Stable Value-Add Market
Westmount Realty Capital is a private Dallas-based owner-operator specializing in value-add, opportunistic and core-plus investments. Scott Ferguson, senior director of acquisitions, says the value-add sector is not seeing outsized rent growth, but it remains stable.
“The market has slowed from the historic rent growth that we witnessed in 2021 to a more typical 3 to 5 percent growth in the value-add space, which is what we were generally experiencing in 2022,” says Ferguson. “We saw concessions re-enter the market toward the end of 2022, but the springtime leasing season seems to have arrived right on schedule. Our DFW portfolio occupancy rates range from low to mid-90s,” according to Ferguson.
He says a typical concession in the value-add space is generally about $500 off the first month’s rent up to one month free. However, Ferguson is quick to add that many properties in the space are not offering concessions.
“With regard to the DFW market as a whole,” Ferguson adds, “my sense is that the performance of the newer Class A to A-plus product is beginning to soften as increased concessions erode effective rents, especially in the supply heavy northern suburbs. The Class B to A-minus space continues to do well as it is not directly impacted by new supply. Renters in the Class C space are beginning to feel the squeeze of inflation on their overall household budgets.”
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