Institutional Property Advisors (IPA), a division of Marcus & Millichap (NYSE:MMI), has been active in the Dallas-Fort Worth (DFW) multifamily market this year. As of today, it has closed 15 multifamily asset sales valued at $860 million, with $1.6 billion currently under contract or in escrow, according to a release on Friday.
"The deep conviction institutional and major private investors have for multifamily properties in Texas and in DFW specifically is keeping the market very active,” Drew Kile, IPA executive managing director said. The Texas-based team, led by IPA executive director Will Balthrope and Kile, has closed 15 transactions so far this year, with 17 transactions in escrow and 10 properties coming to market.
Joey Tumminello, IPA senior managing director, noted that despite stronger bid lists than last fall, market volatility has made buyers more diligent and selective on assets they pursue aggressively.
IPA's new Special Texas Multifamily Construction Report revealed that developers in Dallas-Fort Worth, Houston, Austin, and San Antonio began just 6,500 apartments during the second quarter of 2023. This volume is down 72% from the quarterly average recorded from the beginning of 2021 through Q1 2023 when new construction was at its peak.
"Uncertainty in the capital markets environment and tightened construction lending have made development very challenging right now," Taylor Hill, IPA senior managing director pointed out. He added that the significant fall off in supply suggests brighter days coming sooner than expected in the DFW market.
With strong job growth and a continued increase in population in DFW, demand for apartments remains high. "Investors are diligently trying to make new acquisitions work to be positioned to take advantage of what is likely going to be a strong operational run in 2025-2027 with so little new supply,” said Michael Ware, IPA senior managing director.
Marcus & Millichap, Inc. is a leading brokerage firm specializing in commercial real estate investment sales, financing, research and advisory services with offices throughout the United States and Canada. As of December 31, 2022, the company had 1,904 investment sales and financing professionals in 81 offices who provide investment brokerage and financing services to sellers and buyers of commercial real estate. The company closed 12,272 transactions in 2022, with a sales volume of approximately $86.3 billion.
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