DFW Apartment Bubble Deflated In 2023 As Onslaught Of New Units Pushed Supply Ahead Of Demand

As featured in "BISNOW" 
13 December 2023 

It was a year of reckoning for the local apartment industry.

After notching a series of wins in the wake of the pandemic, rent growth and occupancy in Dallas-Fort Worth declined each month in 2023. A wave of new units coming online snatched the ball from owners and placed it firmly in the tenants' court, marking a reversal in the power dynamic that has defined the market for the last three years.

“There’s just been wild swings in supply and demand,” MRI ApartmentData Industry Principal Bruce McClenny said. “That’s what’s behind the drop-off in rates — there are so many new units coming on, and the timing isn’t right.”

More than 8,100 new units opened in DFW in the third quarter alone, and another 44,000 are on the way in 2024 and 2025. Meanwhile, more than 81,000 existing units sit empty, and landlords are having to work twice as hard to fill them amid fiercer competition from new development.

“When you’re talking about so many thousands of units … that is a huge amount of supply,” RR Living CEO Melanie French said. “You see building happening everywhere.”

Rapid in-migration and job growth have put DFW at the top of the roster for apartment investors. Hundreds of new projects launched over the last three years, but those units are delivering into a market on its way to becoming oversupplied — a phenomenon most didn’t see coming when demand was red-hot, McClenny said.