Over 200 multifamily investors came to the Old Capital Speaker Series with Steve Brown on August 1st, 2018 at the Grapevine Convention Center. Steve shared his insights on the current commercial real estate market in DFW. He has been the real estate editor for the Dallas Morning News since the 1980s so he has seen a few cycles.
Some of the key takeaways from the presentation for me:
1) It is all about jobs. DFW added 122,000 new jobs year over year through May 2018. 1st in the nation. As companies relocate and jobs continue to enter DFW, every commercial real estate sector improves.
2) Jobs lead to population growth. 147,000 new people came to DFW in 2017. They are coming from Chicago, LA, NY for the jobs and lower cost of living.
3) Single family homes- In 2006 and 2007, DFW was building 50,000 homes per year. In 2018, there will be 35,000 homes built. As the cost of money (interest rates), land, labor continues to increase, the development has pushed further and further outside of DFW suburbs to hit new home pricing under $300,000. As demographics shift and people are getting married later and having kids later, people are staying in multifamily properties longer.
4) DFW has the most new supply in the country in terms of multifamily units over 30,000, which is not enough to house all of the people moving to DFW. However, the new development is concentrated in the wrong place (North Dallas, Frisco) and wrong price ($2-$3/sf/month rents). Class A DFW multifamily in these concentrated submarkets are experiencing negative rent growth in order to maintain occupancy. Class B and C properties are still seeing 2-3% rent growth depending on the submarket.
Thank you to all the investors who attended, and if were not able to make it you can catch the video replay at the Old Capital Facebook page: https://www.facebook.com/OldCapitalLending/
Old Capital’s next event will be our annual Multifamily Conference on Thursday September 13th at AT&T Stadium: https://www.eventbrite.com/e/old-capital-multifamily-conference-get-in-the-game-tickets-43198819833