TEXAS SNAPSHOT, OCTOBER 2008

Fort Worth, Texas Multifamily Market

Overall, growth has been steady in Fort Worth’s multifamily market in 2008. However, there are pockets — such as the North Tarrant County/Alliance area, the Southwest submarket, the central business district (CBD) and Mansfield — that have grown substantially with higher-end projects. Apartment users want proximity to job centers, shopping and transportation corridors. They also want nicer kitchens, more storage and more amenities; many of the new complexes reflect these mixes and market demand.

One growth area, Alliance/Northern Tarrant County, is attractive due to the variety of employers and jobs available in the immediate vicinity. Furthermore, the area continues to grow with retail development, providing much more than just household necessities nearby. Alliance/Northern Tarrant County has approximately 3,800 new units planned, which will add additional stress on the Interstate 35W Corridor, north of Loop 820. One of the largest developments planned in this area is at the Presidio, located at northwest corner of I-35W and North Tarrant Parkway. This mixed-use development is planned for 660 units, which are scheduled for completion in 2010.

The Southwest corridor has an additional 826 units under construction/planned and is seeing increased rental rates, and the Southeast corridor, which includes Mansfield, has 843 units under construction or planned. Both areas are attractive due to proximity to freeways, shopping, and job centers, combined with the affordability of land.

In Mansfield, three new multifamily projects — Stonehedge Apartments, The Mansions, and The Broadstone’s at Lowe’s Farm — are planned or are currently under construction along Highway 360, within a two mile radius of East Broad Street. The number of units for two of the complexes totals 664 units (the third was unavailable), increasing the size of the Mansfield multifamily market by 60 percent. The communities are in close proximity to Mansfield National Golf Course, Hawaiian Falls Water Park, The Shops at Broad Street, The Reserve at Mansfield, and Big League Dreams.

Finally, the Fort Worth CBD and Medical District continue to attract multifamily development, typically as part of mixed-use developments. The pace of completions is expected to decline in these areas due to scarcity of land.

There has been an increase in higher-end projects during the last couple of years that include higher finish outs and greater amenity offerings. This trend is expected to continue.

Rental rates are increasing in the Metroplex, up approximately 1.85 percent. During the first two quarters of 2008, 873 units have been completed and net absorption has been positive, mostly due to absorption rates in the Alliance area/Northern Tarrant County and North Arlington. According to REIS, Inc., the average rental rate in Fort Worth is $659. The lowest average rent in the metroplex (at an average rate of $520) is in the I-820 submarket, which is the area defined by I-35W to the west, Highway 121 to the north, Highway 80 to the south and Cooks Lane/Precinct Line Road to the east. The highest rent is in the Northeast submarket and the Fort Worth CBD at $727. ALN reports the rental rate in Fort Worth as $720; however, this typically does not include a number of smaller, Class C apartments with lower rates.

Vacancy rates have been relatively stable in the region during the last 2 years. Fort Worth’s multifamily vacancy ranges from a low of 6.6 percent in Grapevine to a high of 11.1 percent in Central Arlington. On average, vacancy is approximately 8.5 percent for the Fort Worth Metroplex.

Alliance and the Southwest Tarrant County markets will continue to draw activity as they are close to employers and downtown Fort Worth. These areas also are attractive due to proximity of supporting uses such as shopping. The West Seventh Street and CBD are saturated with condominium projects, and one can reasonably anticipate demand for rental property in this highly desirable area. Some of this demand may leak south into the medical district.

— Donald Sherwood is the managing director of Integra Realty Resources, Inc. in Fort Worth, Texas.

©2008 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.