By Taylor Williams
Dallas-Fort Worth (DFW) is a multifamily powerhouse, and after nearly three years of elevated interest rates, massive volumes of new deliveries and stagnated trading activity, the metroplex’s investment sales market may soon be showcasing that alpha status once again.
Of course, that sentiment was prevalent at the very beginning of the year too. Optimism for lower interest rates and pro-growth policies understandably accompanied the arrival of the second Trump administration. Local factors, such as the peaking of the wave of new supply and the ever-steady flow of jobs and people into the metroplex, augmented that sentiment such that many multifamily lenders and investors entered 2025 with considerably more ebullience following a couple of rough years in 2023 and 2024.
“Coming out of the gates, things felt pretty good, but a lot of this year’s volatility was based on [interest] rate movement, which was primarily based on geopolitical issues,” says Drew Kile, executive managing director of investments at Institutional Property Advisors (IPA), a division of Marcus & Millichap. “Had rates come down methodically more like the last two months, there would have been less of an impact. It’s hard for buyers to make decisions when rates are whipsawing like what we saw the past couple years, when we were at 4 [percent] one quarter and flirting with 4.75 [percent] the next.”
“Coming out of the NMHC (National Multifamily Housing Council) conference and even prior to that at the beginning of the year, sentiment was very high for Dallas and Fort Worth as top markets on most investors’ radars,” adds Eric Stockley, senior vice president of investment sales at Northmarq. “The continued demand drivers and employment growth that we’re experiencing here are very robust and show no signs of cooling. But of course, geopolitical risk coupled with volatility in the 10-year [Treasury index] made transactions a little harder [to execute].”
For context, Stockley says that his team closed about 250 deals during the golden window of 2021 and early- to mid-2022. Since then, the team has closed about 100 transactions.
Indeed, much geopolitical disruption transpired during the spring and summer, including the 10-Year Treasury yield slipping below 4 percent after Liberation Day in early April. Yields on the benchmark index have remained volatile ever since as markets have sorted through shifting levels of employment and inflation, complicating the efforts of commercial lenders and investors to accurately underwrite and price deals. The yield stood at 4.12 percent on Thursday, Sept. 18, the day after the Federal Reserve lowered short-terms interest rates by a quarter of a percentage point.
But as the fourth quarter inches closer, multifamily investment sales brokers in DFW are guardedly confident of better market conditions prevailing such that deal volume will finish the year strong, generating positive momentum for 2026 and beyond. For the reality is that the market’s sluggishness in recent years is a factor of macro-level headwinds that could —— and should — be vanquished soon by strong regional fundamentals.
And that starts with absorbing new supply. According to data from CBRE, which tracks the greater Dallas and Fort Worth metro areas separately, the Dallas area absorbed roughly 16,000 units between the first and second quarters combined, while new deliveries during that six-month stretch were just north of 12,000 units. Average asking rents thus rose slightly — 0.4 percent to $1,551 per month — from the first to second quarter.
In the greater Fort Worth area, net absorption for the year’s first two quarters was approximately 6,000 units against roughly 2,350 new units delivered. Average asking rent growth from the first period to the second in the Fort Worth MSA was slightly stronger than its counterpart to the east, clocking in at $1,390 per month to close the second quarter, a 0.7 percent increase from the prior period.
Market-wide occupancy rates for both MSAs were hovering around 94 percent at the end of the second quarter, per CBRE.
“Now that we’re past the peak of the supply growth in Dallas, the skies are looking brighter,” says Brian O’Boyle Jr., vice chairman of multifamily capital markets at Newmark. “We still have a lot of supply to work through in some submarkets, but in general, investors are becoming more bullish, even if they’re still conservative on their underwriting in some of those more heavily supplied submarkets. But time will solve those problems. We still have the job growth and new entrants in the market to drive demand for housing, both for sale and for rent.”
Market, Product Discrepancies
Generally speaking, sources say that multifamily rents and occupancies in submarkets within the urban core are a bit further along the road to recovery than their suburban counterparts, which makes sense from a qualitative perspective.
Northern suburbs have been the de facto face of the metroplex’s explosive growth over the past decade. With more land to work with and major employers planting flags in their backyards, these areas have realized their potential for housing booms.
Among Dallas-area submarkets tracked in CBRE’s report, the Allen-McKinney area led the way in second-quarter supply growth, adding nearly 1,400 new apartments but also absorbing just as many. In Fort Worth, the overwhelming majority (95 percent) of new deliveries in the second quarter were in the North Fort Worth/Keller submarket.
In addition, sources say that a divergence exists among investor demand for newer versus older assets. The assumption behind that premise is that deals for “older” product have some sort of workforce housing or value-add component attached to them.
“There’s a bifurcation of ‘70s/‘80s and ‘90s and newer product,” notes Kile of IPA. “The bulk of distress is down the spectrum, even if values were impacted across the board. For older product, values may have dropped 35 to 40 percent, whereas for the newer stuff, the decrease was probably 20 to 25 percent peak to trough. This year is different for newer vintage assets as we have moved from a declining market where you’re just trying to find the bottom on pricing to one of more price stability. Additionally, this year, we’re finally seeing the light at the end of the tunnel on supply.”
IPA recently brokered the sale of Mason + Mill, a 349-unit apartment community located south of Fort Worth in Mansfield. The property was built in 2024 and stabilized prior to the sale, which saw Utah-based investment firm Milburn & Co. purchase the property from an undisclosed seller.
Kile adds that as rents in many submarkets have rebounded or slowed their pace of erosion in 2025, most major buyers have crept back into the market. “There’s more competition and somewhat stronger underwriting for buyers, which has triggered some rebound off the bottom on values, and we expect that to accelerate next year,” he concludes.
O’Boyle of Newmark says that the bifurcation between older and newer product goes back to the pandemic, at which point many equity sources began aggressively targeting newer-vintage assets that were experiencing exceptional levels of rent growth. For many of these groups, the investment objective is relatively unchanged today.
“Most equity still wants nicer, newer vintage assets,” O’Boyle says. “A lot of the older workforce [housing] product was dominated by syndication groups that took out floating-rate debt and were negatively impacted by the runup in rates. Some of those deals were capitalized with a large number of investors, and there wasn’t the depth of capital to solve cost overruns, interest rate buydowns or loan modifications. So those deals are in trouble and are seeing foreclosures or forced sales.”
Another broker who specializes in workforce housing sees different forces emerging that could drive healthier deal volume in the metroplex. Mark Allen, vice chairman at Colliers following the company’s acquisition of GREA Dallas, points to the passage of Texas House Bill 21 earlier this year as one of those catalysts. The new law limits housing finance corporations that own and operate affordable and workforce properties from claiming property tax exemptions outside their immediate jurisdictions.
“House Bill 21 forced a reality check. Lenders began to realize the market fundamentals weren’t improving and stopped kicking the can down the road,” Allen says. “We’re now seeing more foreclosures and lenders taking discounts to par on their loan basis. Previously, many just wanted to break even. Now, with broader distress across portfolios, they’re more willing to offload assets with no near-term path to recovery.”
This analysis underscores that distress does exist in workforce housing, though the magnitude varies by submarket. Allen also notes that the sector faces additional demand headwinds from geopolitical and policy factors. Still, investors remain generally bullish on the product type in DFW.
“While nobody knows where the bottom is, Texas’ fundamentals such as job and population growth remain strong and continue to underpin long-term investor confidence,” he explains. “There’s still significant interest from both domestic and global capital, given the relative yield advantage compared to coastal markets.”
“Some buyers relying on Section 8 tenants are wary of potential HUD funding cuts. That uncertainty creates demand headwinds as operators push to reduce reliance on vouchers,” Allen continues. “Risk is always part of the equation, but today’s investors are navigating it through tighter underwriting, sensitivity to location, and careful exposure to policy-driven demand shifts.”
Stockley of Northmarq say that institutional capital currently has a healthy appetite for workforce housing deals in DFW, all other factors being held equal.
“We’ve been seeing cap rate dispersion between vintages, with more institutional and high-net-worth buckets of capital veering toward 80s vintage or workforce housing product,” says Stockley. “This is especially true now that we’ve had a few transactions that are discounted payoffs from lenders or preferred equity groups that have taken over for certain operators. That activity has led to a pricing reset that’s drawn in some institutional and high-net-worth investors.”
Other Dynamics
Sources say that the reluctance of equity sources to allocate capital toward new multifamily development has also helped create a healthier investment sales environment.
This is somewhat ironic given that peak supply is passing and rents are slowly rebounding; securing entitlements and permits today, putting shovels in the ground next year, delivering in 2027 and sell in 2028 is a business plan that makes sense on paper. But equity providers for new development aren’t quite ready to chance it, sources say.
“Until we see factual, data-driven numbers that show a rebound in performance in terms of both sales values and operations, that bet isn’t being made,” says Kile. “Development equity is very skittish, even if they know that now’s the time to start a deal and be in lease-up in two years with minimal competition. In some cases, they’re making acquisitions instead because they can buy below replacement cost, sit on it for a couple years and get money out. They’re then starting at a lower basis with cash flow out of the gate versus starting a new development with no cash flow for the next three years.”
O’Boyle concurs.
“There’s very little supply delivering in three years, so it makes sense in theory to be starting new development now,” he says. “But you have to look at the economics and where rental rates and concessions are — we’re seeing in some cases two to three months of free rent being offered in some northern suburban submarkets — and how that translates to NOI and cap rates today. And it means that deals are trading at a significant discount to replacement cost. So it’s hard for an equity group to put out capital for development and take the risk of, for example, [developing] wrap product at $275,000 per door when they can buy that same deal at $225,000 to $230,000 per door.”
Stockley says that the formation of fresh capital that has its sights set on the DFW multifamily market is well underway and may just be waiting for the final vestiges of the inventory boom to burn off.
“Earlier in the year, we saw a lot of big institutions and equity partners that were in the process of raising funds,” he says. “Fast forward to today and through the end of the year, those funds have either closed or are about to close and be deployed. In the past month, we’ve seen two teacher retirement funds that have issued $190 million and $300 million to select partners. So the capital is still there and wants to buy, and DFW is still atop the hit list, but the capital is more discerning in terms of its focus on what the buy box looks
like.”
— This article originally appeared in the September 2025 issue of Texas Real Estate Business magazine.