Brian O’Boyle: Breaking Down DFW’s Hot Multihousing Market

Brian O'Boyle
Brian O’Boyle

Dallas’ multihousing investment sales activity remains brisk. The competitive nature of this market continues to push pricing higher than we’ve seen in recent years. Additionally, more buyers are willing to put up non-refundable earnest money at execution of the contract.

Recently, the Dallas-Fort Worth market has been seeing a vast increase in foreign capital. Chinese, Middle Eastern, Canadian and Israeli investors have been especially active. National awareness of Dallas has continued to increase with positive reports of major corporate relocations. The region has appeared on the radar of institutional investors who may not have considered the multihousing industry before.

The Frisco-Plano-Richardson area has been at the epicenter of suburban expansion and interest, and suburban prices have seen significant upticks. It is quite possible we will see suburban sales in the $200,000-per-unit range by the end of 2015. Infill deals are also continuing to garner great investor interest and are selling at record low cap rates.

Requests for broker price opinions are at an all-time high across the board, which should result in more deals coming to market in the second half of the year. MPF Research has estimated that more than 35,000 apartment units are currently under construction, with most of these expected to deliver within the next two years or so. The area’s strong economy and anticipated job formations should provide high absorption rates for these units.

Our sector was concerned when Fannie Mae and Freddie Mac shut off lending in April-May of this year, but this has not come to fruition, as the void has been filled by life insurance companies and banks. Therefore, sales have not decreased. The questions we had regarding oil and gas have proven to be a non-issue as well. In fact, the Dallas-Fort Worth multihousing industry has seen little to no effect on the investor market and performance of properties due to the drop in oil prices.

Dallas’s future remains bright for multihousing investors due to our strong employment growth, diversified economy, and rental increases compared to other U.S. markets. More groups are looking to our central location and taking eyes off the West and East Coasts, as a result of our strong economic fundamentals and the convenient perks of doing business in Texas. The beat goes on.

Brian O’Boyle is vice chairman of ARA Newmark. Contact him at [email protected]

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