Founders Grove Insights

April 2018 Founders Grove Capital Newsletter

written by Ryan Cox

Founders Grove Capital is focused on acquiring the best, most promising multi-family investment opportunities in Dallas-Fort Worth. The demand for multi-family investments in DFW is as competitive as it’s ever been and rightly so, thanks to tremendous population growth and new job creation. We are continuing to analyze a vast number of opportunities across the metroplex while pursuing the select few that currently meet our rigorous underwriting metrics. This enables us to identify market condition imbalances that present the opportunity for value-add investments with the potential for strong returns.   

Outlook (2018): Driven by accelerating household formation and job growth, apartment absorption in DFW is forecast to surpass deliveries in 2018, with 28,000 deliveries and absorption estimated to exceed 30,200 units. The enormous leasing activity is projected to drive occupancy up to over 95%. Net apartment leasing in DFW totaled more than 4,700 apartments in the fourth quarter. Founders Grove Capital will continue to seek opportunities to capitalize on the vigorous demand by raising effective rents during the year.

Job Growth & Development: This year, the local job growth rate is again expected to outpace most metro areas in the country. Employers are projected to add 114,100 new workers to payrolls this year, a 3.1% year-over-year increase. A significant amount of this growth will originate within major developments Legacy West District, $5 Billion Mile, and Arlington Stadium District. Over the long term, other massive projects including Dallas Midtown and Hidden Ridge in Irving will also become sizable centers of employment.

Tax Reform: Analysts are predicting a surge in private capital in commercial real estate to take advantage of the new tax benefits in 2018. The final legislation kept tax-free exchanges of real estate and continues taxation of real estate carried interest as capital gains. Real estate firms are also still able to deduct their business interest expenses. And the taxes for the so called pass-through businesses—a common real estate vehicle—were reduced.

Podcast: As we focus on multi-family investments and the market in the DFW, it is also very important to understand the technology trends and companies that are innovating in the field of commercial real estate. In February, I launched an interview-style podcast with industry leaders and innovators who are changing the business of commercial real estate and are inspiring the future of how we work, live and play. It has been an excellent way to learn and connect with industry leaders and entrepreneurs in commercial real estate, whether they are involved in technology, design, or development.