The pace of apartment rental in Dallas-Fort Worth has ground nearly to a halt this year.

And the dramatic slowdown in apartment demand in North Texas has left industry analysts scratching their heads.

“It’s pretty ugly,” said Greg Willett of apartment consultant M/PF YieldStar. The latest leasing numbers were released Thursday.

“Results for the second quarter fell way below expectations,” he said, with virtually no increase in apartment rentals.

For the first half of 2007, net apartment leasing has added up to only about 300 units. Compare that with the more than 7,000 net apartments leased in the first six months of 2006.

Mr. Willett blames a combination of homebuilder giveaways and for-rent homes for stealing the apartment market’s thunder.

“While there are lots of new jobs in Dallas-Fort Worth, the associated housing demand just isn’t going to the apartment sector,” he said.

Instead, renters are snapping up new-home bargains or renting houses put up for lease by investors.

“The number of single-family homes available for rent appears to be way up, even though many aren’t getting rental rates that actually cover mortgage costs,” Mr. Willett said.

Unless apartment demand recovers, developers could be headed for a train wreck with almost 13,000 units in the construction pipeline, according to M/PF YieldStar’s latest estimate.

Much of the construction is in central Dallas and in the Las Colinas community in Irving.

“What’s saving the market’s overall performance from cratering is that Dallas-Fort Worth leads the country in teardowns, mostly to create redevelopment sites,” Mr. Willett said. “Because removals have been so numerous, total inventory actually dropped by about 400 units during 2007’s first half.”

More than 3,500 D-FW area apartments were demolished in the last six months.

Even with all the demolitions, overall vacancy rates inched up to about 7 percent.

And average monthly apartment rents in North Texas at the end of June were $716 – up about 1 percent from a year ago.

M/PF YieldStar is now forecasting that the apartment market will be essentially flat this year, with little improvement in leasing or rental rates.

“This pattern isn’t seen just in Dallas-Fort Worth,” Mr. Willett said. “Atlanta looks like the most extreme example.”

Tenants moved out of almost 5,000 net rental units in the Atlanta area so far in 2007, he said.

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This entry was posted on Sunday, July 8th, 2007 at 11:45 am and is filed under Apartments, Real Estate. Tags: Atlanta Community Dallas development Fort Worth Inventory Texas . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.