AATC Market Report: August 2019

Stabilized Properties Fending Off Newer Challengers

The new construction pipeline has continued to increase deliveries in each of the last three year-over-year periods for the Greater Fort Worth area, culminating in about 6,300 new units in the last 12 months. Demand has lagged this new supply in each 12-month period, which has added some competitive tension between existing properties and new lease-ups. For a closer look at the situation, let’s examine average occupancy, average effective rent, and demand within existing stock. All numbers refer to conventional properties with at least 50 units on the Fort Worth side of the metroplex.

Net Absorption

It’s helpful to compare net absorption* figures for the basket of all properties to the basket of stabilized-only** properties to see whether new units are being poached from stabilized properties by lease-ups. For all conventional properties in the last 12-months, around 3,800 units were newly rented. That is an improvement from the previous 12 months when about 3,000 units were absorbed but falls well short of the 6,300 new units that entered the market within the same span.

When considering only stabilized properties, net absorption for the last 12 months stands at a loss of 800 rented units. That loss is more than the 600-unit reduction in rented units in stabilized properties in the previous 12 months and the roughly 400-unit loss from July 2016 to July 2017. While that is clearly a trend moving in the wrong direction, it bears noting that the 800 lost units represent 0.5% of stabilized capacity in Greater Fort Worth. Regardless, it’s clear there is some poaching of renters happening from stabilized properties to new lease-ups.

Average Occupancy

Average occupancy remains strong for existing properties. In July of 2016, average occupancy was 95% for stabilized properties. As of July 2019, that figure was just under 94%. Given the introduction of almost 15,000 new units in that timeframe, an occupancy loss of about 130 basis points isn’t alarming.

In the Greater Fort Worth market overall, average occupancy has declined from 94.5% in July 2016 to 90.5% in July 2019. That the overall average occupancy decline was more than double that of the stabilized properties decline indicates the issue lies more with the lease-up properties. In fact, lease-up absorption has been increasing, but not at a rate sufficient to keep pace with deliveries.

Average Effective Rent

For the overall market, average effective rent growth has slowed for three straight annual periods. Between July 2016 and July 2017 average rent rose by nearly 7%. In the last 12 months, average rent added just under 4%.

For the basket of stabilized properties, effective rent growth was nearly 3% over the last year. This is a decline from 3.5% in the previous 12 months and 5.5% from July 2016 to July 2017. The average effective rent is now about $1,070 per month for these properties. Partly to blame for winnowing rent growth is the reemergence of rent concessions. As of the end of July 18% of stabilized properties were offering a discount. That’s up from only 12% last July.

The lease-up properties are coming to market at a much higher price point, and this is undoubtedly having an impact on lease-up rates. The average effective rent for properties still in lease-up is $1,400 per month. Whereas only 18% of stabilized properties are offering a rent discount, 67% of lease-up properties are. The average value of the concession package amongst those properties offering a discount is also nearly double that of stabilized properties.


The Greater Fort Worth market is feeling the effects of an active construction pipeline. While deliveries continue to outpace demand, absorption is strong and growing.

Within the existing stock, renters are being lost to new lease-ups, but not to a worrying degree. Rent growth has remained solid relative to national averages and occupancies are largely being maintained without a large-scale reliance on concessions. With almost $400 per month difference in unit rent between stabilized and lease-up properties, the existing properties continue to offer the average renter good value. So far, in the tug of war between existing and new stock, existing properties are more than holding their own.

*Net absorption refers to the net change in rented units

**Properties are considered stabilized once occupancy reaches 85%, or nine months after opening, whichever comes first