Nexus Development says the company will begin building a high-end senior living community in Uptown Dallas. The 20-story luxury tower, called Vivante at Turtle Creek, located at 2505 Turtle Creek Blvd, is planned to feature 164 assisted living units, 29 memory care units and two levels of underground parking. The Dallas Business Journal reports construction on the roughly 375,000-square-foot building is estimated to cost roughly $150 million and should be completed in early 2027.

The assisted living units will range from 1,000 square feet to 3,000 square feet and feature full kitchens and balconies/patios. The memory care units, located in a secure care community within Vivante called The Shores, are designed for residents with dementia and offer shared and private room options.

The senior living community will include a library, movie theater, chauffeured Mercedes transportation, a large ballroom, beauty salon and yoga and Pilates studio.

HKS Inc. is the development’s design firm, and Andres Construction is the general contractor.

As rent growth declines and new construction progresses, oversupply is a hot topic in the multifamily industry. Now, fresh data shows the impact of elevated supply could fall heaviest on the high-end properties that make up the bulk of scheduled new deliveries.

There were just fewer than a million units under construction at the end of the third quarter, and 70% of those were considered high-end, according to a CoStar report that found the gap between mid-range and high-end rents is widening.

The rent difference between properties considered four- or five-star and those considered three-star is about $550 per month, or $6,600 a year, much higher than the marginal difference in years past, CoStar found. That could be an issue since developers often deal with oversupply by offering concessions to lure tenants from other complexes, making larger differences more impactful.

High-class building rents nationally average $2,074 per month, so a developer would have to offer at least three free months to attract a tenant from a lower-class building, CoStar reported.

Landlords are already offering concessions on 30% of rental listings, the highest rate in two years, according to a Zillow report from last week. 

The trend is being felt in submarkets like Downtown Miami, which saw luxury rents drop 1.1% at the end of the third quarter, while lower-tier rents grew by 1.1%, according to CoStar. Downtown Miami has about 16,708 units under construction, or about 57.8% of its inventory. With an average price differential of $540 a month, Miami’s nonluxury product is somewhat insulated from the large supply of four- and five-star units coming online, CoStar reported.

Charlotte’s South End had 6,592 units, or 59.3% of its inventory, under construction and saw a rent growth decline of 3.1% in the third quarter. 

Other submarkets likely to feel a pinch include St. Augustine, Florida, Downtown Austin and Downtown Atlanta, which all have a construction pipeline representing more than 40% of their inventory. All three markets saw rent growth declines in the third quarter.

The Sun Belt has the largest concentration of units under construction. The markets with the most units being built include Downtown Miami, Downtown Nashville, Frisco/Prosper in Dallas-Fort Worth, Downtown Denver and Charlotte’s South End. 

Multifamily REITs are seeing the impact of oversupply and concessions in these areas, according to third-quarter earnings calls. UDR reported its San Francisco and Sun Belt markets being impacted by new supply, with average concessions hovering at about three weeks and ranging up to six weeks free. 

UDR expects the concession-heavy dynamic to continue throughout the fourth quarter and into 2024, said Michael Lacy, the company’s senior vice president of property operations.

The same submarkets seeing many product deliveries this year will probably see more still in 2024, Camden Property Trust President Keith Oden said.