Apartment demand in Dallas is overtaking new construction, bucking a trend that’s held fast since 2022. Markets like Arlington, Plano, Frisco and McKinney boasting the largest rates of new construction in the metro are also claiming the highest numbers of new tenants.
Six months into the year, just over 12,000 new apartments have been delivered in Dallas-Fort Worth — but 13,500 have been filled.
Although the year is only half over, demand is expected to continue outpacing new construction.
“I don’t have a crystal ball, but I see nothing that would slow things down right now. We’re in the middle of leasing season, which will go through September. Then we’ll enter the slower part of the year,” said Cindi Reed, director of sales and an analyst with MRI ApartmentData. “But so far, it’s been a strong year. Unless there’s a major economic disruption, I don’t see any reason why the momentum would slow.”
Reed also noted a constricted housing market could also be pushing Dallasites toward rentals.
The adjacent cities of Allen and McKinney immediately north of Dallas, which ApartmentData groups into one submarket, posted the most new apartment occupancies in 2025 — just under 2,100.
That’s typical since those cities also posted the most new units opened in the past year.
The markets of western Plano, Frisco and eastern Lewisville which were also grouped together, followed with just under 2,000 new apartment occupants.
The falloff to the No. 3 spot, claimed by Denton, is steeper with only 836 absorptions, followed by a grouping of Uptown, Oaklawn and Highland Park with 811, and southern Fort Worth rounding out the top five markets with 735 new occupants.
Tenants take the upper hand
Despite the ramp-up in new tenants, over 100,000 apartment units on the market are sitting empty, putting Dallas at around 88.9% occupancy.
Anything below 90% puts the market in favor of tenants over landlords, bringing down rental rates an average 2% yearly since 2023 after a nearly 19% spike in 2021 and another 7.4% jump in 2022.
“What we always like to say is, we want to return to our long-term average. That’s how we define ‘normal,’” Reed said, explaining the pandemic years were anomalous for the rental market. “Before 2020, occupancies were over 91%, and rental growth was steady and healthy. But from 2020 on, all hell broke loose. We can forecast the impact of a hurricane, but when the pandemic hit, we had no idea what to expect.”
As the market catches up to the construction surge in the meantime, however, landlords are ramping up incentives to get tenants through the door.
“Rent growth is still down 2.8% this year, with about 58% of Class A apartment communities in Dallas — which include most of the new developments — offering some form of concession,” Reed said. “That’s equivalent to about six weeks of free rent.”
She said incentives will likely begin tapering down as properties fill with new tenants and the market moves toward stability.
An overbuilt market
During the pandemic, a combination of economic forces, including work-from-home policies, prompted record-shattering absorption of 45,000 apartment units in 2021, causing developers to scramble to build more and capitalize on a booming market.
After most pandemic restrictions were lifted the following year, however, a one-two punch of return-to-office mandates and out-of-control pricing dramatically reduced the appetite for new housing. In 2022, ApartmentData recorded just over 8,600 new absorptions to a whopping 27,000 deliveries.
While absorption has been ticking upward since then, it hasn’t had a chance to catch up with the onslaught of new supply, coming to a head last year with 38,500 deliveries.
That’s because the typical turnaround time for construction to wrap on an apartment complex is between 18-24 months. By the time the apartment market softened, developers who had hastened to bring more product to market were already too far gone to put the brakes on their projects.
The dramatic cleft between supply and demand has finally forced the market to slow down, with only 18,000 units currently in the construction pipeline according to ApartmentData.