November Market Report

New Construction in Greater Fort Worth

The Dallas – Fort Worth metroplex as a whole has led the nation in new conventional units delivered for the last couple of years. While much of that volume has been centered in the Greater Dallas part of the area, Greater Fort Worth has been active as well. In fact, the amount of new supply in Greater Fort Worth continues to grow. All unit counts below will refer to conventional units in properties with more than 50 units.

Units Entering the Market

ALN uses two separate designations for properties coming online, Lease-up and Construction/Lease-up. The only difference is that some properties are still completing construction as they begin leasing, while others are completed and leasing. To be reassigned as stabilized, a property must reach 85% occupancy or have been completed for 12 months, whichever comes first.

In the new construction pipeline, 44% of the units fall into this category with about 10,500 units currently entering the market. This is almost the same share as in March of this year when 43% of new construction units were in this category. The difference is that the units are now more concentrated in the lease-up phase as additional properties have been fully completed. The Central Fort Worth submarket accounts for almost 900 Construction/Lease-up units and 2,700 Lease-up units. The Grapevine – Roanoke – Keller area is the only area in Greater Fort Worth with more than 1,000 units in a Construction/Lease-up phase, with about 1,600 units. Similarly, the Denton – Corinth submarket joins Central Fort Worth as the only two submarkets with more than 1,000 in the Lease-up category – with about 1,200 such units. While Central Fort Worth is the epicenter of new units currently coming online, 11 of the 12 ALN submarkets in Greater Fort Worth have at least one project represented in this category of the pipeline.

Under Construction

There are about 8,000 units currently under construction in properties that have not yet begun leasing. This is an increase from 7,200 units under construction in March of this year. For those keeping scores, there are currently more than 18,000 units either already in lease-up or currently being built.

Once again, the Central Fort Worth area leads the way, with over 2,500 units currently being built. The North Fort Worth region has approximately 1,100 units under construction and both the North Richland Hills – Hurst – Haltom City and North Arlington submarkets have about 900 units under construction. Once again, the activity is spread throughout the market with 10 of 12 submarkets having at least one property currently being built.

Pre-Construction

These are projects in a planning, research or permitting phase. Because projects in this category can be delayed or canceled, they’re less relevant in terms of near-term supply. However, this category of the pipeline can provide some indication of where developers and investors see the market going over the next handful of years.

The pre-construction portion of the pipeline is the portion that has really decreased. In March of 2019, there were 7,500 pre-construction units waiting to break ground and there are now roughly 5,400 units. This drawdown in planned properties is coming at a good time because the Greater Fort Worth market has been showing some signs of stress from the new supply. A break in construction will be helpful in getting average occupancy back up after its 4% decline in the last 36 months down to 90%. The 1,500 units in the Grapevine – Roanoke – Keller area lead the way in this category of the pipeline. The Central Fort Worth section of the metroplex is also well represented here, with a little more than 1,200 additional units that have yet been started. There are also nearly 2,700 more units that have yet to start in projects spread throughout seven other ALN submarkets for Greater Fort Worth.

Takeaways

Dallas – Fort Worth has been extremely active over the last handful of years when it comes to new supply. The Greater Fort Worth side of the metroplex has lagged the Dallas side, but the area continues to ramp up deliveries.

Over the last 36 months, average occupancy for communities in Greater Fort Worth has declined more than 4% while average effective rent per unit has climbed by 14%. The relative drawdown in planned construction is coming at a good time for the area. Though with more than 18,000 new units set to come online that have already broken ground, occupancies may continue to soften, and concessions will likely continue to increase in availability.