Rents Soar and Concessions Fade Across Greater Fort Worth
After a difficult 2020, the multifamily industry has roared back in 2021 with historic apartment demand helping to fuel rent growth not seen in a decade or more. The Dallas – Fort Worth metroplex has certainly not been left out of the party and the Greater Fort Worth side of the market has posted some dazzling numbers of its own. Using conventional properties of at least 50 units, let’s take a closer look at how the area has performed through mid-year.
New Supply and Net Absorption
One area where the first half of 2021 resembled previous years was new supply. About 2,700 new units were delivered in the period, almost exactly the quantity from both 2019 and 2020. Only seven of the 12 ALN submarkets for Greater Fort Worth saw any new units introduced, with the bulk of the new supply located in the Denton – Corinth region. Other submarkets with notable new supply included North Fort Worth and South Fort Worth – both adding around 500 new units.
While new supply stayed within the range established over the last few years, apartment demand outperformed in a big way. Not only was net absorption of approximately 5,700 units more than double that from the COVID-affected first half of 2020, but it easily surpassed the 3,500 units from the same portion of 2019 as well.
As is usual for the area, Class A properties led the way with almost 2,500 net units absorbed. However, the largest gain compared to recent years was in the Class B space. Class B properties gained about 1,800 newly rented units that were previously vacant after totaling less than 700 in the first half of 2019. The net effect of the new supply and apartment demand was a 1.8% average occupancy increase to just below 92%.
Average Effective Rent and Lease Concessions
A 60% increase in demand compared to 2019 translated into a doubling of average effective rent growth. The average unit in Greater Fort Worth ended June leasing for $1,193 per month after a 6.6% gain in the first half of the year. This rent surge was not simply due to receding lease concessions as evidenced by increased aggressiveness on the part of operators to the tune of a 5.4% average asking rent increase. No midpoint of a year in the last 10 years has seen higher asking or effective rent appreciation. The gains were most pronounced in the top two price tiers with Class A average effective rent up more than 11%. In the bottom two tiers, Class C gained just less than 5% and Class D finished June up 2% higher.
Another major piece of the puzzle was lease concessions. After a 35% reduction in availability from January, about 20% of conventional properties were offering a discount at the end of June. This level of availability is almost precisely the same as in June of 2019, meaning that on the discount front, Greater Fort Worth has returned to normal. An almost 20% decline in the average discount value brought the average concession package value to a little below three weeks off an annual lease – also right at the level from June 2019.
Multifamily has gotten off to a roaring start in 2021, and Greater Fort Worth has not been an exception. A typical volume of new supply has been met with swelling demand and the result has been climbing occupancies, receding concessions, and effective rent growth not seen in more than a decade. All of these developments are encouraging following the difficulties of 2020. Since the traditionally strong third quarter is still ahead, the trajectory of rent growth may exacerbate affordability issues should it not level off.
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.