DALLAS (TIP): An average new apartment in Dallas’ popular Uptown neighborhood can cost you twice as much as the mortgage payment on a mid-priced North Texas home.
And developers can’t build apartments fast enough, even though most of their new renters – a combination of young professionals and affluent empty nesters – could save money buying a house in the suburbs.
Of course, they don’t want to live there. They are willing to pay more for the luxury rental lifestyle and an address in the heart of Dallas. “A lot of them are people moving into town – people coming from other urban experiences,” Dallas developer Lucy Billingsley told developers at an apartment seminar this week. “We know we have lifetime renters who will be with us now.” While spending $1,800 to $2,000 a month for a unit of less than 1,000 square feet may sound crazy to many Dallas residents, there are thousands of tenants signing up for the newest wave of apartments. So far this year, more than 13,000 renters have signed leases in North Texas. New projects woo residents with luxe lifestyle amenities and hotel-style services. “Renting apartments is a much more attractive option than it used to be,” developer Dirik Oudt with Lang Partners says. “We are fiercely competing for tenants, and the only way to differentiate our project is with better amenities and better design. “Some of the apartments we live in now are like resorts.” A generation ago, apartments in Dallas were the waiting rooms for homeownership. That’s not the case anymore. Starter homes stall Changes in the job market and tougher mortgage qualifying standards have pushed home buying down on young America’s list of must-haves. “Thirty-five years ago when I started in the business, apartments were feeders into singlefamily homes,” said apartment builder Brad Miller with Encore Multi-Family. “Now, singlefamily homebuilders are not building starter homes anymore. “And people have to wait longer to be able to afford to buy a house.” While they are waiting, they want deluxe digs. Top-of-the-market apartment rents in Dallas are eye-popping, but they are still cheap compared to a lot of other major U.S. markets. Dallas ranked 15th among top apartment rental markets in a new report by Zumper Inc. Rents are, of course, less here than on the coasts. But we are also less expensive than Denver, Atlanta and Minneapolis, a new report shows. Thousands of residents who are moving to North Texas from California, Chicago and the Northeast to fill new jobs in Dallas-Fort Worth find our apartment rents a bargain. “We import people from all over the country,” said Drew Kile with Institutional Property Advisors. “For them, our apartments are cheaper, and they want to live in town.” Bargain for some Recently, I bumped into an exec working in Toyota Motors’ new headquarters up in Plano who just rented in Uptown. He’s moving from New York and knows all about urban lifestyle. The run-up in Dallas apartment rents still is big enough to make some industry analysts nervous. Zumper’s report on rents said that Dallas had the fastest month-over-month average rent increase among the 25 major markets it surveyed. And overall rents here are up about 40 percent from a decade ago. Greg Willett, vice president with longtime Dallas apartment market firm MPF Research, warns, “we need to pay attention to the affordability factor.” “You are pushing rents above the wage growth level,” Willett told developers meeting in Dallas this week. “You can do that for a while but not indefinitely. “A big share of the people that want that product don’t make near enough to afford it.”