North Dallas and Denton Vacancy Rates

[Greg Gallucci]

Can anyone help in understanding current rental demand in North Dallas and Denton TX. I'm looking to purchase a duplex - quadplex but am having a tough time gauging what the current vacancy rate is. There seems to be a ton of inventory and most multis I look at have a least one unit vacant. What I am trying to avoid is purchasing a property and having one or more units sit vacant for months. What is timing looking like for filling vacancies on 2 and 3 br apts and are rents holding stable? 

Thanks 

Greg

[Phillip Ellis]

Hi Greg! I work in property management in DFW and have some information that I have sent out to investors recently: 

Rental Demand & Vacancy Rates:

• North Dallas: The multifamily market in North Dallas has experienced significant growth, with over 696,000 existing apartment units as of Q1 2024. Despite this, strong demand drivers and a significant influx of job additions have helped maintain a relatively stable occupancy rate of 93.2% by Q4 2024. 

• Denton: Denton's multifamily market is currently facing challenges due to high vacancy rates and aggressive construction, leading to short-term oversupply concerns. However, the area remains attractive for long-term investment, especially with a strong student housing market and continued suburban expansion. 

Strategies to Mitigate Vacancy Risks:

• Targeting High-Demand Areas: Focus on submarkets with low vacancy rates and strong rental demand. For instance, Grapevine and Hurst/Euless/Bedford have maintained low vacancy rates, contributing to the overall market's stability.

• Property Upgrades: Investing in property enhancements can make your units more competitive in the market, potentially reducing vacancy periods.

• Competitive Pricing: Ensure your rental rates are aligned with current market trends to attract tenants promptly.

Rental Trends:

The Dallas-Fort Worth area has seen a modest decline in average effective rents, averaging $1,531 by Q3 2024. This trend reflects a cooling in rent growth, influenced by the influx of new inventory and increased competition.

Conclusion:

While Denton presents some short-term challenges due to oversupply, North Dallas continues to offer a robust rental market with stable occupancy rates. By focusing on high-demand submarkets and implementing strategic property enhancements, you can mitigate vacancy risks and position your investment for long-term success.

If you need further assistance or detailed market analyses, feel free to ask!