Top 5 Markets for Multifamily Development

Deliveries in these metros have already surpassed 44,000 units this year, according to Yardi Matrix data.
Image by ds_30 via Pixabay.com

Multifamily has been one of the best-performing industries throughout the pandemic. According to Yardi Matrix data, robust demand pushed rent growth to record highs, placing 2021 on track to be among the best years since the 2008 downturn.

Demand continues to fuel development and, following a moderate slope during the first weeks of the health crisis, construction activity has largely bounced back in 2021. Yardi Matrix expects deliveries to amount to roughly 334,000 units by year-end.

Consistent growth was registered in most fast-growing secondary markets, but also in several gateway metros. In the ranking below, we showcase the top five markets for deliveries in 2021 through July by the number of units, based on Yardi Matrix data. Combined, 44,168 units came online in these metros, which is slightly above the 38,275 units that were delivered last year during the same period.

In July, the construction pipeline in these markets comprised 170,913 units underway. Not surprisingly, four of these markets also held the top spots for transaction activity during the first half of 2021.

Rank Market No. of Units Delivered in 2021 No. of Units Under Construction Occupancy as of July 2021
1 Dallas 12,654 47,486 94.7
2 Houston 9,511 30,078 92.9
3 Atlanta 8,596 21,007 95.7
4 Miami 7,173 38,147 96.3
5 Phoenix 6,234 34,195 96.5

Source: Yardi Matrix

5. Phoenix

Paradise at P83

The fast-growing tech hub consistently ranks among top metros for rent growth, bolstered by strong demand and insufficient supply. Developers strived to meet demand and brought online 6,234 units in 2021 through July, well above the 4,691 units delivered during the same period last year. In addition, the metro’s pipeline comprised 34,195 units underway.

Robust in-migration from more expensive markets prompted developers to keep their focus on the Lifestyle segment, which led both in deliveries as well as in units under construction. The occupancy rate in stabilized properties signals a progressively tighter rental market, rising 110 basis points in the 12 months ending in July, to 96.5 percent.

The largest multifamily delivery in 2021 through July was The Opus Group’s Paradise at P83, a 354-unit completed in July at 16601 N. 75th. Ave. 

4. Miami

Las Olas Walk

The pandemic enhanced the metro’s appeal, attracting even more companies looking to relocate from New York City and California markets—this has spurred robust demand for multifamily projects.

Through July, 7,173 units came online in the metro, with more than 6,625 units delivered during the same period last year. The construction pipeline is second only to Dallas and Washington, D.C., with 38,147 units underway. Miami is one of the top markets for absorption, too, posting a 180-basis-point occupancy increase in stabilized properties in the 12 months ending in July, to 96.4 percent.

Deliveries were almost evenly distributed between Miami metro (2,391 units), Ft. Lauderdale (2,648 units) and West Palm Beach-Boca Raton (2,134 units). Occupancy increased the most in West Palm Beach-Boca Raton, climbing 250 basis points, to 96.6 percent. Miami Metro followed, with occupancy improving by 160 basis points, to 96.2 percent, while the rate increased 150 basis points in Fort Lauderdale, to 96.4 percent.

One of the largest projects delivered in the metro in 2021 through July was ZOM Living‘s Las Olas Walk, a 456-unit Lifestyle property completed in February in Fort Lauderdale at 106 S. Federal Highway. 

3. Atlanta

Star Metals Residences

Developers added 8,596 units to Atlanta’s multifamily inventory in 2021 through July, well above the 5,418 units delivered during the same period last year. The pipeline had another 21,007 units underway. Overall, the occupancy rate in stabilized properties increased 130 basis points to 95.7 percent in the 12 months ending in July.

Deliveries were almost even across the map, with 55 percent of the new stock coming online in Urban Atlanta and 45 percent in the suburban parts of the metro. The occupancy rate reflected a balanced demand for housing in both suburban and urban submarkets. Year-over-year, the rate rose by 140 basis points to 96.2 percent in suburban areas, and by 130 basis points to 95.1 percent in urban submarkets.

The largest project delivered in the metro through July was Star Metals Residences, a 409-unit Lifestyle community completed in January in Urban Atlanta at 1050 Howell Mill Road. The asset is jointly owned by Allen Morris and Pebb Capital.

2. Houston

Houston’s inventory saw a remarkable expansion in the first seven months of 2021. Developers brought online 9,511 units, slightly above the 8,167 units delivered during the same period last year, and had another 30,078 units underway. The occupancy rate in stabilized properties increased 60 basis points in the 12 months ending in July, to 92.9 percent.

The metro’s western side, especially, has been bustling with activity, with the region accounting for 86 percent of total deliveries. Even so, the occupancy rate here rose 80 basis points to 93.1 percent in July. The eastern part posted lower improvement, with the multifamily stock expanding by 14 percent and the occupancy rate inching up just 10 basis points to 92.3 percent.

The largest multifamily project delivered in 2021 through July was Broadstone Vintage Park, a 386-unit Lifestyle property completed in March in Western Houston at 14700 Vintage Preserve Parkway. 

1. Dallas

One90 Firewheel

Dallas-Fort Worth holds the leading position, with a total of 12,654 units added to stock in 2021 through July. Moreover, the metro also held the top spot in the number of units underway, with 47,486 units.

Surprisingly, however, Dallas was the only one of the markets in the top five to post a slight decrease from last year’s volume recorded in the same period: In 2020 through July, 13,374 units came online in the Metroplex. Nonetheless, demand is strong in Texas’ main economic engine—despite the robust inventory expansion, occupancy in stabilized properties rose by 80 basis points in the 12 months ending in July, to 94.7 percent.

North Dallas accounted for slightly more than half the number of units delivered in the metro and had the biggest spike in occupancy, up by 120 basis points to 94.6 percent in July. Next in line were Fort Worth with 27 percent of deliveries, and Suburban Dallas with nearly 22 percent. Occupancy in these regions increased by 60 and 40 basis points, respectively.

The largest project delivered in DFW was One90 Firewheel, a 483-unit Lifestyle asset completed in January in North Dallas. The property at 1675 W. Campbell Road is owned by Integrated Real Estate Group.

Yardi Matrix covers all multifamily properties of 50+ units across 140 markets in the United States. This ranking reflects deliveries within that sample group.