Dallas local Mari Henry recently joined BSB Design as Director of Architecture Development. She shares her thoughts on the current Texas market, and what’s to come.
The Dallas-Fort Worth area continues to flourish as individuals from all over the nation are relocating to Texas. DFW is a rising hub for technology and finance jobs – while also offering sporting events, nightlife and great food. The time is right for continued multifamily development in our market, and here’s why:
1. In Dallas, demand for hip developments north of the metro will continue.
The growing population in DFW has created a shortage of housing, sending people to surrounding cities, such as Frisco and Plano. More rental housing, including apartments, townhomes and single family for rent, will be needed.
2. Texas offers modest rent growth but incredible job growth.
Rent growth in DFW ranked 55th out of the nation’s 100 largest cities. Being right in the middle is truly a sweet spot – no massive rent increases to scare renters away and a large, growing metro area with plenty of employment and investment opportunities. DFW leads the nation in multifamily real estate investments over the past four quarters, with more growth coming in 2022.
3. We should see 24 to 36 months of robust multifamily development activity.
Not surprisingly, Texas is one of three states that account for 40% of future apartment demand across the country. Multifamily developers in our growing markets can make a drastic impact on the housing shortage while realizing excellent ROI along the way.
4. Incremental unit design adjustments can have a huge impact on marketability.
The next generation is entering a new phase: Moving in together, adopting pets, getting married and having kids. They also tend to own less material items and opt for an experience-focused lifestyle that thrives on flexibility. Apartment unit designs should incorporate office nooks, large “Swiss Army Knife” islands that serve multiple functions and more space for hybrid work.
5. Speed to market will win the day, so small design firm capacity may be an issue.
It’s estimated that the country will need 4.3M new apartments by 2035. That’s a lot of pent up demand that can keep multifamily developers plenty busy. But successfully executing these new projects will require robust consultant teams on the pre-development and architecture side to make sure progress and quality don’t suffer. Larger design firms will offer that breadth.
And of Course, Single Family Build to Rent
Okay, here’s the obligatory mention of single family for rent. It’s no news flash, but I can’t talk about development opportunities without mentioning it. Consumers who have been entrenched in the competitive for sale market are still willing to pay a premium for the privacy and feel of a single family home with the flexibility and amenities of renting. Built for rent continues to explode all over the nation, and it’s clear it’s not going anywhere, especially in Texas. Multifamily developers and investors have a key advantage in finding and executing new single family build to rent opportunities.
There is so much potential for multifamily development in Texas right now. Jobs are flourishing, rent growth is manageable and development ROI is high. I’m optimistic that our market will continue leading the way.