Dallas is neck and neck with New York City for apartment construction.
The Big Apple came out on top by just three units, with 32,935 units expected to be delivered before the end of the year, while Dallas has 32,932, according to a RentCafe analysis of Yardi Matrix data.
Dallas-Fort Worth is one of the top metro areas in the country for multifamily development. The Texas growth story has persisted — its relative affordability, solid infrastructure and business-friendly leanings resulted in a population boom that drew developers from around the country. The Texas Triangle holds more to-be-developed land than anywhere else in the nation, while in New York, there’s hardly anywhere to go but up.
Dallas also outpaced New York in multifamily construction from 2019 to 2023 in bringing completed apartments to market: 128,000 to New York’s 116,000.
Multifamily supply has temporarily outpaced demand in some Texas metros. Still, in high-growth areas like Dallas, a steady population swell has developers anticipating a payoff after what is seen as a temporary surge in supply and fall in rents ends — supply will begin decreasing, rents will start rising and, maybe soon, interest rates will dwindle, the thinking goes.
Forecasts suggest multifamily construction in Dallas will fall behind New York through 2028, likely reaching 108,000 new units to New York’s 150,000 in the next five years. Construction starts dropped in the first half of this year compared to the same time last year, and economic variability has tightened standards for construction loans, part of the Fed’s reasons for considering interest rate cuts.
Zoning changes in Dallas could also re-shape the landscape by turning Texas’ single-family dominance on its head. The Dallas City Council is set to consider a resolution this fall to allow multiplexes to be built on single-family lots.
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Absorption may be on the rise, too. While the supply glut hasn’t given owners enough leeway to raise rents yet, DFW area renters absorbed 4,983 units in the first quarter, close to the demand seen before the pandemic, according to MMG Real Estate Advisors.
While New York and Dallas are ahead of every other market, Austin’s third-highest apartment growth tells a similar story. It’s adding 21,506 apartments this year, and YIMBY policies that reduce single-family lot sizes and allow multiplexes on single-family lots recently took effect.