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Multifamily demand remains high in Dallas-Fort Worth metro area. How to keep your project on track and on schedule.
Dallas-Fort Worth ranks first nationwide in projected apartment construction in 2020, and maintains a fairly high occupancy rate of 91.6 percent in July, according to recent data reported in the Dallas Business Journal.
The DFW multifamily market has ~3,200 apartment communities, with 70 of those opened in the past 12 months. Another 110 communities are under construction, and 130 communities are proposed for construction. But can the market keep up with the consistent demand for apartment housing in the Metroplex?
Before the COVID-19 pandemic tightened its grip on the world, DFW metro area developers were experiencing a 2.5-year wait with area architects to get their multifamily projects designed and through the permitting process. Add to that an already existing unmet 3-year demand for affordable rental units, and it’s clear there is capacity for growth to help the market meet the demand.
What is driving the market right now?
1. Recession AND migration
The majority of apartment seekers are targeting DFW from outside the metro area, a number that hasn’t changed as an effect of COVID, suggesting that DFW continues to attract more people to relocate to the metroplex. Even though expectations of a significant decline in area construction due to COVID-19-imposed restrictions, multi-family construction spending is trending only slightly lower than in 2019.
In addition to migration to the area keeping demand relatively high, a recession indefinitely drives more people to multifamily housing. Many people are forced to tap into their savings and therefore lose access to available cash they might have used for a down payment on a home. Instead, they will often opt for renting in order to build up their equity until they can comfortably buy a home with a good-sized down payment.
2. Tight design and engineering labor market
While many firms are working harder than ever to meet the market demand for multifamily projects, most are at full capacity and are simply unable to complete drawings, oversee permitting, and manage construction in order to meet current market demand for new designs. With the increasing volume in multifamily development, challenges in construction and delivery, developers are encountering significant delays in their project timelines that they simply can’t afford.
3. Traditional construction material shortage
When COVID-19 brought much of the country to a screeching halt in March, much of the lumber industry did not place orders for materials, as they anticipated very little construction activity through the summer. But in many areas, especially North Texas, building barely slowed down, and now the supply for lumber building materials is unfortunately low, causing the price of lumber to skyrocket over 200% what it was the same time last year.
Alternately, many suppliers overordered steel during the trade war with China in anticipation of steep tariffs. Now, there are warehouses filled to the brim with steel materials that haven’t been used and need to be cleared out to make room for other materials that need to be stored. As a result, the price of steel is far lower than lumber. Many builders can now utilize steel modularization and panelization to accelerate construction installation and even use a hybrid system of 10% lumber, 90% steel to go vertical with a building under what was budgeted last year. As a result, developers are able to get a much sturdier, safer, and higher quality structure with steel for a fraction of the cost, and manufacturers like Texas Steel Tech are helping developers complete their projects on schedule with modularization and panelization.
What happens now?
There is a better way to do things. Small firm dynamics can offer a more robust level of service to help meet demand for this growth market. Development advisers and construction managers like Vision+Architecture have the experience and expertise to tackle large projects – especially those that have encountered hurdles – and give them the one-on-one attention and problem solving, quality deliverables, and discerning perspective needed to see their project over the finish line.
“With regular communication, processes, standards, and coordination with all of the consultants, we’re able to stage out the project and budget to ensure we adhere to the set timeline,” says Bobby Finta, Vision+Architecture Studio Vice President of Architecture and self-professed contractor’s architect. “We’re not only experienced in multifamily development, we can also help select more experienced multifamily general contractors to construct the buildings on time and within budget.”
And with a vetted network of contractors, suppliers, and more, development advisers and owner’s representatives such as Vision+Architecture can kickstart stalled or delayed projects to help owners meet their construction deadlines and more quickly see a return on their investment.
