East Dallas is Transitional...Eclectic….Diverse… Changing every day…
While most submarkets contain a similar vintage age of properties as discussed on previous posts, East Dallas is a very unique transitional submarket that has class A, B, and C properties all adjacent to each other. Due to land prices near uptown and downtown increasing significantly, the price of class C apartments in this area have shown a trend above the typical $30K-$45K/unit in other DFW submarkets especially for properties under 50 units.
East Dallas is east of Central Expressway/75 and downtown Dallas, north of Fair Park, west of the cities of Mesquite and Garland and south of the Lake Highlands area of northeast Dallas.
Developers such as Trammell Crow (Ross Avenue project), Greystar (Elan City Lights), JBL (Icon at Ross), and Encore Multi-Family have started Class A developments in East Dallas recently. These projects are able to undercut rents in Uptown and still deliver close proximity to downtown and uptown employment centers.
Below is a snapshot of where Class A developments are going in along highway 75. These developments are getting rents of $1.50-$2.50/sf:
Class B (blue; Rents of $1.00-$1.50/sf) and Class C (orange; Rents of $0.75-$1.15/sf) are intertwined throughout the remainder of the submarket:
Here is a sample of market activity in the submarket:
For Sale:
Carroll Place- 1500 North Carroll Avenue, Dallas, TX; Class C property with 26 units built in 1986. Average market rent of $804 ($1.52/sf). No list price.
Courtyard Condominiums- 6003 Ridgecrest Road, Dallas, TX 72531; Class C+ property with 32 units built in 1983. Average rent of $631 ($0.79/sf) at 94% occupancy. Pro-forma NOI of $95K at 7.5% cap yields a $1.3M estimated value ($40K/unit). This deal might trade significantly higher just to proximity to Highway 75.
5317 Junius- 5317 Junius, Dallas, TX; Class C property with 16 units built in 1964. List Price $1,200,000 ($75K/unit); 9.37% CAP rate.
Fitzhugh Apartments- 2212 North Fitzhugh, Dallas, TX; Class C property with 14 units built in 1951. List price of $900,000 ($64K/unit); 7.61% CAP rate. You can see the redevelopment happening just to the right of this picture.
Royal Orleans- 1540 Chenault Street, Dallas, TX (Northwest corner of I-30 and Buckner); Class C property with 134 units built in 1985. List Price $5,150,000 ($38K/unit); 7.57% CAP rate.
Casa Flores- 2600 Highland Road, Dallas, TX; Class C property with 106 units built in 1965. Proforma NOI of $300K at cap rate of 7.5% yields an estimated value of $4.0M ($38K/unit).
Class C properties in East Dallas along I-30 are listed for $35-$40k/unit, but properties near Hwy 75 are listed in the $40K-$75K range due to the redevelopment possibilities in the future.
Sold:
2014 Bennet Avenue- 2014 Bennett Avenue, Dallas, TX; Class C property with 50 units built in 1971. Closed in June 2015 with $2.7M recourse bank debt.
Venue at Greenville- 5759 Pineland Drive, Dallas, TX; Class B- Property with 310 units built in 1977. Closed in June 2015 with $13.3M from a balance sheet lender.
Swissaire- 4125 Swiss Avenue, Dallas, TX; Class C property with 58 units built in 1958. Closed in May 2015 with recourse bank debt of $2.2M.
Avalon- 1925 Moser, Dallas, TX; Class B- Property with 107 units built in 1972. Closed in March 2015 with a balance sheet lender.
East Dallas will be a very interesting submarket to continue to watch transition from Class C/D to Class A & B properties due to its location and proximity to employment drivers.
If you are interested in financing a new acquisition or refinancing an existing property in the Texas market, please reach out to me at: jeng@oldcapitallending.com or 214-300-5035.
