Top 5 Markets for Multifamily Occupancy Growth
- Sep 20, 2019
Nationwide, the average occupancy rate decreased by 0.1 percent year-over-year through July to 95.1 percent, according to Yardi Matrix data. The markets on this list have seen their occupancy rates go up by at least 70 basis points and by as much as 160 basis points. However, these are considerably lower growth rates compared to our previous ranking.
Except for Albuquerque, N.M., the rest of the metros on the list have fewer than 40,000 units completed but there’s a lot of room for new development in all five markets. With increased demand and limited construction activity overall, Wilmington, N.C, and Huntsville, Ala., are also among the country’s top markets for rent growth.
5. Columbus, Ga.
Benefiting from a relatively affordable cost of living compared to neighboring Atlanta, solid population gains and a rather limited development pipeline, the occupancy rate in Columbus, Ga., continued to grow, but at a slower pace than over the past 12 months. However, it was still 80 basis points above the national average rate of 95.1 percent. The metro’s occupancy rate increased 0.7 percent year-over-year through July.
Some 800 units are expected to come online by year’s end, the highest level since 2012 and equal to 2.4 percent of total inventory. That’s almost a quarter more than in 2017 when developers completed four multifamily projects totaling 658 apartments. Last year, however, no new units came online, pushing the occupancy rate in recent months to a record high. With only 402 units under development, it’s likely the occupancy rate will continue to break records over the coming quarters.
4. Albuquerque, N.M.
Despite more than 1,100 units coming online last year, Albuquerque’s housing supply is still limited. Less than 300 apartments are forecasted to be delivered this year, representing 0.5 percent of existing stock. As the metro attracts large companies—including Netflix, Facebook and NBCUniversal—and diversifies its economy, its population continues to increase and, with it, so does the average occupancy rate. Albuquerque’s occupancy rate, at a record-high of 95.8 percent in July, went up 0.7 percent year-over-year.
But Albuquerque still has a lot of growing to do in order to catch up to some of the bigger U.S. metros. With an unemployment rate of 5.4 percent in July, an increase of 30 basis points year-over-year, and only 4,100 jobs added in the 12 months ending in June, the metro’s employment market is still well below national trends.
3. Wilmington, N.C.
For a relatively small multifamily market, Wilmington continues to be among the strongest in the country. The metro, which was severely hit by Hurricane Florence in 2018, learned from the experience and faced only minor flooding as a result of Hurricane Dorian at the beginning of this month. Wilmington—one of the top markets for multifamily rent growth—had an occupancy rate 80 basis point above the national average, up 1.0 percent year-over-year.
While construction activity picked up in 2017 when more than 1,000 units came online, deliveries decreased in the next year by more than 50 percent. This year, developers are projected to add some 550 apartments. A total of 2,000 units were underway throughout the metro as of July, with almost half scheduled for completion in 2021.
2. Huntsville, Ala.
Thanks to its highly educated workforce and increased interest from big tech companies, Huntsville has one of the lowest unemployment rates in the country, 140 basis points below the national average of 4.0 percent in July. The metro’s population growth accelerated significantly in recent years—increasing by almost 10 percent since 2010— and is expected to overtake Birmingham as the state’s largest city within a decade. As a result, the metro has consistently had high occupancy rates, now at 96.3 percent, up 1.1 percent year-over-year as of July.
Despite robust demand, development activity is still lagging, with only 572 units projected to come online by year’s end, equal to 1.4 percent of the metro’s total multifamily stock. Additionally, there are some 750 apartments underway, the bulk of which is expected to be completed next year. Huntsville is also one of the top markets for rent growth year-over-year through August, at 6.1 percent.
1. Wichita, Kan.
After being the only major metro area in the state with a shrinking economy in 2017, things turned around for Wichita, Kan., over the following quarters. With a strong manufacturing employment sector, which represented 18.4 percent of the metro’s total employment as of June, and a rapidly growing professional and business services industry, Wichita’s overall job market is back in expansion mode. The metro’s occupancy rate, at 94.5 percent in July, although the lowest of the five markets on this list, rose by 1.6 percent year-over-year—the most notable growth rate on our list.
Developers completed a record 874 units in 2017, more than in any other year over the past decade, followed by a significant slump in deliveries. This year, two projects totaling 126 units are slated for completion, equal to 0.4 percent of the market’s existing inventory. With a total of 450 apartments underway, things aren’t going to radically change over the coming quarters.