Multifamily Demand Relatively Stable in April

by Jordan Brooks, ALN Apartment Data

The main story of 2020 continues to be COVID-19 and the fallout from both the virus and the response to it. The impact is being felt across the economy, and multifamily real estate is no exception. April was the first full month in which a majority of the country was locked down and provides a first full look at what that may look like for the apartment industry. Using conventional properties of at least 50 units, let’s take a look at how April 2020 stacked up against the month of April from recent years for the Greater Fort Worth area.

Average Occupancy

Average occupancy for Greater Fort Worth gained about 0.3% in April to finish at 90%. Although overall occupancy for April is a little bit lower than in years past, the monthly change is on-par with that of recent years.

Zooming in to look at individual submarkets, a few stand out. On the positive side, the Central Fort Worth area gained 1.4% in average occupancy. Though even so, the area finished the month at just below 86% occupancy. The other submarket to hit at least a 1% gain in April was South Fort Worth – a 1% gain brought the area to almost 88%.

On the other side of the coin, average occupancy in the East Fort Worth submarket retracted about 0.8% to end April at around 91%. Similarly, the Grapevine – Roanoke – Keller region suffered a monthly decline of nearly 1% to finish just above 83%. One mitigating factor for the latter submarket is that 300 new units were introduced during April, making it the only submarket in Greater Fort Worth with a new property delivered in the month.

Net Absorption

Net absorption fell 20% in April compared to last April. As significant a drop as that is, many areas were much worse. In fact, at the national level, April demand fell by 80%. On the Greater Dallas side of the metroplex the decline was 65%.

Only two submarkets experienced a net loss in rented units, East Fort Worth and West Fort Worth, but each lost less than 100 rented units.

Demand was mostly centered in four areas, led by Central Fort Worth with over 200 absorbed units. The Grapevine – Roanoke – Keller, Mid-Cities and South Fort Worth regions each added around 140 newly rented units in April.

Average Effective Rent

Average effective rent growth crossed into the negative range in April, to the tune of a 0.3% loss. For context, in the same period last year average effective rent growth was 0.8%. However, as with net absorption, the lackluster result is certainly better than some other large markets.

No submarket’s average effective rent decline came close to matching the 1.6% loss in Grapevine – Roanoke – Keller. The North Richland Hills – Hurst – Haltom City area lost 0.8% at the average and the Mid-Cities submarket lost 0.5% at the average.

In terms of lease concessions, both the availability of new lease discounts and the average value of the discounts being offered ticked up in April, but not by much. As of the end of the month about 28% of conventional properties were offering a concession and the average value was about three weeks off a 12-month lease.

Takeaways

Thanks to a softened monthly net absorption blow relative to other areas, the Greater Fort Worth market managed a slight average occupancy improvement without drastically increasing lease concessions. Average effective rent did dip into negative territory, but not to the extent as in some other large markets.

April was certainly no walk in the park, and May is likely to be rougher still. With the state beginning a partial re-opening, and early reporting on May rent collections looking somewhat better than expected, there may be some light at the end of the tunnel as summer approaches if all goes well. With so much still unknown, only time will tell.