/Park Cities8571%128
Richardson1,0952%711
Rockwall/Rowlett/Wylie2,5955%2,353
South Irving00%0
Southeast Dallas00%0
Southern Dallas County650%65
Southwest Dallas8662%671
The Colony/Far North Carrollton1,5643%627
West Plano00%0
Zang Triangle/Cedars/Fair Park1,1872%1,147
Dallas-Plano-Irving, TX57,225100%36,871

Sales Activity

The migration shift induced by the pandemic has redirected investor attention towards high-growth markets like Dallas in recent years. With its robust economic and demographic drivers, low entry costs, and solid multifamily fundamentals, Dallas has become a magnet for investors. This has led to record levels of capital being deployed in the metroplex over the past decade. In the first half of 2023, the Dallas market exhibited resilient transaction activity of conventional multifamily assets, with approximately $1.3 billion exchanged across 60 properties, as reported by Real Capital Analytics. Despite representing a 70% decline compared to the same period in the previous year, Dallas continues to rank among the top markets nationally in terms of total sales volume. The average price per unit for these transactions stood at $190,200, denoting a 2.5% decrease year-over-year.

  1. Weidner Apt Homes
  2. Tides Equities
  3. Blackstone
  4. Western Wealth Capital
  5. Madera Equity
  1. Conti Capital
  2. Intercapital
  3. Provident Realty Advisors
  4. SPI Advisory
  5. German American Realty

TRANSACTION VOLUME


YTD Transaction Volume


Y-O-Y Change


Individual Transaction Count


Price Per Unit


Annual Price Change

* Transaction data is for the whole Metroplex

* Trailing 4Q average PPU

* Preliminary Data from RCA – Individual conventional MF transaction $2.5M +

Economy

During the second quarter of 2023, the Dallas metropolitan area experienced notable economic growth, with a 4.9% expansion in its Gross Domestic Product (GDP). This expansion coincided with a net gain of 172,300 jobs, representing a 4.2% increase in employment. In May, the unemployment rate stood at 3.8%, just above the national average of 3.4%. Among the various sectors, the professional and business services industry saw the most significant job gains, with the addition of 36,100 positions, reflecting a 4.8% expansion. The education/health services sector also reported a notable increase of 5.0%, adding 23,900 jobs. Despite the initial job losses caused by the pandemic, the local economy has rebounded strongly, adding the highest number of jobs since the downturn began, totaling 345,000 jobs since February 2020. The Dallas metropolitan area continues to be a frontrunner in terms of economic and demographic growth in the country.

172.3K

May Annual Jobs Created

4.2%

May 23 Employment growth

3.8%

May 23 Unemployment rate
3.4% us may rate

Top 5 Employment Sector Annual Change

Business & professional services

Business & professional services

Change from May 2022 to May 2023:
36,100

Percent Change:
4.8%

education & health services

education & health services

Change from May 2022 to May 2023:
23,900

Percent Change:
5.0%

trade, transportation & utilities

trade, transportation & utilities

Change from May 2022 to May 2023:
23,300

Percent Change:
2.7%

leisure & hospitality

leisure & hospitality

Change from May 2022 to May 2023:
21,300

Percent Change:
5.3%

government

government

Change from May 2022 to May 2023:
15,800

Percent Change:
3.4%

Hover over icons to view data
SectorChange from May 2022 to May 2023 Percent Change
Mining, logging, and construction12,3005.30%
Manufacturing7,4002.50%
Trade, transportation, and utilities23,3002.70%
Information4,6005.10%
Financial activities15,6004.40%
Professional and business services36,1004.80%
Education and health services23,9005.00%
Leisure and hospitality21,3005.30%
Other services12,0009.40%
Government15,8003.40%

Major Economic Developments

Texas Instruments - Sherman Facility

$30B Total Investment

3K Permanent Jobs Created

500 Acre Site Fab Size

Sherman, TX Location

Electronics Manufacturing Industry

2025 Timeline

Dallas Convention Center

$3B Total Investment

Downtown Dallas Location

2.5M SF Facility Size

Feb. 2022 Approved

2028 Completion Timeline

Wells Fargo Irving Campus

$455M Total Investment

6,800 Employees Campus Size

Banking & Financial Services Industry

Iriving, TX Location

End of 2025 Timeline

Market Outlook

Investors continue to express strong interest in the Dallas market. As of Q2 2023, more than 40,900 apartment units were in the process of construction, with nearly 36,871 units expected to be completed within the next four quarters. Despite this substantial pipeline of incoming units, current market projections suggest that heightened demand will successfully absorb this supply within the coming year. This demand-supply interplay is expected to instigate a rebound in occupancy rates and rent performance by mid-2024. In the face of this robust development activity, Dallas remains an attractive investment target, due in part to its resilient economy and favorable demographic trends. Investors have been particularly drawn to the area’s steady job growth, affluent population, and rising household formations. These factors have helped sustain rental demand, allowing the market to absorb new units and maintain stable occupancy rates despite the ongoing construction surge. This broad-based interest underscores the resilience and growth potential of the Dallas apartment market, positioning it well for continued performance strength in the face of an expanding inventory.

Sources: RealPage; BLS; MSCI; Dallas Business Journal; Economic Development Corporation of Dallas

To Gain Further Insights Into The Dallas Market Please Reach Out To Our local Team

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Mike Watson

Managing Director

Michael Moffit

Managing Director

Nick Ling

Senior Director

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Sanders Campbell

Senior Advisor

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Nathan Allison

Associate