COMPETITION FLOODS CLASS B MULTIFAMILY SPACE

In DFW, a diverse, expanding pool of buyers has joined forces with a growing supply of renters, leading to price escalation and yield compression.

The unprecedented job and population growth that Dallas-Fort Worth (DFW) has experienced during this cycle has brought a plethora of new buyers to the Class B multifamily space, and the simple economics of high demand and low supply are re-shaping the landscape of the investment market.

According to CoStar Group, the average price per unit in the Class B space has increased by 4.3 percent year-to-date, and deal volume on sales of Class B assets is down from 2017. These trends attest to the strong impact price escalation has had on the market. A more crowded buyer pool is also breeding competition and pushing prices upward.

The metroplex’s growth cycle datesback to the beginning of the expansion. Data from the U.S. Census Bureau shows that between 2010 and 2018, the metroplex added about 1.1 million people, or 122,000 per year. Earlier this year, Cushman & Wakefield released a report stating that DFW added approximately 754,000 jobs between 2009 and 2018, or 75,000 per year.

This convergence has significantly boosted apartment demand in the metroplex, ushering in waves of competition for older multifamily assets, many of which are positioned for value-add investment and subsequent rent bumps. Price escalation caused by

SEE INVESTMENT page 36

– Texas Real Estate