“Texas markets were among the hottest” for multifamily real estate heading into 2022 — and the Dallas-Fort Worth area was a big reason for that.
That’s according to a new report from Dallas-based commercial real estate and investment services firm CBRE, which looked at key metrics in major US markets.
One robust finding: Nationwide multi-family absorption in Q1 2022 was the highest since Q1 2000.
“The rise in demand was fueled by household formation, job and wage growth, and strong house price increases,” CBRE writes in the report.
DFW #1 in the United States in multi-family investments
For the past four quarters, DFW was No. 1 in the nation for multifamily investments, according to the report. The region recorded a total volume of $29.2 billion, or 7.8% of the US total. The next closest market for investment was Atlanta, which saw $21.4 billion in the past four quarters.
The DFW region saw net absorption of 4,600 in the first quarter and 35,200 in the last four quarters, making it the #3 market in the US in this metric, behind Houston and ahead of Austin.
Texas led the nation in multifamily completions
The report also notes that Texas markets saw more multi-family completions than other states. Houston led in the first quarter, taking second place overall, behind only New York, with 4,900 completions. Dallas came in just behind Austin in Q1 completions, with 3,600.
The news comes as rents are rising across the country, except in San Francisco and San Jose, and vacancy rates are falling. Overall, CBRE said year-over-year vacancy rates fell to a record low of 2.3% in the first quarter. He also notes that this is the first time that vacancy rates across all multifamily asset classes have been below 3%.
It comes as the Dallas area saw an 18.5% year-over-year increase in rents, the second-highest in the South Central region, behind only Austin, which saw an increase of 23.9%. The region with the highest year-over-year change was the Southeast, with West Palm Beach ranking first with a 30.4% rent increase.
“A strong rebound in investment volume for major coastal markets is expected this year as rental growth accelerates,” the report said. “These markets should lead U.S. rent growth in the second half.”
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