State of the Industry – So Predictable.

by Sherry Jordan, LumaCorp, AATC President

The 2018 Economic Outlook for the Multifamily Industry is strong.

Can you believe it is 2018?  To get a feel for 2018, attend the AATC- AAGD State of the Industry (SOI) economic forecast event is Tuesday, January 9, 2018, from 11:30 a.m. to 1:00 p.m. at the Westin Galleria in Dallas. This year’s luncheon features presentations by Jay Denton, Senior Vice President with Axiomatics; Jeff Price, Managing Director with JLL Capital; and Brian O’Boyle, Vice Chairman of ARA.

If you are a joint AAGD-AATC you can register online at If you’re an AATC only member you can register at Per usual, the cost is $55.00 if you register before January 4 and $65.00 if you register after that date. There will be no guaranteed seating for those who do not pre-register. Cancellations accepted until 12:00 noon Monday, January 8. No shows will be billed.

Since it’s a new year, I asked a few of our colleagues to offer their insights and expectations for rents, occupancy, amenities, operational cost drivers, hot submarkets, and challenges in the coming year. Below are their (and my) responses—see if you agree:

RENT & OCCUPANCY: I believe DFW rents will increase around 3% in 2018 and predict Metroplex-wide occupancy to be 95%.   AATC Government Affairs Committee Chair Jason Busboom, The Busboom Group, thinks rents will go up 2.8% and occupancy will be 94.8% AATC President-elect Nicolle Block, AMLI, predicts 2.5% for rent increases and 94% occupancy while AATC Treasurer Candy Maxey foresees 2.75% up tic in rents and 93.5% occupancy.  AATC Secretary Jim Canon says we’re all too low and expects 3.5% rent increases and 95% occupancy.

AMENITIES: Package lockers, hammocks, outdoor kitchens and living spaces, pet-related products, “maker’s spaces”, DIY classes, Copycat kitchen, and enhanced concierge services are the hot-new amenities according to Candy, Jason, Jim, and Nicolle.  For older properties, you can expect expanded fitness rooms.

OPERATIONAL EXPENSE INCREASE:  Other than the big three (personnel, mortgage/debt, and utilities), your peers expect advertising/marketing/promotion costs, and turn costs to increase.  Safety and security expenses (courtesy patrols, cameras, etc.) are also expected to rise according to Nicolle. Taxes and insurance went up in 2017, so I anticipate that same for 2018.  Jason agrees, “the main expense to keep under check is real estate taxes…taxes can wipe out revenue gains very quickly.”

HOT DFW SUBMARKETS:  For stabilized and existing assets (not new development), the consensus is North Fort Worth and South Fort Worth in Tarrant County and North Dallas, Addison, Carrollton, and Farmers Branch.  Block thinks Las Colinas will stabilize and everyone is cautious about Frisco/Allen/Plano – great place, but lots of construction (9,000 units under construction with an additional 9,000 units proposed).

“Definitely Bedford!” says Jason.  Thanks Jason— we were trying to have a Happy New Year.  I cannot believe Jason used the “B-word”!  Hint: look at Richardson in 2018.  The rents there rival some pockets of downtown Dallas – I’m just saying.

CHALLENGES: New Year, new challenges.  Three words: “effective rent growth” says Candy.  “Achieving budgeted results—okay, I know, I’m an asset manager. What can else could I say”, pleads Jim. Nicolle adds, “No. One word: retention– associates and residents!”  Labor issues and the unintended consequence of great development growth are two concerns all DFW multifamily professionals will face. It will continue to be difficult to find quality personnel, especially maintenance and leasing professionals. It will also get harder and harder to find qualified, potential residents.  Good prospects are jumping from lease-up to lease up.  Rent concessions are starting to creep into the market.  Maintaining a strong reputation in a slightly softening market is also a constant battle.

My final prediction (guaranteed to come true):  someone (could be you) is going to win a 1967 Blue Camaro, but you’ll have to wait until the AATC Trade Show in November to find out who the winner is!