FEATURE ARTICLE, SEPTEMBER 2012

Q&A
The multifamily market in Dallas.
Taylor Snoddy

For a perspective on Dallas, Texas Real Estate Business caught up with Taylor Snoddy, vice president of Transwestern’s Dallas Multifamily Group.

Texas Real Estate Business: What are some of the drivers of the increased demand for multifamily properties both from a tenant’s and investor’s perspective?

Snoddy: Obviously, the poor single family market is driving the rental market. DFW is one of the top job growth markets in the country. Apartment investors follow job growth. Transaction volume is up as buyer’s are locking in low rates and paying seller’s premiums to do so.

TREB: In what Dallas submarkets and for what types of multifamily properties are deals getting done? What are some of the largest (or most important) multifamily sales that have occurred this year?

Snoddy: Transwestern Dallas has sold three deals totaling 706 units in Irving in the past 60 days. The Irving submarket is 95 percent occupied and rents are up 4 percent. Buyers are getting aggressive in submarkets where they feel rents are on the move.

TREB: How is multifamily construction/repurposing going in Dallas? Has it increased, decreased or stayed the same compared to this time last year? For what reasons?

Snoddy: Supply remains low as only 6,000 units were delivered in the last 12 months, which is in line with the past year. It won’t remain that way as 15,000 units are under construction and permits are on the rise.

TREB: What types of lenders are active in the marketplace? What are they most bullish on? Describe the challenges, or lack thereof, of securing financing for new development or acquisitions.

Snoddy: We are working with local, regional and national banks, the GSE’s, life companies and conduit lenders. As investments sales advisors, we look very hard at the sponsorship of the buying entity. If the sponsor has a good track record and liquidity, we feel pretty comfortable about the financing options.

TREB: What types of properties and markets are still struggling? For what reasons?

Snoddy: The Class B and C markets are now gaining traction as Class A communities continue to push rents. Class C communities in tough submarkets struggle to stay well occupied. Traffic is there, but finding qualified residents is difficult.

TREB: What are some of the different trends you’re seeing for condos and apartments in your market?

Snoddy: On the construction side, there is significantly more in-town development than suburban. Developers are building smaller units with increased amenity packages.
On the investment side, the distressed deals aren’t as prevalent due to our strong fundamentals in Dallas. Investors are becoming more yield-driven and underwriting longer holds. More private investors are selling to take advantage of today’s pricing.

TREB: What’s on the horizon for multifamily activity in Dallas? What do you expect will be the big story in the next six months?

Snoddy: The transaction market in DFW is vibrant and we only anticipate that to continue. Interest rates are always the hot topic as cap rates follow its lead.

©2012 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.