New markets lead in growth
What multifamily construction markets are experiencing a true housing boom? Multifamily developers, investors, and managers want to know. The answer lies in the key indicators like net effective rents, occupancy rates, leased percentage, and concessions. In this blog post we explore why these markets are booming from the perspective of key progress indicators and national housing trends.
As the pandemic continues to fuel uncertainty in some traditionally strong markets, the renter trend from urban to suburban has pushed new metros into the spotlight. While they may have been experiencing growth pre-pandemic, each of the markets below have set new personal highs in various key indicators. The article provides thorough multifamily construction insights for the interested reader.
Demand indicators for multifamily housing in the Phoenix area increased significantly over the last year compared to national averages. Occupancy rates are now 96.5%, and rents continue to increase steadily with low concessions, significantly outperforming the national average. Net effective rents are up 22.5% from January to August, making Phoenix one of the fastest growing metros in the nation. Three bedrooms specifically are up 25.7% and are the top performing floor plan in the metro currently.
Dallas has seen occupancy and leased rates grow 2.5% and 2.8%, both of which are significantly higher than national averages for the same metrics. Net effective rents are up 14.4% from January to August and show signs that they will continue to climb, even if the growth is not as rapid. Studios are the top performing floor plan in the metro with rates up 16.3%.
Occupancy and leased rates in Miami have outperformed national averages by nearly half a percent. Like Phoenix, Miami is one of the fastest growers in the nation and has seen net effective rent growth of 22.5%, with an average NEW of $2,272. Similar to Dallas, studio floor plans have grown the fastest, and are up 26.1% from January to August.
Denver’s leased rate has leapt 3% from the beginning of the year and is one of the fastest growing markets in the nation by this metric. Net effective rents are up 17.9% with a new average of $1,841, with one bedrooms leading the market with a total increase of 18.1% from January to August.
More opportunities as demand increases
Data shows that the multifamily market is growing fast in many areas in the U.S., including Phoenix, Dallas, Miami, and Denver. These cities have experienced new highs in occupancy rates, net effective rents, while maintaining low concessions. This healthy performance indicates that there are several opportunities to look out for in these markets and in multifamily real estate in general. While there might be uncertainty in other real estate markets, this is certainly not the case in multifamily.
The increased demand for multifamily in these rising real estate markets presents investors and developers with continued opportunities. Analysts should monitor the markets listed above for data-driven insights on growth opportunities. Now, more than ever, multifamily organizations have a golden chance to expand their presence and gain an early advantage over competitors in emerging markets.