by Jordan Brooks, ALN Apartment Data
Important Changes to Recent Multifamily Performance
The winter period is generally the weaker portion of the calendar for multifamily performance. At the national level, subpar apartment demand in January interrupted what had been a relatively robust winter. Local net absorption for the month underperformed compared to last January, but by a smaller degree than in many markets around the country. Even with that stumble in demand, some encouraging developments have occurred in recent months.
All numbers will refer to conventional properties of at least fifty units.
Decline in New Supply
An unusually active new construction pipeline has acted as a headwind to occupancy and rent performance for the last couple of years. Unlike some other Sunbelt markets, the Greater Fort Worth region appears to be on the other side of its deliveries peak for this development cycle.
Since the start of October, roughly 2,000 new units were delivered across the area. That was the lowest total for that portion of the calendar since the period ending in January of 2020. This decreased new supply pressure should remain throughout 2025 and will provide cushion for some inconsistency in apartment demand that has been absent for the last handful of years.
Approximately 5,000 new units are expected to be delivered this year across Greater Fort Worth. This total would be considerably below the 8,000-unit annual average over the last five years and would make 2025 the first year since 2019 with less than 6,000 new units delivered.
Demand Stumbled in January
As already mentioned, apartment demand had been quite strong for the winter period leading into January. Except for 2021, a historic year for apartment demand, fourth quarter net absorption in 2024 was the highest of the last decade. It should be noted that it took net absorption of less than 250 units in the quarter to claim that title. Nonetheless, the gain occurred at a time of year when the market regularly experiences a net loss of leased units.
There was reason to believe the broader upward trend in net absorption that began all the way back in 2023 would carry over into early 2025. However, a net loss of around 250 leased units in January not only counteracted the positive demand from the final quarter of 2024 but represented an underperformance relative to January of last year.
Price Class Demand Inverted
There was one aspect of the January absorption data that was especially interesting. At the national level, and in other Texas markets, Class A demand was the most resilient with the slide in demand concentrated predominately in the workforce housing segments. This same dichotomy in apartment demand was present in 2023, including in the local market. It would characterize a step back for the multifamily industry should the trend hold through 2025.
January played out differently for Greater Fort Worth. Net absorption fell year-over-year for January in three of the four price tiers. However, the decline was most pronounced at the top of the market. Class A properties shed more than 50 leased units during the month after a net gain of more than 100 leased units last January. Class B properties saw essentially no net change in leased units this January after adding about 400 net leased units in the opening month of last year.
For Class C, a net loss of almost 250 leased units doubled the loss from last January. For Class D properties, last year’s net loss of about 250 leased units to open the year was followed by a net gain of nearly 50 leased units this year. Not a massive number, but positive for the first time since 2022 and a notable net improvement from last year.
Takeaways
The last few months had been going fairly well for Greater Fort Worth multifamily. Apartment demand was encouraging for the time of year. New supply momentum had begun to slow. The result was lessened average occupancy decline and positive winter rent growth for the first time in three years. January muddled that picture somewhat.
Too much should not be taken from a single month of data. January may end up an outlier in an otherwise strong year. Even if apartment demand is more inconsistent than expected this year, mitigating factors remain. One is the expected substantial decrease in new supply for 2025. The other is that the last segment of the market to see a demand recovery from the 2022 trough had been Class D. Amid the January absorption struggle, Class D was a bright spot.
Jordan Brooks
Senior Market Analyst – ALN Apartment Data
Jordan@alndata.com
www.alndata.com
Jordan Brooks is a Senior Market Analyst at ALN Apartment Data. In addition to speaking at affiliates around the country, Jordan writes ALN’s monthly newsletter analyzing various aspects of industry performance and contributes monthly to multiple multifamily publications. He earned a master’s degree from the University of Texas at Dallas in Business Analytics.
