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by Steven McCord, Co-Founder, Spatial Laser
For a real estate investor trying to fill a vacancy, it is not uncommon to find big differences between summer and winter. Summer vacancies get snapped up quickly by renters, and the reasons are quite simple: 1) many people try to move during summer school vacation to minimize disruptions for their school-age children, and 2) job-related relocations tend to happen well outside of the “holiday season” of November and December. The result is more demand for rentals in the summer months.
How much longer does a lease take in winter?
We crunched nearly 140,000 lease records from the North Texas region from the start of 2016 through to the eve of the Covid pandemic last year, to see how much of a seasonal difference exists in our market. We ignored, for the moment, the abnormal period during the pandemic, which is a separate discussion.
Seasons do matter. For all price categories, it took, on average, two to four weeks longer (17-27 days) to rent out a house in winter than in summer. For all rental levels, it took, on average, two to four weeks longer (17-27 days) to rent out a house in winter than in summer. 
Days on market are shorter in the summer
We also found that on average, cheaper homes rented out faster. The pool of demand for cheaper homes is larger, as there are more potential renters. Meanwhile, high-rent homes take longer to rent out. We calculated that it takes 10-20 days longer to secure a tenant for a $2500-$3000/mo home compared to a $1000-$1,500/mo home.
We calculated that it takes 10-20 days longer to rent out a $2500-$3000/mo home compared to a $1000-$1,500/mo home. Is a fast lease still possible in the winter?
The short answer is yes, if priced right.
The averages tell one part of the story, but there are still wide ranges for what can actually happen. Below, we show what the range looks like between the fastest 25% of the leases, with the fewest days on market, and the slowest 25%, with the most days on market. Fast lease ups do happen in the winter, though they aren’t as common. The fastest 25% of leases in winter took less than two weeks, for homes listed in a rental range of $1,500-$2,000/mo. 
Days on market can vary widely at all times of the year
What you can do
An extended vacancy period has a big effect on the profitability of a real estate investment. For a house renting for $1,750 a month, each day of vacancy costs you $60. A long vacancy period of 40 to 60 days results in a 10-15% drop in revenue for the year.
The best way to combat this situation is to time leases to expire during the summer, when your days on market are likely to be lowest. If a winter vacancy is unavoidable, your second-best option is to price the rent slightly lower than you might in the summer, in order to minimize the days on market. Most of the time, a small discount in rent is worth it, if it cuts your vacancy period to a minimum. About Spatial Laser
We help real estate investors find the perfect place to buy a home or invest. Our flagship product, Locate Alpha, lets you explore the market and form a laser-focused investment strategy based on rich data.
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The hustle and bustle of urban co-working
A huge co-working craze took off during the 2010s. Soon, companies like WeWork were all over the news. In the Dallas-Fort Worth area, on the eve of the pandemic, there were no less than 200 sites offering some form of co-working, or what many refer to more generally as “flexible office space.”
Typically in urban locations, these bustling locations were often in areas thought of as millennial hotbeds, close to the hubbub of urban activity and social environments that young people craved. Traditionally, owners and operators of co-working spaces gravitated to these urban environments to open new locations as a way to get the highest absorption and occupancy. For users of co-working spaces, they were a blessing – a way to get a collegial, interesting work environment at relatively low cost. Sometimes, these offered a short, or even walkable commute for an urban apartment dweller. 
Downtown Dallas, a traditional co-working area, requiring a commute for non-urban dwellers
Urban centers spurned in favor of suburbia
Then, the pandemic changed the dynamic. Remote work become commonplace, and many believe a sizeable number of jobs will stay that way forever. Urban settings — and urban co-working spaces — quickly fell out of favor as many people left the city to escape population density and minimize health risks. As work moved online in era of Zoom, remote workers could go wherever they wanted.
The emphasis of early co-working operators on urban locations is proving to be a mistake.
Suddenly, you had millions of people working out of single-family homes in suburbia or exurbia. Large, suburban homes often have ample space to set up a home office — perhaps an extra bedroom, or even a dedicated office room. The original co-working locations, in the city, became far away and impractical, and the emphasis of early co-working operators on urban locations is proving to be a mistake.
Urban environment typical of co-working in the past
A respite from the home environment remains vital
But there was another problem: working from home is not a complete solution. There needs to be a close-by “third place” that forms a bridge between home and the occasional office visit, even if that office visit is infrequent. Someplace to do focused work, use expensive office equipment, and get a break from the house.
The coffee shop craze of the 2000s is not pandemic-friendly.
The coffee shop craze of the 2000s is not pandemic-friendly. Even post-pandemic, coffee shops have their limitations due to noise and shared, insecure Wi-Fi, among other concerns. Furthermore, suburban co-working spaces are often trailing in quality compared to their urban counterparts, in terms of comfort, facilities, equipment, and finishings.
This brings us to the co-working spaces of the future: close to suburban remote workers, affordable, and a step up from what’s out there today. This brings us to the co-working spaces of the future: close to suburban remote workers, affordable, and a step up from what’s out there today. About three-quarters of homes are more than 2 miles of some form of co-working facility.
Only about 27% of single-family homes in the Dallas-Fort Worth metro area, for example, are within 2 miles of some form of co-working facility (if you include executive suites), according to Spatial Laser analysis. This means the other nearly three quarters of Dallas homes require travelling some distance to reach one of these facilities. Areas of single-family housing without convenient access to co-working spaces are shown below in grey:
Areas of single-family housing that are more than two miles from any co-working space
Where should new co-working spaces open?
We set out to form a starter framework for where these new co-working spaces might go:
Site evaluation criteria we may use to evaluate co-working locations
Example of candidate sites resulting from the analysis
What to doWith the changes happening in the demand landscape for co-working spaces, think about whether a strategy adjustment may help. We can always help. About Spatial Laser
We help real estate investors find the perfect place to buy a home or invest. Our flagship product, Locate Alpha, lets you explore the market and form a laser-focused investment strategy based on rich data.
In 20 years, the urban area of Dallas-Fort Worth grew 40%+
Development of the Dallas-Fort Worth real estate market has moved quickly in the last 20 years. By our estimates, about 40 square miles of land per year get developed. This is an area larger than the massive DFW airport, or about 15-20,000 football fields, every single year*. That is also the same as 11,000 Costcos!
That means the urbanized area has grown by 40-50% in the last 20 years from 1,400 square miles to 2,200. Therefore, the Metroplex has added almost one additional New York City, in terms of land, over 20 years. We calculated this using satellite imagery. In the chart below, the black dots represent urbanized land within 40 miles of DFW airport, while light grey shaded dots represent undeveloped land within that same area. 
Urban growth in Dallas-Fort Worth over the last 20 years
Source: Spatial Laser analysis Housing shortage
And yet today, inventory, or homes for sale, in the Dallas and Fort Worth housing markets is extremely low. We wrote about this last year, as some segments of the market were falling below 2 months of inventory, Since then, the market has tightened even further. Houses that get listed on the market are snapped up quickly, sometimes in hours. There are simply not enough houses on the market, as sellers are held back by the ongoing pandemic, while demand surges due to the improved affordability.
There are simply not enough houses on the market, as sellers are held back by the ongoing pandemic, while demand surges due to the improved affordability. Building more houses
There's still plenty of land to build on. A quick look at the breakdown reveals that 44% of the land within a 40 mile radius from of DFW airport is simply "grass." Without mountains or other impediments, much of this land is easily buildable.
Source: Landsat imagery analysis by Spatial Laser
Developers are scrambling to buy land to build more houses. Some cities that were mostly grass and dirt a decade or two ago are increasingly built out with housing.
Based on today’s city limits, cities like Prosper went from 9% built-out to about 55% today. Buildable space in these markets is getting snapped up quickly. Below, we compare some of the Collin County markets, which are growth hotspots: 
Developed and undeveloped space in Collin County cities
Source: Spatial Laser Analysis
Of course, not all undeveloped land is buildable, but this gives a starting point. Some cities have become heavily urbanized in a short time.
As search for land continues, there always a tradeoff of buildable space vs price vs location. In our analysis, we account for these tradeoffs by looking at job access and future job growth. What it means for homebuyers
Homebuyers and investors can look forward to a greater supply of new housing in the future, but this may take several years. Until then, competition may be fierce.
*Using a more conservative estimate, the number could be 15,000 football fields per year. About Spatial Laser
We help real estate investors find the perfect place to buy a home or invest. Our flagship product, Locate Alpha, lets you explore the market and form a laser-focused investment strategy based on rich data.
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July 2021
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