A sturdy economy and prime renter demographic put Dallas at the top
A diverse range of industries have experienced booming job growth in the Dallas-Fort Worth metro area since the pandemic, including in the tech and real estate sectors. In combination with an extremely favorable demographic profile, it’s little wonder that Dallas topped our list of the best multifamily markets in the second half of 2022, as determined by our proprietary data modeling tool, the CONTI Index.
An exceptionally resilient labor market
Dallas-Fort Worth is a great place to find a job as a financial analyst, or an insurance agent, or a telecommunications engineer. There are plentiful jobs to be found creating software, building computer systems or treating patients. Work at warehouses and in restaurants has grown, as well as work in offices. The crux of it is, while some major metros rely heavily on one major industry – auto manufacturing in Detroit, leisure and hospitality in Orlando, oil in Houston, et cetera – Dallas’ job market is robust on multiple fronts, making labor an especially stout pillar of the local economy. It’s this stability makes Dallas one of the strongest labor markets of the metros we track, second only to Nashville.
The metroplex expanded its jobs market by 275,800 jobs last year – a staggering 7.4% growth, according to CoStar. DFW is among the Sun Belt metros where the job market recovered rapidly from the economic woes of the COVID-19 pandemic. Dallas is now 155,000 jobs above pre-pandemic levels. An extremely business-friendly environment likely contributed to this rapid recovery.
The DFW area has continued to attract big companies through the state’s business-favorable policies, relatively low costs and plentiful population of well-educated workers. Most recently it was reported that Wells Fargo is planning to build a colossal project out in Irving that could house as many as 4,000 workers. They’ll join Caterpillar, whose leadership announced in June that they were converting their existing offices in Irving into their headquarters. Other major corporations that have recently put down roots in the Dallas area include AECOM, MD7 LLC, Charles Schwab, JP Morgan, McKesson Corp., USAA and Liberty Mutual, to name a few.
The tech sector, including software development, data processing and computer systems design, added 29,000 jobs from the start of 2020 to Q2 2022, or 17% growth. Dallas also achieved strong growth in office sector jobs at 10%, ranking Dallas 3rd out of a top 50 metros according to Oxford Economics. Dallas’ office sector growth through 2026 is also expected to put it within the top 10 U.S. metros.
It’s significant that the metro’s growing industries correlate closely with growth in demand for high-end (Class A) apartments. As we’ve said before, office-using jobs are critical to demand for high-end apartments because they pay well relative to other types of employment.
A big pool of potential renters
Dallas isn’t simply one of the largest metro areas in the country – its population is expanding at a promising pace. Dallas’ rate of population growth left most other U.S. metros in the dust, according to our Demographic Destiny sub-index. The population grew 1.2% from the start of 2021 to Q2 2022, with in-migration making up half of that increase. This strong in-migration trend feeds the metro’s significant demand for housing.
It isn’t just growth and inward migration that matter when gauging apartment demand, however. Dallas knocked it out of the park in terms of household formation and in CONTI’s preferred “prime renter” population subset (ages 20-34). Notably, DFW’s median age is younger than that of the U.S. CONTI looks for markets with a sizeable population of young professionals as a measure of demand for Class A apartments.
We expect Dallas population growth of 1.2% annually through 2026, compared to 0.5% projected annually for the U.S. in that period. Healthy in-migration is expected to continue.
The CONTI Index gauges more than 400 leading indicators, helping us to select sites for potential acquisitions. The Dallas-Fort Worth metroplex will continue to be of great interest to our acquisitions professionals as we make investment decisions.