NEW COMPLETIONS
New apartment units completed in just the first-half of 2008 equaled 73% of the new deliveries from all of last year.  Of the estimated 6,600 completions so far this year, from January through June, around 4,700 units were finished in the Greater Dallas Area and approximately 1,900 units in the Greater Fort Worth Area.

Interestingly, the share of new deliveries located in the Greater Dallas Area and the Greater Fort Worth Area were weighted the same as the allocation of the entire inventory between the two areas.  That is to say, 71% of the new units completed so far this year are located in the Dallas Area; and, 29% of the newly completed units are located in the Fort Worth Area.

Among ALN’s 35 submarkets in the D/FW Metro, new units were delivered during the first-half of 2008 in 16 submarkets.  In five of those submarkets, new completions exceeded 500 units. 
In the first six months of this year, the largest amount of new units delivered within a submarket was the approximately 1,036 newly completed units in the Uptown/Downtown/Park Cities area.  This was the only submarket to experience delivery of 1,000 or more units during the first-half of this year.

NET ABSORPTION
Annualized net absorption activity in the D/FW Metro dropped to its lowest level in five years with approximately 7,200 net units absorbed from the Third Quarter of 2007 through the Second Quarter of 2008.  This means that after all of the tenant move ins, move outs, and renewals, approximately 7,200 more units were occupied at the end of the Second Quarter of 2008 than one year earlier. 

Overall net absorption in the Metro has dropped almost 25 percent compared to the previous annualized year when there were about 9,600 units of net absorption.  In addition, net absorption activity for the past year was a far cry from the unprecedented demand experienced during the annualized year impacted by hurricane crisis of late 2005 when net absorption reached about 19,700 units.

Annualized net absorption for the past twelve-month period was positive in 25 of the Metro’s 35 submarkets.  Eight submarkets had net absorption that exceeded 500 units.  In two submarkets, demand topped 800 net units.  Those submarkets included the Duncanville/Desoto/Lancaster/Cedar Hill area and the Uptown/Downtown/Park Cities area.

During the last four quarters, D/FW’s quarterly net absorption activity was strongest in the Third Quarter of 2007 with just over 4,200 units of net demand.  In the most recent quarter, the Second Quarter of 2008, around 2,150 net units were absorbed.  And, in the two quarters in-between, approximately 700 net units were absorbed during the Fourth Quarter of 2007 and only about 110 units were taken up on a net basis in the First Quarter of this year.

SUPPLY vs. DEMAND
For the 18-month period which began in January of 2007 through the Second Quarter of 2008, demand for D/FW apartment units barely tipped the scale in the age old battle of supply and demand with around 15,770 net units of demand compared to approximately 15,600 new units completed. 

However, when comparing apples to apples, or in this case when comparing new to new, the estimated 15,600 newly delivered units outweighed the net absorption of about 13,300 units among the newest age category of apartments, which includes units completed since 1997 in the D/FW Metro.

Bonnie Brown is a Vice-President with ALN Apartment Data & serves as the editor of the firm’s line of publications, including ALN’s MarketWatch and the firm’s Monthly News; and, she has been analyzing real estate market trends and conditions for twenty years. ALN has been specializing exclusively in apartment market research and knowledge since 1991.  On a monthly basis, the firm monitors occupancy, rent, absorption and other vital factors on more than 11,000 apartment communities comprising almost 2.5 million units within eighteen markets across the southern United States.  Within Texas, the ALN researches apartment conditions in Dallas/Fort Worth, Houston, Austin, San Antonio, and now in Corpus Christi.  Outside of Texas, the firm’s coverage area includes twelve metros in Florida, Arizona, Georgia and Nevada.  Bonnie can be reached by emailing Bonnie@ALNsystems.com