Industry Market Report - Jan 2024

Posted By: Jordan Brooks Dimensions Online,
Inconsistent Price Class Performance in 2023

2023 has been a challenging year for the multifamily industry, and the Greater Fort Worth market was not immune to the challenges. At the market level, a surge in new supply paired with apartment demand that was improved but still tepid resulted in declines in average occupancy and average effective rent for new leases.

Below the market level, some stark differences emerged between the price classes. All numbers will refer to conventional properties of at least 50 units. A property’s price class is assigned based on its average effective rent per square foot weighted across the unit mix. Class A properties are the top 12% of a market, Class B are the next 20%, Class C are the next 38% and Class D are the bottom 30%.

Class A

New supply has been less concentrated at the top of the market this year than last year. About 2,700 new Class A units delivered through November was slightly below last year’s total through the same portion of the calendar. Deliveries were actually right at the average derived from the previous five years. 

Class A demand improved from 2022, but aside from last year, the approximately 1,700 net absorbed units through November was the fewest since 2018. For some perspective on the change that has occurred over the last few years, in 2021 about 4,200 net Class A units were absorbed through November. In 2022 and 2023 combined, the total was around 2,800 net units. 

With new supply outpacing net absorption, Greater Fort Worth average occupancy fell 2.4% to around 81% to close November. This represented the lowest finish for this time of year since 2020. For those properties that entered 2023 already stabilized, the average to end the period was about 94%. Clearly, the vacant recent additions to the market are weighing heavily on occupancy.

Average effective rent for new Class A leases rose by just over 2% from the start of the year through November to $1,763 per month. Class A was the only segment to realize notable rent growth this year, but this year’s total was better only than in the same portion of 2020 among the last five years. Lease concessions have played a major role in rent performance this year. An increase in availability of more than 40% for Class A properties left discount availability for new leases in November at its highest point since 2020. 

Class B

The Class A segment of the market was aided by partially sidestepping the full load of the construction pipeline. Class B was predominately the segment to pick up that slack. Almost 4,500 new units entered the Greater Fort Worth market through November as Class B units. This was the most new supply for the Class B subset of any recent year – and by a wide margin. 

Part of the story here was an increase in deliveries within more outlying, and lower rent, submarkets. Because ALN price class is calculated at the market level, a new property entering the market at the top of its submarket in weighted average effective rent might find itself outside the top 12% of market-level average rents. This dynamic was particularly observable in the 2023 national deliveries data and in many markets around the country. 

Unfortunately, Class B demand was not up to the challenge presented by the new supply. Less than 800 net absorbed units through November was the lowest total of any recent year by far. The previous trough in recent years was about 1,100 net absorbed units in the same portion of 2019.  

As would be expected with deliveries well above the norm combined with net absorption well below the norm, Class B average occupancy has declined significantly this year. A decrease of 8% from the start of 2023 brought the average to 85% to finish November. This average occupancy was the lowest in more than five years. For the properties that entered the year already stabilized, average occupancy closed the period at just under 93%. So, like the Class A tier, stabilized properties are holding their own – at least for now.

Despite struggles on the occupancy front, Class B properties as a group managed to narrowly avoid an average effective rent growth loss. A 0.2% gain through November left the average rent almost unchanged at $1,516 per month.  

Classes C and D

Without the same new supply pressure, the workforce housing segments have seen smaller average occupancy declines in 2023. For Class C, net absorption through November was negative by just over 300 units. The resulting 2% decline in average occupancy brought that metric to 90% to end the month. Class D properties were able to add nearly 300 net leased units in the period, but average occupancy finished November at about 87%. Both average occupancies were well below the norm for these price tiers. 

Occupancy declines for Class C and Class D were less pronounced than in the other two tiers, but the inverse was the case for rent change. A 2.6% decline in average effective rent for new leases in the Class C group brought the average unit to $1,380 per month. For Class D, a 3.9% decline through November brought the average unit to $1,175 per month. 

For both Class C and Class D properties, lease concession availability ended the period higher even than the 2020 through early 2021 period at 34% and 30% of properties offering, respectively. The increase in availability for the Class C group was the most significant of any price class with the share of properties offering a discount for a new lease more than tripling from the start of the year.  


2023 was a tough year in many respects for the multifamily industry. The dramatically low apartment demand of 2022 improved, but not enough to offset one of the most active new construction pipelines in decades. Paired with macroeconomic headwinds and uncertainty, the imbalance between supply and demand sent both occupancy and rent change into negative territory.

From a price class perspective, it was clear this year that Greater Fort Worth demand and rent growth came almost exclusively from the Class A segment. For the workforce housing tiers, low demand and the rent growth of 2021 and 2022 made rent growth hard to come by in 2023. For Class B, net absorption uniquely underperformed 2022 at a time when a mature construction cycle delivered vastly more new units in that segment of the market than in any recent year. 

Looking ahead to 2024, a broadening of demand outside of Class A will be important. This is especially the case for the Class B group given that deliveries are not expected to materially decline until at least 2025. 

Jordan Brooks
Senior Market Analyst – ALN Apartment Data

Jordan Brooks is a Senior Market Analyst at ALN Apartment Data.  In addition to speaking at affiliates around the country, Jordan writes ALN’s monthly newsletter analyzing various aspects of industry performance and contributes monthly to multiple multifamily publications. He earned a master’s degree from the University of Texas at Dallas in Business Analytics.