Irving apartment developer JPI plans wave of new apartment construction in DFW after mega-sale
Hot off a five-project, almost 2,000-unit sale earlier this month, Irving-based apartment developer JPI is focusing on building “out” in Dallas-Fort Worth.
Out, as in out in the suburbs.
And out, as in out, not up.
“We don’t anticipate any concrete high-rises, at least in the short-term,” Blake Taylor, JPI’s senior vice president and regional development partner, said in an interview with the Dallas Business Journal on Tuesday.
Demand has softened for more expensive, high-rise apartments in the city, Taylor said.
JPI, one of the most active developers in North Texas, in early August sold five apartment projects in the DFW area totaling nearly 2,000 units to investor Lone Star Funds for an undisclosed price. JPI reported that it was the company’s biggest single deal in 15 years.
The multifamily communities sold were Jefferson West Love in Dallas, Jefferson Boardwalk in Farmers Branch, Jefferson Eastshore in Irving, and Jefferson Reserve and Jefferson Vantage, both in Richardson.
DFW is projected to lead the nation in the number of new apartment units built in 2020. If that occurs, it will be the third straight year.
JPI is planning to add its share of those new units, Taylor says in the interview that follows. He discusses the company’s plans, the market and more.
What does the transaction with Lone Star say about the strength of the DFW apartment market?
It’s obviously a sign of strength for DFW. It shows that we’re a really good geographic place to invest in. There’s a strong desire from a lot of groups to be the best in this asset class.
On the heels of this big deal involving DFW apartment communities, will JPI reinvest a significant amount into the North Texas market and what form will that investment take?
We will reinvest in future apartment communities through new construction and new development. We will use those proceeds from the sale to start construction of new communities this year. There’s still going to be a need for housing in DFW. A lot of people work in our (DFW) communities. DFW is our headquarters and our biggest market. We’ll continue to make big investments with development and investment in DFW.
Will you break that down?
In 2020, we’re focusing on wood-constructed apartments. We think those make sense in first-, second- and third-ring suburbs. We’ll be more suburban than we probably have been in the past.
You said wood construction?
Yes, wood-framed construction. We don’t anticipate any concrete high-rises, at least in the short-term. We’ll build in the first-, second- and third-ring suburbs, and we’ll build your three- and four-story apartment communities rather than the 20-story high-rise.
That’s the class that’s hurting right now, right?
That appears to be the class that is struggling more than others. The cost to build that is very high, therefore the rents they need is very high. There’s fewer people that can pay big rents vs. more people who can pay a lower rent just from an affordability standpoint.
What does JPI have in its construction pipeline for the rest of this year and for 2021?
We will start construction on two communities between now and the end of the year with 750 units (combined). Then next year we will start construction on four to five communities, call it 1,500 or 1,800 (units) in all of them next year. That will be new construction starts.
We’ll open three communities in the next four months or so. We’ll open about 1,000 more units, give or take, and between now and the end of the year we’ll start construction on another 750.
Where will the two new communities be that you’re opening between now and the end of the year?
One of them is in Frisco on the east side, and the other is in Irving just south of the Las Colinas Urban Center.
Dallas is projected to be the top market next year for new apartment construction. Is there demand for all of those units?
I would expect Dallas to also be very near the top on apartment demand, apartment absorption.
I think I know the answer, but tell me why you see that?
We see it and we see a lot of market research firms coming to the same conclusion. It’s the jobs story of DFW. We’re a major hub, in the Central time zone, and it’s really a pro-business state and a pro-business city. The job growth fuels housing demand which is the demand for apartment homes.
This interview has been edited for brevity and clarity.