25,000 New Apartments Added in Dallas, Will the Renters Come as Costs Rise?

According to the Dallas Morning News, more than 25,000 apartments will be added to Dallas-Fort Worth market this year, more than in any other metro area in the country. The units are being built based on 100,000 new jobs that are fueling the build out. "Employment growth has been the tailwind this entire economic cycle and that has continued to push forward," said John Sebree, national director with Marcus & Millichap, one of the country's top apartment brokers. "There is a lot of conversation about are we getting overbuilt in apartments?

Apartment vacancy rates in North Texas remain low — near 5 percent — even with years of widespread building. And local apartment starts have increased for several years in a row. "I don't know that Dallas continues to increase at that level," Sebree said. "It may level off next year." The top reason builders say they may be forced cut back on new apartment projects is due to rising construction costs.

"Several years ago costs were up year over year because of labor," said Tom Bakewell, one of the founders of StreetLights Residential, one of D-FW's largest apartment builders. "Today it's more material pricing. "It's tariffs on imported building materials and construction products," he said. "It's a 30 percent increase on some items. You scramble to find another way to source items." With construction costs spiking and average rents up only about 3 percent this year from 2017, builders profits are getting squeezed.