By Joe Lutz, managing director at Leon Multifamily Group
Market uncertainty has many real estate investors hesitating. Rising costs, high interest rates and shifting supply demand dynamics add to the caution. Yet Dallas-Fort Worth (DFW) remains a powerhouse in multifamily development, driven by strong demand and solid market fundamentals. For those willing to act, the opportunities are hard to ignore.
Investor caution is evident, with a “stay alive through ’25” mentality reflecting economic pressures. Transaction volumes have dropped to historic lows. Newmark Capital Research (NCR) reports that 2023 and 2024 saw the weakest activity since 2013, with sales down 30 percent compared to the pre-COVID era. For the first time since 2008, 2023 ended without the usual year-end sales uptick, and 2024 data suggests a similar trend. While some feared a market collapse, conditions haven’t reached Great Financial Crisis levels.
The multifamily sector faces supply imbalances and growing debt pressures. Construction starts hit their lowest levels since 2013, while completions exceeded new starts by over 200,000 units — a gap unseen since the 1970s, according to data from NCR. The surge in 2023 completions resulted from post-COVID low-interest-rate incentives, but now concerns over vacancies, concessions and stagnant rent growth linger.
Debt challenges add to the strain. NCR reports that $530 billion in floating-rate loans matured in 2024, with $1.1 trillion set to mature by 2026. Nearly half of all multifamily loans due before 2026 are cash-flow insolvent, meaning a property’s net operating income can’t cover its debt service coverage obligations. This has led many lenders and developers to delay resolutions, prolonging uncertainty.
Despite these challenges, strategic opportunities exist. Elevated construction costs and tight capital flows have slowed new development, but those acting now can benefit from reduced costs and favorable market positioning when demand rebounds. With fewer new projects, subcontractor pricing is more competitive. Building during downturns at lower costs and delivering properties into a tighter supply environment in two years can set developments up for future rent growth.
DFW continues to lead in multifamily deliveries while maintaining the highest absorption rates. We see an opportunity to take advantage of reduced construction activity and bring new units into a less competitive market by 2027.
Driving Forces
DFW’s strong demographics and economy continue to fuel demand. The metroplex attracts young professionals and families with its booming job market and high quality of life. Corporate relocations further boost population growth, and ongoing infrastructure expansion strengthens its long-term real estate prospects.
Reports indicate that approximately 80 percent of new real estate capital is flowing into multifamily and industrial properties, signaling continued investor confidence. As uncertainty around pricing, cap rates and expenses eases, the market is on a path toward stabilization.
DFW has also emerged as a major hub for technology and finance. Since the pandemic, companies like CBRE Group, Charles Schwab and Caterpillar have relocated headquarters to the region. Goldman Sachs, JPMorgan Chase and Oracle have expanded operations, and the NYSE Chicago and Yum Brands recently announced plans to move their headquarters to Dallas. With Tesla already in Texas and Meta considering reincorporation, the state’s business-friendly environment continues to attract top-tier companies.
Industry experts recognize DFW’s market strength. The Urban Land Institute (ULI) and PwC’s Emerging Trends in Real Estate 2025 report ranked DFW as the top market for real estate prospects, dethroning Nashville. DFW’s employment has grown 11 percent since 2020, reinforcing its appeal.
While challenges like supply imbalances and economic uncertainty persist, DFW remains a key market full of opportunity. Developers that invest now — leveraging cost advantages and strong fundamentals — will be well positioned to meet future demand. With resilient rental demand, favorable demographics and a path toward stabilization, DFW is a compelling choice for decisive investors.
Instead of a cautious “stay alive through ’25” mindset, perhaps it’s time for a new approach: “Build now, let the market leaven and deliver in 2027.”
About Leon Capital Group
Founded in Texas as a modest real estate development company, Leon Capital Group has grown into a diversified holding company that has overseen more than $10 billion in private capital since its inception. The company’s portfolio spans real estate, healthcare, financial services and technology, with investments across multiple geographies and sectors.