Top 5 Emerging Multifamily Markets

7 min read

These secondary and tertiary locations are showing significant growth.

Almost two years since the onset of the pandemic, the multifamily sector remains one of the best-performing asset types. The new migration trends observed in 2020 have heightened in 2021, as work-from-home options have given renters more freedom to choose where to live. Migration has been visible from gateway coastal markets toward secondary and tertiary metros, primarily in the Sun Belt, where the cost of living is significantly lower.


READ ALSO: National Multifamily Report – December 2021


Pent-up demand and high household savings impacted increase in rent and occupancy across markets, with the metros highlighted in the following list showing significant growth in the first 11 months of 2021. As the national average unemployment rate dropped to 4.2 percent in November all the metros in our top five saw rates at that level or lower. The national occupancy rate in stabilized properties was 96.1 percent; metros included in our ranking saw average occupancy rates in stabilized properties range between 96 percent and 98 percent as of November.

In order to analyze population growth, we utilized U.S. Census data between April 2010 and April 2020. While the numbers pre-date the full brunt of the pandemic, the demographic trends were likely to have continued or accelerated in the interim. Utilizing primarily Yardi Matrix and publicly available data, here is our list of the top 5 emerging markets in the multifamily sector:

Rank Market Price per Unit Units Completed Units Under Construction Unemployment Rate Score
1 Greenville $144,932 2,070 5,892 3.9 36
2 Omaha $118,937 1,298 5,265 2.2 48
3 Pensacola $206,830 2,140 3,164 4.2 49
4 Savannah – Hilton Head $152,887 2,564 2,151 3.3 53
5 Reno $230,293 2,230 3,661 4.2 55

5. Reno, Nev.

The first entry on the list saw a 15.3 percent population increase between 2010 and 2020, according to U.S. census data. Growth could be attributed to Reno’s proximity to overpriced metros, together with the area’s affordable housing, business-friendly environment and high quality of life. The migration kept the metro’s unemployment on par with the November national level of 4.2 percent. Additionally, the population growth helped the occupancy in the metro grow 83 basis points to 97.0 percent in the twelve months ending in November, above the national average of 96.1 percent.

To meet the demand for space, construction activity was high, placing Reno second on the list in terms of units completed. Developers added 2,230 units to the inventory across eight properties in 2021 through November. Additionally, 3,661 units were under construction as of that time, placing Reno in fourth place in terms of projects underway.

Despite this influx of new supply, the metro was one of the priciest markets on our list and the most expensive in our selection. The average price-per-unit grew 26 percent to $230,293 in the twelve months ending in November, above the national average of $185,466.

4. Savannah – Hilton Head, Ga.

Image by stanbalik via Pixabay.com
Image by stanbalik via Pixabay.com

The metro attracted new residents due to its low cost of living, warm temperature year-round and sandy beaches. Census data showed significant increase over the past decade, as Savannah-Hilton Head’s population recorded a 15.0 percent rise from 2010 to 2020. Even if parts of the metro rely heavily on trade, travel and tourism, the metro’s unemployment rate stood at 3.3 percent in November, 90 basis points below the national average. With construction deemed essential in 2020, developers capitalized on these positive demographic trends and completed 2,564 units across 12 properties through November, topping the overall list. Construction activity has recorded a significant increase since 2016, with a dip in 2019, when only 1,084 units were added to the inventory.

The occupancy rate in the metro grew 260 basis points in the twelve months ending in November to reach 97.0 percent, 90 basis points above the national average. Average rents in November skyrocketed to $1,432, up almost 19.5 percent year-over-year. While growth is impressive, average rents are still below the U.S. rate of $1,590.

Transaction activity in the Georgia and South Carolina coastal market has been growing of late. Roughly $851 million in rental assets traded in the first eleven months of 2021, up 31.5 percent from the same period the previous year. The volume was second only to Greenville, S.C., across the 64 metros on the complete list. Investor interest was split evenly between the two ends of the quality spectrum.

3. Pensacola, Fla.

The metro benefited from Florida’s strong in-migration trend, especially from New York City residents looking to escape the high cost of living and limited space. Between 2010 and 2020, Census data shows the metro’s population rose 13.6 percent. Despite the new residents, Pensacola’s unemployment rate dropped to 4.2 percent in November, on par with the national average.

Developers capitalized on the positive demographic trend and added 2,140 units year-to-date through November—the third largest figure on our list and the highest of the past five years for the metro. An additional 3,164 units were underway as of November.

Even though new supply was at an all-time high, Pensacola had one of the highest occupancy rates on the list, clocking in at 98 percent, up 160 basis points year-over-year. Pensacola experienced steady average multifamily rent increases over the past five years. In November 2021, the metro had an average rent of $1,472, up 20.5 percent year-over-year.

Investment activity more than doubled through the first eleven months of 2021, compared to the same period of 2020. Multifamily rental assets worth $606 million traded, up from the almost $300 million a year before. This heightened interest in the metro drove the per-unit price up 48 percent from the same period in 2020, to $206,830.

2. Omaha, Neb.

From 2010 to 2020, US Census data shows the metro grew by 11.8 percent. Heightened in the last year by remote work, new residents were attracted to Omaha because of the low cost of living, clean air and affordable housing. The metro’s unemployment rate was 2.2 percent in November, the smallest of all the included metros and 200 basis points below the national rate. Additionally, Omaha is the only metro outside the Sun Belt in our ranking.

Development activity in the metro cooled off in the first 11 months of 2021 with only 1,298 units were added to the inventory. This comes after the same period of 2020 recorded a five-year high of 3,519 completed units. Despite that, developers remain confident in the metro’s potential as 5,265 units were under construction. Because of limited new supply, occupancy rates in stabilized properties rose 110 basis points year-over-year, to 96 percent.

Investor interest in the metro was not as high as the other metros on the list. While it recorded a 13 percent increase over 2020 levels, the metro’s $118,937 price-per-unit was the lowest among the top five. Also, transaction activity in Omaha was low, as only $62.6 million in rental assets changed hands during the first 11 months of 2021, a 32.2 percent drop from the previous period.

1. Greenville, S.C.

Image by Ernest_Roy via Pixabay.com

Topping the list is a new entry to our emerging markets analysis from 2021. The metro’s population grew 10.8 percent from 2010 to 2020, U.S. Census data shows. The low cost of living, affordable housing and plenty of outdoor activities, as well as its relative proximity to both Atlanta and Charlotte, N.C., attracted new residents. The unemployment rate dropped to 3.9 percent, 30 basis points below the national average.

Greenville attracted the most investment activity out of all the metros on the list. Roughly $1.1 billion in rental assets traded in 2021 through November, a significant increase from the some $261 million in properties sold in the same period of 2020. This popularity drove the average price-per-unit up more than 50 percent year-to-date to $144,932.

While rents rose 14.8 percent year-over-year as of November, the metro remained affordable with average rent at $1,234, well below the $1,590 national average. Occupancy rates reached 96 percent, up only 0.9 percent year-over-year.

With construction deemed essential since the start of the health crisis, Greenville had a very active pipeline even as of April when the metro ranked fourth in terms of units underway. Developers added 2,070 units to the inventory last year through November across eight properties, while 2021 numbers were just below the completion decade-high recorded in the first 11 months of 2020. Additionally, 5892 units were under construction as of November.

Working with Yardi Matrix data, we first filtered out all metros with 2 million residents or more, and we ended up with a list of 63. Then, we decided on a series of significant data points that would separate the best-performing markets from the rest. We looked at the increases in the average per-unit price for transactions closed in 2021 through November compared to the same period of the previous year, at how the employment market performed year-over-year, as well as the number of units completed over the first nine months and the number of apartments underway as of November. We then compared the 63 markets based on performance of these data points, and eventually assigned them a final score.

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