Dallas, Texas MSA Apartment Market Outlook - September 2006

Apartment Market Conditions
• Following a three-year draught, demand for Dallas apartments is soaring. According to Reis, the average vacancy rate fell 240 basis points in
the last five quarters, including a 50-bp move in 2Q06. Average vacancy declined to 8.0% at mid-year, the lowest level since 4Q01.
• Rent momentum is beginning to build. Average asking rents increased $5 to $751 in 2Q06, or 2.7% annualized. Effective rents also gained $5
sequentially, translating to a 3.0% annualized rate of increase. Dallas ranked forty-second among the top 63 metro markets on these bases, a
dramatic improvement from last year.
• Class-B&C properties outperformed the luxury sector. Average vacancy at value-priced properties fell 70 bps in 2Q06, an outgrowth of strong
job creation trends in lower-wage service industries. Conversely, the loss of existing and prospective tenants to owner-occupied housing limited
class-A occupancy advances to only 10 basis points