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Multihousing Industry News in the DFW Metroplex
D-FW leads nation in apartment construction
The Dallas-Fort Worth area now leads the country in apartment construction.
But building is likely to slow because of the crisis in debt and financial markets, apartment analysts meeting in Dallas said Wednesday.
More than 20,000 apartments are under development in the D-FW area, apartment consultant M/PF YieldStar said at its annual industry conference.
"The aggressive construction gives new meaning to the phrase 'It's bigger in Texas,' " said M/PF analyst Chandra Gajjar.
D-FW far outpaces second-place Houston, which has just over 16,000 rental units in the pipeline. Austin is third nationally, with 13,366.
Although North Texas has the strongest job growth in the country, apartment leasing has lagged this year.
"Demand for apartments in Dallas-Fort Worth is virtually flat – only 300 units [net leasing] through September," Ms. Gajjar said. "We have a strong economy that is providing ample support for housing demand. Where is it?"
Even with high building levels and weak demand so far in 2008, apartment occupancy rates will remain near current levels and rents here will rise through 2009, M/PF YieldStar predicts.
Overall, the apartment market in North Texas has less than a 7 percent vacancy rate.
Rents in the last year have inched up about 3 percent to a record $766 a month.
"Look for occupancies to come down just a tiny bit and rents to slow to a still decent 2 percent gain," Ms. Gajjar said.
"North Texas looks stable in the year ahead."
Of course, prices vary by district. Local rents are highest in the Uptown neighborhood, with an average of $1,325.
The Las Colinas area is second at $977.
Vacancy rates average less than 4 percent in East Plano, Allen, McKinney and North Dallas
Central Dallas, which has just seen a wave of building completions, has the highest vacancy rate at almost 12 percent.
"These are actually decade lows," Ms. Gajjar said.
Most development is taking place in Collin County, including West Plano, Allen and McKinney.
And while construction has fallen from recent highs, 2,239 units are still being built in central Dallas neighborhoods including Uptown and downtown.
To make way for construction, developers and investors have torn down almost 2,400 D-FW apartments this year, continuing a recent trend.
Developers are predicting a marked decline in apartment starts. Indeed, they're already seen a slowdown.
"We have four or five projects on the drawing board and one we might hope to start construction on in 2009, but we are not really optimistic," said Spencer Stuart Jr., senior managing director and Texas partner with Legacy Partners Residential Development.
Rick Perdue, director of acquisitions and development for builder Tonti Properties, said it's much more difficult to get an apartment project started today.
"There is a lack of financing and equity," Mr. Perdue said.
"It's not entirely a bad thing.
"A lot of times the lenders keep us from doing things we shouldn't do on the development side."
Source: Steve Brown
The Dallas Morning News
Reprinted with permission
Multifamily construction surging throughout Texas
Despite nationwide economic woes, construction of multifamily housing is surging throughout Texas.
There are 55,516 units under construction in the four major metros. Currently, 20,585 units are being built in North Texas; 16,282 in Houston; 13,018 in Austin; and 5,631 in San Antonio. Dallas–Fort Worth is seeing its highest building level since 1999.
This adds to the existing inventory of 562,465 units in Dallas–Fort Worth; 162,280 in Austin; 497,010 in Houston; and 136,455 in San Antonio.
Occupancy climbed slightly. Dallas–Fort Worth units held just over 93 percent occupancy; Austin, 94 percent; Houston, nearly 92 percent; and San Antonio, just under 93 percent.
Average monthly rent statewide jumped up $23 to $771. Averages also increased within the four major metros. Dallas–Fort Worth recorded an average of $776; Austin, $838; Houston, $764; and San Antonio, $712.
"The Texas multifamily market has always been highly cyclical," said Dr. Jim Gaines, research economist with the Real Estate Center at Texas A&M University. "Now we're seeing an uptick because of the slowdown in the single-family housing market. Most of these projects reflect financing put in place before the financial crisis began to escalate. It will be interesting to see if any new projects begin in the new year."
Source: The Real Estate Center
Texas A & M University
Reprinted with permission
Frisco apartment complex lands green building award
A new Frisco apartment complex will be the first such development in the area to receive a Home Builders Association of Greater Dallas’s green building award.
Tonti Properties is developing the 270-unit La Valencia at Starwood apartments on Lebanon Road.
The project is set for completion in March 2009.
The builders' association said that the Frisco development is the first Energy Star-qualified apartment project in North Texas.
To get the designation, La Valencia had to meet construction and materials standards to reduce energy usage and promote recycling and water conservation.
About 30 percent of the apartments are already leased, according to the developer.
Rents in the project range from $830 for a one-bedroom unit to $1,575 for a three-bedroom apartment.
Source: The Real Estate Center
Texas A & M University
Reprinted with permission
Apartment developer JPI of Irving announces Dallas area plans
Irving-based JPI, one of the nation's largest apartment developers, says it won't pursue any new construction projects because of the prolonged credit crisis.
It plans to continue current Dallas projects, which include the 146-apartment West End Station on Ross Avenue at Lamar Street and a $50 million apartment building in the Arts District, JPI senior vice president Brad Taylor said.
"We're deferring new production starts until there's improvement in the capital markets," Mr. Taylor said. "It's the difficulty of obtaining reasonably priced capital for new starts. For us, it makes sense to defer those starts. We're still pursuing entitlements on land that we own."
Many companies in real estate and other industries have been hurt by a lack of access to capital. The federal government is providing a $700 billion bailout to financial companies holding bad debt to stimulate the credit markets.
Texas has avoided much of the recessionary impact, but industry experts say the credit crunch was bound to affect real estate developers, which operate largely on credit. It's the same for developers across the country, they say.
"Property developers need access to capital to get projects off the ground," said Dr. Bernard Weinstein, director of the University of North Texas' Center for Economic Development and Research. "This is probably the best market in the country for apartments. Vacancies are very low, and rents have been rising. That a strong developer like JPI isn't doing new projects is really incredible and highlights just how serious this credit crunch has become."
In addition to a lack of capital, construction costs aren't declining, delivering a double whammy to developers, said Chuck Dannis, an adjunct professor of real estate at Southern Methodist University.
Dallas-based Hamilton Properties recently failed to attract private financing to turn the former Ramada Plaza hotel on Akard Street at Interstate 30 into an independent boutique hotel, president Ted Hamilton said.
"They said if a [hotel] brand was associated with it, they might be interested," he said. "So we're trying to secure a brand and will approach the financial markets again later this year or early next year."
Higher construction costs are prompting the company to request additional tax-increment financing from the city of Dallas next week to turn four vacant downtown office buildings into apartments and retail, Mr. Hamilton said. It plans to seek private financing next spring, he said.
JPI, which survived the late 1980s real estate crash with an investment from Dallas oilman Ray Hunt, finds current financing economics unfeasible, Mr. Taylor said. Lenders are requiring at least 40 percent in borrower equity, up from 20 percent to 35 percent 18 months ago, he said.
Here are JPI's Dallas plans, according to Mr. Taylor:
West End Station: It will complete construction in November and continue to lease the apartments and ground-floor retail space.
Downtown Arts District: It will complete construction in August 2010 on a 228-unit apartment building on Ross Avenue at Routh Street. JPI also owns about two acres across the street, where it has delayed plans to start building a 242-unit apartment complex early next year.
Trinity River corridor: It's pursuing rezoning approvals, design plans and infrastructure studies for the 60-acre former Alford Refrigerated Storage warehouse site but has deferred construction.
Source: Sheryl Jean
The Dallas Morning News
Reprinted with permission
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