Why the Southeast Remains the Star of Multifamily
First Communities’ Pauline Houchins reveals the hottest areas of the fast-growing region.
The perfect climate, a lower cost of living, tax breaks and some of the highest-paying jobs—the Southeast has got them all. No wonder so many people have been relocating to this region, even before the health crisis. The move continues to fuel a surge in multifamily demand across several established metros, but smaller cities are also performing well.
Pauline Houchins, executive vice president at First Communities—a management company with a solid footprint across the Sun Belt—has seen the rise of southeastern cities firsthand. She’s been in the industry for almost 25 years and currently oversees $1 billion in multifamily assets. Multi-Housing News asked her to pinpoint the areas that have attracted most residents in the past few years and explain what continues to entice new residents to these cities.
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The Southeast has been something of a Mecca for people fleeing large, densely populated coastal metros. In the past 18 months, what metros were the most sought-after and why?
Houchins: COVID-19 changed the work model for many, and more employers than ever are allowing a truly remote workforce. As people came out of lockdown, individuals were drawn to areas that provided outdoor accessibility—lakes, beaches, mountains—to escape the feeling of confinement. As a result, we are seeing demand and population increases in South Carolina, North Carolina and Florida in areas that provide access to these features.
While you can attribute part of the South’s growth to the pandemic, it’s important to note that the South’s growth started well before the pandemic. The South remains the country’s fastest-growing region, continuing a shift in the nation’s political gravity to southern states. The 13 southern states have grown 10.5 percent since 2010, accounting for nearly half of the country’s overall population increase.
Besides accessibility and climate, what else is attracting people to the Carolinas and how is that impacting the area’s multifamily market?
Houchins: Nearly 361,000 people moved to North Carolina in 2019, according to the U.S. Census Bureau. Part of this growth can be attributed to additional tech companies entering the market, making it attractive for the 25–35-year-old demographic. With the delays in household formation among that age group, we are seeing longer-term renters in major metros in the Carolinas and that, combined with the overall population growth, has led to a surge in demand.
Another preferred destination is Texas. Please tell us what makes the state’s main cities so desirable.
Houchins: Major metros in Texas provide a lower cost of living compared to West Coast tech hubs and significant tax breaks that make the region appealing to multiple demographics.
The move from high-tax states such as New York and New Jersey to Florida is also notorious. How have you perceived this trend?
Houchins: We have seen an influx of residents moving from the Northeast to our Florida region, and while many attribute it to tax breaks, the cost of living plays a role. Residents often tell us that their money goes further than what they are accustomed to seeing up north.
People working from home have been among the first to consider relocating to more affordable, warmer or less dense areas across the Southeast. Would you say the Southeast is a haven for remote workers?
Houchins: Our Texas and Florida communities have benefited significantly from the relocation of remote workers and are experiencing higher occupancy trends and increased rental rates due to the influx of residents entering the southern markets.
We’ve received consistent feedback from new residents in these markets that their quality of life is improved as they appreciate the size of the units available in the Southeast.
Besides the more prominent metros, are there any smaller ones that are in high demand?
Houchins: Greenville, S.C., is a great example of a smaller town that is in high demand, and should be included on a list with Chattanooga and Murfreesboro, Tenn., and Savannah, Ga. What these cities all have in common is a lower cost of living than what you see in the more prominent metro cities such as Atlanta. That southern charm of a smaller town is also appealing to residents.
As vaccination rates increase across coastal metros, do you expect the trend to reverse? Will those who have experienced living in the Southeast want to go back to large coastal cities?
Houchins: I think COVID-19 has redefined how and where we choose to spend our time. Markets are cyclical and so are the trends that we see in rental and housing markets. Rates will be the driver on where people are able to live, and their employer requirements will dictate when they need to make that change.
What will be the hardest for a multifamily property manager going forward? What challenges should they expect to face in 2022?
Houchins: I think multifamily managers will face challenges when the market changes. Although our teams have experienced hardships during COVID-19, they’ve learned to adapt in different work environments, and the high occupancies and demand made things manageable. As the market changes, our managers will have to adapt yet again to working in a far more competitive market.