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The newest apartment tower on the way in Dallas’ Victory Park project won’t open until 2021.
That’s probably a good thing.
The Dallas area has seen a flood of new high-rise, high-priced rental projects in the last few years and more are on the way. Developer Hines’ 39-story Victor tower in Victory Park will be one of the biggest.
The builders are betting that with a 32-month construction schedule, most of their competitors will be out of the market by the time The Victor opens.
"We are well aware of the supply Dallas has built unlike anywhere else in the country other than New York," said Hines’ Corbin Eckel. "Luxury residential has seen a large influx of new units at the same price point."
Dallas leads the country in apartment building with almost 35,000 units in the construction pipeline. So far, the local market has gobbled up almost everything developers can throw at it, fueled by several years of more than 100,000 jobs being created every year in the area.
But a flood of high-rise projects coming to the market in the next couple of years will be the real test.
In the last year and a half, more than a dozen high-rise apartments with about 3,000 luxury units have opened their doors in the Dallas area. And another 15 luxury tower rentals are under construction or about to start with a staggering 4,500 units.
"There’s still quite a bit of high-rise product on the way," said Greg Willett, top economist with Richardson-based RealPage.
Most of the new tower apartments are headed for Dallas’ Uptown and downtown markets. But there are high-rise residential buildings in the works up in Plano and Frisco, too. The average monthly rent for these projects is just under $2,000 a month — nearly twice the overall monthly apartment cost in North Texas.
The most expensive penthouse apartments can run well over 10 grand a month.
"That pool of resident prospects for high-rise product looks comparatively shallow," Willett said. "Thus, we can only handle a limited block of completions in that niche at one time."
So far, occupancy levels in the apartment towers are more than 93 percent — slightly less than the overall market.
"Even more telling, rents are being cut 0.8 percent on an annual basis in the high-rise segment," Willett said.
With so many more new super-luxury, super-price apartments on the way, don’t be surprised if there are more bargains offered for renters. A month of free rent is already common in the market.
High-rise rental developers are betting that local job growth and moves to the area will keep filling up their new units. And lenders are keeping a close eye on the development pipeline.
"You are going to see capital markets limit new project developments," said Hines’ Eckel. "The banks are aware of the supply in Dallas."