Market Update: August 2024
A Mixed Bag at Mid-Year for Greater Fort Worth Multifamily
The first half of the year is in the books, and so far, 2024 has played out mostly to expectations nationally. A very active new construction pipeline has counteracted the moderate improvement in demand and that misalignment has applied downward pressure to average occupancy and rent growth.
Greater Fort Worth multifamily performance generally resembled national trends, but the market outperformed in key metrics.
All numbers will refer to conventional properties of at least fifty units.
New Units and Net Absorption
New supply continued to ramp up as the current development cycle approaches its final chapters. Just more than 6,600 new units were delivered across Greater Fort Worth in the first six months of the year. This marked a 14% increase over the same portion of last year and was more than the new units delivered in the first half of 2021 and 2022 combined.
Nearly all of the twelve ALN submarkets for Greater Fort Worth had at least one new property delivered in the period, but three areas in particular were the focus. The Denton – Corinth region led the way with approximately 1,700 new units delivered. North Fort Worth and Central Fort Worth rounded out the top three submarkets with right around 1,400 new units each.
Net absorption was not up to the task of offsetting new supply, but there was strong year-over-year improvement, nonetheless. Around 2,200 net units were absorbed in the first two quarters of the year compared to only about 400 net units in the same portion of 2023. There remains a shortfall in absorbed units relative to the pre-pandemic years, but 2024 has been a step in the right direction.
Encouragingly, the improvement in the demand picture has been fairly widespread. Class A net absorption in the period doubled last year, and Class B properties nearly tripled last year’s absorption total. Class C properties followed up last year’s net loss of more than 500 leased units with a net gain of nearly 200 leased units through June of this year. Only the Class D subset failed to notch a year-over-year improvement with a net loss of nearly 400 leased units.
Market-level average occupancy fell by 190-basis points to finish June at a little under 86%. For properties that entered the year already stabilized, average occupancy closed at 91%. Overall average occupancy is at its lowest point in more than fifteen years, whereas stabilized occupancy is at its lowest point since 2011.
Average Effective Rent and Lease Concessions
Despite challenges on the occupancy front, average effective rent for new leases rose in the first half of the year. A 1.1% gain was higher than last year’s 0.8% increase but was otherwise lower than in any recent year. Nearly all of the rent growth came from lease-up properties, as properties that entered the year already stabilized managed just a 0.1% gain.
This dynamic was clearly discernable in the price class data as well. Cass A properties managed a 4% gain and Class B average effective rent growth nearly hit 3%. Both were higher than in the last pre-pandemic year of 2019. As with net absorption, Class C properties outperformed last year with rent growth but not the extent of the top two price tiers. A 0.5% gain bettered last year’s 0.1% increase. For Class D, a 2.8% decline at the average represented the first decline at mid-year in more than five years.
As would be expected, lease concession availability also rose from the start of the year, but not as dramatically as last year. A 13% gain resulted in 35% of conventional properties offering a discount for new residents to end June. Lease concession availability ended the second quarter at its highest point since 2014. Even so, for the first time since 2022, concession availability fell in the period for both the Class A and Class B groups.
Takeaways
2024 has largely played out to expectations, and that has meant both positives and negatives for Greater Fort Worth. A very active new construction pipeline continued to drive industry performance by overpowering a robust improvement in apartment demand. The result was average occupancy falling ever lower, with lease concessions remaining a major factor.
Looking ahead to the end of the year, the market will need to see positive progress continue through the summer for demand and rent growth in order to build up some cushion for the expected step backward in the final quarter of the year.
Jordan Brooks
Senior Market Analyst – ALN Apartment Data
Jordan@alndata.com
www.alndata.com
Jordan Brooks is a Senior Market Analyst at ALN Apartment Data. In addition to speaking at affiliates around the country, Jordan writes ALN’s monthly newsletter analyzing various aspects of industry performance and contributes monthly to multiple multifamily publications. He earned a master’s degree from the University of Texas at Dallas in Business Analytics.
