Top 5 Markets for Multifamily Occupancy Growth
- Jul 08, 2019
Nationwide, the average occupancy rate decreased by 20 basis points year-over-year through April to 95.0 percent, according to Yardi Matrix data. Meanwhile, the markets on this list have seen their overall occupancy rates surge by at least 90 basis points and as much as 320 basis points during that time.
Benefiting from business-friendly climates, modest development activity, very strong demographic trends and solid employment gains, these five metros are likely to maintain their momentum in the coming months. That’s especially true for Huntsville, Ala., where employers working on large-scale projects are getting ready to kick off their hiring processes.
5. Huntsville, Ala.
Known primarily for its aerospace and defense industry, Huntsville, Ala., is diversifying its economy by also focusing on the tech and manufacturing sectors. Both Facebook and Google are developing data centers in the metro, in two separate investments totaling more than $1.3 billion. Additionally, Mazda-Toyota is investing $1.7 billion in an upcoming manufacturing facility where the company is expected to hire as many as 4,000 people. Unsurprisingly, Huntsville’s overall occupancy rate increased 90 basis points year-over-year as of April. The metro’s population grew 6.3 percent between April 2010 and July 2018.
4. McAllen, Texas
The economic and demographic boom of the border metro of McAllen, Texas, shows no signs of stopping, following a 120 basis point uptick in its overall vacancy rate year-over-year through April. Between April 2010 and July 2018, almost 100,000 persons settled here, an 11.3 percent surge. Meanwhile, developers added 4,680 new units to the metro during that time. McAllen had had a consistent occupancy rate of more than 93.0 percent until the end of 2017, when 1,100 units came online, almost three times as much as in 2016. However, the new inventory has been quickly absorbed and the occupancy rate surged back to 93.2 percent by last July. Of the five metros on this list, McAllen had the lowest average occupancy rate in April, 93.4 percent.
3. Tallahassee, Fla.
Tallahassee, Fla., has seen unprecedented population gains since 2010, a 4.2 percent surge as of July 2018. As a result, construction activity picked up pace in the metro over this period and increasingly so in 2018, with 1,003 units delivered, a 129.5 percent increase from the previous year. In 2019, developers are expected to complete nine projects totaling 1,442 apartments, the highest level in more than two decades. But as supply couldn’t keep up with demand, the metro’s occupancy rate jumped 1.3 percent year-over-year as of April to 95.0 percent, on par with the national average.
At the beginning of the year, Carter Multifamily expanded its Florida footprint with the acquisition of a 262-unit community in Tallahassee.
2. Columbus, Ga.
The metro benefits from a strong employment market, up 1.6 percent year-over-year as of March to 191,000 total jobs, and an estimated unemployment rate of 3.8 percent as of April, the lowest level on record. Demand greatly outpaced supply, as developers completed fewer than 100 units since October 2017. As a result, the metro’s occupancy rate increased 1.3% year-over-year through April. Unsurprisingly, the overall rent grew 3.7 percent during the same period, 110 basis points above the national average.
1. Wilmington, N.C.
One of the country’s top markets for multifamily rent growth, Wilmington, N.C., is outperforming every other metro in the state— in terms of growth in occupancy rates, as well, with an increase of 3.2 percent year-over-year through April. An astonishing turnaround, considering that two years ago Wilmington was among the country’s top markets with the greatest occupancy loss, following the record completion of 844 units in the first two quarters of 2017, nearly double the total deliveries of 2016.
According to the latest U.S. Census Bureau population estimates, the metro’s population increased by 15.5% between April 2010 and July 2018, placing it 49th in the country. During this period, developers added about 3,500 units to the metro, keeping the average occupancy rate consistently above 92.0 percent and as high as 96.5 percent this January.