Top Sun Belt Markets for Construction Activity

The Sun Belt continues its expansion, driven by domestic in-migration from gateway markets, and consequently boosting rent and occupancy in the region. Its appeal—propelled by a favorable tax environment and lower living costs—only grew stronger during the pandemic. The region is home to roughly 50 percent of the nation’s population.

While the U.S. rental market is reaching record growth rates, Sun Belt cities dominated Urban Land Institute and PricewaterhouseCoopers’ annual ranking of top markets to watch in 2022, with six of these included in the list below.

There were 890,868 units under construction as of September nationwide, according to Yardi Matrix data, with the following Sun Belt markets (280,500 units) accounting for 31.5 percent of the total U.S. pipeline. This table highlights the top 10 markets for multifamily construction activity in the region.

Rank	Market	Units Underway
1	Dallas-Ft. Worth	49,347
2	Austin	38,489
3	Phoenix	34,458
4	Houston	28,841
5	Los Angeles	28,479
6	Orlando	22,010
7	Miami	21,378
8	Atlanta	21,160
9	Tampa	18,847
10	Charlotte	17,457

10. Charlotte

Charlotte’s recovery has been on the right track since the first half of the year. In July, the unemployment rate dropped to 4.4 percent, marking a steep decline from last year’s peak of 13.9 percent reached in May. The market has been benefiting from positive migration trends, as several fintech companies, logistics and distribution firms confirmed their expansion in the metro.

The future looks bright for the Queen City, as local authorities are paving the way toward prospective investments through Charlotte Future 2040, a long-term development and investment plan that includes zoning reform and seeks to increase housing supply.

In September, nearly 17,500 units were in the works in the metro. Since January, developers have completed 7,883 units—more than double last year’s deliveries encompassing a total of 3,883 units. Occupancy has been slowly but steadily rising this year, clocking in at 95.9 percent in August.

9. Tampa

As of September, Tampa’s multifamily market had 18,847 units under development, of which 8,768 units broke ground in 2021. Deliveries between January and September reached 3,767 units, already surpassing the 3,265 units delivered last year. The metro’s occupancy dipped below 95 percent between June 2019 and June 2020 but has been rising since and reached 96.4 percent in September.

BLS data shows that the metro’s unemployment rate dropped to 4.5 percent in August, a significant improvement since April 2020, when it reached nearly 14 percent. The metro gained nearly 150,000 new jobs on a year-over-year basis through August.

8. Atlanta

Atlanta’s multifamily market has been reaping the benefits of the city’s growing tech and logistics hubs. In July, the metro’s unemployment rate dipped under 4 percent, hitting 3.2 percent. The market has been outperforming the national average unemployment rate, holding the lowest rate among the metros on our list.

In September, the city had 21,160 units under construction. With 10,275 units already delivered this year, 2021 completions are forecast to substantially surpass last year’s total of 6,788 units. Since January, developers have broken ground on more than 2,800 units across 11 properties.

New City Properties’ $1 billion redevelopment of a former Georgia Power property is the largest multifamily project under construction in the metro. Dubbed 760 Ralph, the mixed-use development is slated to encompass 1,100 residential units, a 75-key hotel, as well as office and retail space.

7. Miami

In early fall, the metro had 21,378 units in the works, with 4,485 units delivered since the beginning of the year. By comparison, a total of 4,271 units came online in 2020. Occupancy has also been strong, averaging 96.5 percent and exceeding the national average of 95.9 percent.

The metro’s post-pandemic rebound is one of the fastest among gateway markets, with South Florida attracting companies and workforce to the Sunshine State. Miami’s unemployment rate peaked in July last year when it reached 15.2 percent. A year later, the rate dipped to 6.5 percent, according to BLS data.

The Magic City’s allure has been fueled, among other factors, by the Miami Downtown Development Authority’s ‘Follow the Sun’ initiative, providing economic incentives to eligible businesses creating jobs that pay a minimum salary of $68,000 per year.

In late August, Royal Palm Cos. broke ground on its 55-story, $500 million Legacy Tower, the first major construction start at Miami Worldcenter since the onset of the pandemic.

6. Orlando

Orlando’s recovery has been quicker than expected, bolstered by positive migration trends. Developers completed 4,135 units in 2020 and 6,519 units delivered during the current year so far, while 35 projects totaling nearly 9,500 units broke ground between January and August.

The metro’s occupancy rate not only returned to pre-pandemic levels but topped 2019 rates, reaching 96.1 in August.

In May 2020, due to the city’s tourism-centered economy, the unemployment rate hit 22.6 percent but has been steadily dropping since February. The leisure and hospitality sector gained 36,600 employees during 2021, with an estimated 205,800 people working within the sector in August.

5. Los Angeles

In September, the metro had 28,479 units under construction, with 7,388 units already delivered in 2021. The overall occupancy rate, which stood at 94.4 percent in August 2020—the lowest figure since at least 2012—has risen to reach 95.6 in July.

In May last year, the unemployment rate in L.A. climbed to a peak of 18.8 percent but has continued to decrease since then, hitting 10.2 percent in July—still almost double the national average of 5.4 percent.

Ferrante, a 1,150-unit community in Westlake North and the largest residential project by the number of units underway in the metro, is nearing completion. GH Palmer Associates is the developer of the luxury property that received $335 million in construction financing from Goldman Sachs in 2018.

4. Houston

In September, more than 28,840 units were taking shape in Houston. After facing several hits over the past decade, Houston’s multifamily market is faring better than expected.

In September, an anticipated high-speed railway project connecting Houston and Dallas received federal approval. With construction expected to commence next year, the project will bring much-needed jobs to the area. During the pandemic, the city lost 175,000 jobs, mainly in the construction and tourism sectors.

Unemployment in the metro fell to 6.1 percent in August—a big leap from last year’s peak of 14 percent reached in April—but still above the national average of 5.2 percent. Houston holds the lowest occupancy rate among the markets listed here, reaching 93.1 percent in September. So far, 11,700 units were completed in 2021, already significantly exceeding last year’s total figure of 8,703 units.

3. Phoenix

Home to one of the most robust multifamily markets in the country and a diverse economy, Phoenix was in a stable position to withstand the pandemic-generated difficulties. The occupancy rate was the highest among the markets listed here, hitting 96.5 percent. The metro’s unemployment rate decreased to 5.7 percent in July, slipping from the 13.5 percent peak reached in April 2020.

As of September, the metro had 34,460 units in the works, while 7,384 units have already been delivered this year. From January through September, roughly 15,060 units broke ground across 63 properties. Los Angeles-based Banyan Residential’s 651-unit Banyan North Tempe is the largest development to have broken ground so far this year.

2. Austin

Austin’s allure has been less affected by the global health crisis, with strong positive migration trends and company relocations strengthening demand. Tesla’s recent announcement regarding its headquarters relocation from California to the Texas capital further asserts the metro’s strength.

In September, nearly 38,500 units were under construction, while occupancy averaged at 94.6 percent. Last year, the metro saw the completion of 8,031 units, while more than 6,800 new units were delivered in 2021 so far and nearly 14,000 units broke ground.

Austin’s unemployment rate has been declining since its pandemic-induced peak back in April 2020, when it reached 11.8 percent.

1. Dallas-Fort Worth

The Metroplex’s multifamily market maintains a strong position despite turbulences caused by the health crisis. In September, 49,347 units were taking shape in Dallas-Fort Worth, with occupancy rates back to 2019 levels since February and reaching 95.1 percent in August.

Since the beginning of 2021, a total of nearly 15,000 apartments broke ground, while between January and September, 14,397 units came online. Last year, a total of 15,672 units were delivered.

Following the loss of nearly 100,000 jobs in a year starting March 2020, the unemployment rate has bounced back to reach nearly pre-pandemic levels, hitting 4.7 percent in September, according to preliminary BLS data. In April 2020, the unemployment rate reached record highs at 12.5 percent.

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