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  • DALLAS - FORT WORTH

    MULTIFAMILY TRENDS & OBSERVATIONS

    MID-YEAR 2018

    Photography: Steve Hinds

  • PAGE 2&

  • PAGE 3DALLAS - FORT WORTH MULTIFAMILY TRENDS & OBSERVATIONS | MID-YEAR 2018 &

    DALLAS-FORT WORTH TRENDS TO WATCH

    Source: Axiometrics, Bureau of Labor Statistics, & U.S. Census Bureau

    _________________ DFW Job Growth Among the Highest in the Nation _______________ » DFW, second only to New York, continues its trend of prolific job growth. » DFW added 118,200 new jobs Year-Over-Year as of July 2018. » The unemployment rate of just 3.6% is well below the national average. » A, B C’s For Future DFW Job Growth:

    A - Affordable D - Diversified Economy B - Business-Friendly E - Educated Workforce C - Centrally Located F - Fair-Weather Climate

    ______________ DFW Apartment Market Fundamentals Remain Strong ______________ » Stable occupancy is reported at 94.6% with 2019 projected to be 95%+. » Absorption and deliveries are projected to be on pace with each other through 2018 for

    Dallas-Plano-Irving-Fort Worth-Arlington markets with estimated absorption of 27,104 units while deliveries are projected at 27,418 units.

    » New multifamily deliveries in 2019 are projected to be on par with 2018. » Effective Rents are projected to rise in 2019 alongside occupancy.

    _________________ Headwinds Slowing Down New Development ___________________ » Fewer available apartment sites along with resistance among suburban communities to

    rezone new multifamily parcels are resulting in higher land prices and longer lead times. » New construction costs continue to rise as labor and material costs have been increasing 5%

    per year along with rising land prices. » Tightening credit standards for multifamily construction loans result in higher equity

    requirements. » Average return on cost for new developments has declined from 9.5% to 6.6% between 2002

    and 2017.

    _____________ Transaction Market Remains Robust with some Caution _____________ » Ample low-cost debt and equity for all multifamily asset classes still exists. » Value-add deals are still the darling of the investment market with in-place cap rates the

    lowest among all classes. » Some traditionally value-add capital is shifting its focus to newer, more stabilized assets

    chasing higher going in yields with lower capital risk. » Institutional investors are considering suburban over urban core locations in an attempt to

    find higher yields. » There is continuing caution in underwriting rent growth in the near term for submarkets with a

    higher new development pipeline. » Rising interest rates combined with compressed cap rates result in low LTV’s and higher

    equity requirements.

  • & PAGE 4

    QUARTER TWO 2018 STATS AT A GLANCE

    TOTAL UNITS UNITS ADDED

    SINCE 2010 UNITS ABSORBED

    SINCE 2010

    788,816 127,008+/- 166,273+/-

    CURRENT OCCUPANCY

    PROJECTED OCCUPANCY Q2 2019

    ANNUAL # NEW UNITS DELIVERED

    94.6% 95.2% YTD: 25,618

    CURRENT AVERAGE EFFECTIVE RENT

    PROJECTED EFFECTIVE RENT GROWTH

    EFFECTIVE YOY RENT GROWTH

    $1,116 2010 TO YTD 2018: 39% 2010 TO YTD 2019: 45%

    FOR THE YEAR ENDING Q2 2018: 1.3%

    FOR THE YEAR ENDING

    Q2 2019: 3.1%

    DALLAS - FORT WORTH MULTIFAMILY TRENDS & OBSERVATIONS

    Source: Axiometrics, Bureau of Labor Statistics, U.S. Census Bureau, Natl. Asso. of Realtors, Fortune 500, & Sperling’s Best

  • PAGE 5DALLAS - FORT WORTH MULTIFAMILY TRENDS & OBSERVATIONS | MID-YEAR 2018 &

    ECONOMIC DRIVERS AT A GLANCE

    JUNE 2018 WORKFORCE JOB GROWTH

    JUNE 2018 UNEMPLOYED

    3,716,200 JUNE 2018 YTD: 113,600+/-

    2010-JUNE 2018: 786,700+

    DFW: 3.8% U.S. 4.2%

    CENSUS BUREAU JULY 1, 2017 POPULATION

    2010-2017 POPULATION GROWTH

    2010-2050 PROJECTED POPULATION GROWTH

    7,399,662 973,448+ +10MM+

    PUBLIC/PRIVATE PARTNERSHIPS

    FORTUNE 500 COMPANIES

    CLASS A OFFICE SPACE Q2 2018

    $246,550,000 22 15.7 MM SF $29/SF

    Q2 2018 MEDIAN HOME PRICES

    YOY % GROWTH MEDIAN HOME PRICES

    COST OF LIVING INDEX SPERLING’S BEST PLACES

    $268,200 5.10% DALLAS: 95

    DENVER: 128

    HOUSTON: 102

    ATLANTA: 102

    BENCHMARK: 100

    DALLAS - FORT WORTH MULTIFAMILY TRENDS & OBSERVATIONS

  • & PAGE 6

    0

    10,000

    20,000

    30,000

    40,000

    50,000

    60,000

    70,000

    80,000

    0

    1,000,000

    2,000,000

    3,000,000

    4,000,000

    5,000,000

    6,000,000

    7,000,000

    8,000,000

    19 80

    19 81

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    M ul tif am

    ily  P er m its

    Po pu

    la tio

    n DFW MF Permits & Population

    1980‐2017

    Population MF PermitsSource: U.S. Census Bureau  | R. E. Center Texas A&M

    DFW MULTIFAMILY STARTS - A HISTORY LESSON!!!

    The challenge – “boom or bust” perception vs recent history and reality today Half the MF permits with twice the total population vs. the 1980s

    DFW POPULATION PROJECTIONS 2010 - 2050

    2010 – 2050 (Estimate) = + 10 million people At 2.7 people per HH = 3.7MM HHs

    = 92,500 HH per year

    1970 2,428,365 19853,624,952

    2010 6,341,740

    2017 7,399,662 

    2050 16,367,293

    0

    2,000,000

    4,000,000

    6,000,000

    8,000,000

    10,000,000

    12,000,000

    14,000,000

    16,000,000

    18,000,000

    1970 1980 1990 2000 2010 2020 2030 2040 2050

    Po pu

    la tio

    n

    Axis Title

    Source: U.S. Census Bureau/Real Estate Center at Texas A & M University

    Source: U.S. Census Bureau

    &

  • PAGE 7DALLAS - FORT WORTH MULTIFAMILY TRENDS & OBSERVATIONS | MID-YEAR 2018 &

    16.4%

    15.1%

    11.3% 10.7% 10.3%

    6.2%

    4.1% 3.9%

    2.2%

    0.8%

    0.0%

    2.0%

    4.0%

    6.0%

    8.0%

    10.0%

    12.0%

    14.0%

    16.0%

    18.0%

    Houston Dallas‐Fort Worth

    Atlanta Miami Washington DC Boston Los Angeles New York Philadelphia Chicago

    Population Growth Ten Largest Metros 2010 ‐ 2017

    Source: U. S. Census Bureau

    2010-2017 POPULATION GROWTH OF TEN LARGEST U.S. METROS

    Population increase DFW 2010-2017 = 973,448 Population increase DFW 2016-2017 = 146,238*

    * The largest numerical increase of all U.S. metros in 2017

    27%

    22% 22%

    21%

    16% 16% 15%

    13% 12%

    10%

    0%

    5%

    10%

    15%

    20%

    25%

    30%

    Dallas‐Fort Worth

    (786,700)

    Atlanta (504,300)

    Houston (567,300)

    Miami (452,600)

    Boston (393,700)

    Los Angeles (842,800)

    New York (1,323,200)

    Chicago (561,900)

    Washington DC (370,400)

    Philadelphia (274,100)

    2010-June 2018 YTD JOB GROWTH OF TEN LARGEST U.S. METROS

    2010 - June 2018 Job Growth Rate 27%

    DFW JOBS CREATED 2010 - JUNE 2018

    786,700+

    Source: U.S. Census Bureau

    Source: Bureau of Labor Statistics

  • & PAGE 8

    Trade, Transportation, and  Utilities 21%

    Professional and Business  Services 17%

    Education and Health  Services 12%

    Government 11%

    Leisure and Hospitality 11%

    Financial Activties 8%

    Manufacturing 8%

    Mining, Logging, and  Construction

    6%

    Other Services 4%

    Information 2%

    Total Non‐Farm Employment Highly Diversified June 2018 Employment By Industry Supersector

    DFW EMPLOYMENT BY SECTOR – 3,716,200 JOBS – June 2018

    Source: Bureau of Labor Statistics

    PUBLIC & PRIVATE CAPITAL INVESTMENT

    AT&T STADIUM KLYDE WARREN PARK

    DART RAIL LINE I-35 CORRIDOR PARKLAND HOSPITAL

    73.6 79.2

    89.8 112.2 116

    102.7 93.7

    113.6

    0 50 100 150

    2011 2012 2013 2014 2015 2016 2017

    Jun‐18

    Year‐Over‐Year Employment Growth (1,000's)

    2011 ‐ June 2018

  • PAGE 9DALLAS - FORT WORTH MULTIFAMILY TRENDS & OBSERVATIONS | MID-YEAR 2018 &

    COMPANIES HEADQUARTERED IN DFW

    2018 Fortune 500 / 1000 COMPANY RANK REVENUE (M’s)

    Dallas AT&T 9 $160,546 Energy Transfer Equity 64 $47,487 Southwest Airlines 142 $21,171 Tenet Healthcare 147 $20,613 Texas Instruments 192 $14,961 HollyFrontier 206 $142,51.3 Jacobs Engineering Group 297 $100,22.8 Dean Foods 362 $7,795 Builders FirstSource 400 $7,034.2 Neiman Marcus Group 548 $4,706 Trinity Industries 633 $3,662.8 Comerica 702 $3,289 Brinker International 714 $3,150.8 Atmos Energy 724 $3,063.2 Primoris Services 853 $2,380 Valhi 959 $1,980

    Plano J.C.