Market Report

by Jordan Brooks, ALN Apartment Data

2017-2018 was another great year for AATC!

Q1 2019 Review: Units, and More Units

The opening quarter of 2019 is now in the books. As we head toward mid-year, now is a good time to check in on multifamily performance in the first quarter for the Greater Fort Worth area, and how it compared to the same period in recent years. All numbers will refer to conventional properties with at least 50 units.
New Supply and Average Occupancy

Early-year deliveries continued at a strong pace in Greater Fort Worth. The roughly 1,300 new units to open 2019 represents a slight reduction compared to the same timeframe in 2018 though. This new supply is a part of more than 14,000 conventional units added since the beginning of 2017. A positive development was that net absorption* was the highest it’s been in a first quarter since 2016. More than 1,200 net units were newly rented.

That many new units have certainly had an impact on average occupancy, however. At this time three years ago, average occupancy for Greater Forth Worth stood at just above 93%. As of the end of March 2019, average occupancy was 90%. Interestingly, the Greater Dallas side of the metroplex also finished March at about 90%. The bright side of the occupancy story is that even though there has been some pullback in recent years, Q1 2019 was the first time average occupancy didn’t retract in the first three months of the year since 2016.

Average Effective Rent and Concessions

Average effective rent growth continued its downward trajectory as compared to previous years. In fact, as recently as 2017, rent growth topped 2% for the first three months of the year. Last year, the gain was less than 1.5% for the same period. This year, average effective rent climbed by only about 80 basis points—ending March at approximately $1,070 per unit per month. While gains are slowing, the market has realized a rent appreciation of nearly 30% since the start of 2015.

Part of the challenge for rent growth has been the return of rent concessions that have come along with all the new units. As of the end of March in 2017, only about 14% of conventional properties were offering a rent discount. That number stood at 21% at the end of March this year. That’s the highest percentage Greater Fort Worth has seen in a first quarter since 2015 when more than 2,000 units came online in that 3-month span.

Not only has the presence of rent concessions become more widespread, but the average value of the discount offered has risen as well. Amongst only those properties offering a discount, the average package was about 5.5% off a 12-month lease — essentially a little under three weeks off an annual lease. The increase in concession value from January 1stthrough the end of March was over 13%. That’s the largest quarterly increase for any first quarter of the last five years, and it isn’t close.

Submarket Spotlight

Of the five new properties that were delivered in the quarter, four are in the Central Fort Worth submarket. The other property to be added that includes more than 50 units is the 311-unit addition to the Grapevine – Roanoke – Keller area. Unsurprisingly, the largest slide in average occupancy occurred in Central Fort Worth thanks to the new construction activity there, with a decline of 4% to finish March below 75%. The largest improvement was in North Fort Worth. No new supply combined with the absorption of about 300 units led to a 4% average occupancy jump to finish the quarter at 88%.

The Lewisville – Coppell submarket managed a 2% gain in average effective rent to start the year, and this led the way amongst all 13 submarkets by a decent margin. Other regions that cracked 1% growth include Central Arlington, Central Fort Worth, North Arlington and South Fort Worth. Each added around 1.1% to their average effective rent. The only area to lose ground was Denton – Corinth, with a decline of about $5 per month per unit.

As of the end of Q1 2019, rent concessions were most common in Central Fort Worth and North Arlington, with about 41% and 30% of properties offering a discount respectively.  The Grapevine – Roanoke – Keller submarket experienced a more than 40% increase in the number of properties offering a concession, ending March with 25% of properties falling into that category. South Fort Worth and the Mid-Cities area each saw a 30% increase. On the other side, Central Arlington and North Fort Worth saw a decline of about 30% and 25% respectively in the number of properties offering a concession.


New supply continues to be the story for Greater Fort Worth. After adding more than 14,000 new units in the last 27 months, there are another 18,000 units due to come online in the next 18 to 24-months. Given that average occupancy is failing to stay above water, and effective rent growth has gotten off to a less than stellar start in 2019, it’s likely much of the more than 7,000 units still in a pre-construction phase will be closely evaluated.

Central Fort Worth and Grapevine – Roanoke – Keller bear keeping an eye on.  Central Fort Worth is already struggling with occupancy and there are over 5,000 units in the pipeline somewhere between being under construction and entering lease-up. The Grapevine – Roanoke – Keller area saw a significant rise in properties offering concessions in the first quarter, and there are another 2,500 units already in the pipeline there. Continued strong economic performance is now a necessity for the Greater Fort Worth market.

*Net absorption refers to the net number of newly rented units in a period