Detroit Multifamily Report – Summer 2019
The leisure and hospitality sector leads gains, mainly due to an increasing number of visitors as well as new hotel projects coming online.
Detroit’s expanding economy and growing Millennial population are pushing up housing demand, particularly in core submarkets, leading to a spike in rent growth—at 3.6 percent year-over-year through July. Gains in the Lifestyle segment weighed in heavily, recovering from negative values in the summer of 2018, to figures above the 4.0 percent threshold by mid-year 2019.
Detroit added 11,000 jobs in the 12 months ending in June. Gains were led by the leisure and hospitality sector (6,100 jobs), mainly due to an increasing number of visitors, as well as new hotel projects coming online, while a shortage of guestrooms still lingers. The metro lost 1,600 manufacturing jobs, but the sector is expected to get a significant boost in the coming years, with upcoming investments from Dakkota Integrated Systems and Fiat Chrysler Automobiles. The new facilities, worth a combined $2.6 billion, are set to generate more than 5,600 positions.
Multifamily investment activity slowed down in early 2019, but the pace is expected to pick up, as almost all of Detroit’s core submarkets are within designated opportunity zones, attracting investors seeking well-located properties that offer value-add potential. Considering a projected cycle peak for deliveries in 2019—2,392 units—rent growth is expected to slightly moderate, reaching 2.2 percent for the year.