In this article, we’re going to reveal the best Cities for Multifamily Investing! Make sure you read the article to the end!
2022 was a great year for Multifamily Investing — and the first half of 2023 hasn’t been too bad, either. Though some are concerned about an increased supply of properties on the market, as well as potential increases in interest rates, now is still an incredible time to purchase a multifamily property. To help give you some ideas about where you might like to invest, we’ve listed some of the best markets in the U.S. to invest in apartment buildings in 2019 and beyond.
1. Minneapolis – St. Paul
Employment Growth: 1.5%
Construction: 4,900- 6,700 units (reports differ)
Rent: +5.7%
Vacancy: -0.50%
Minneapolis-St. Paul is widely regarded as one of the best multifamily markets in the country and for good reason.
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Unemployment is at an all-time low of 2.8% (and falling), while the labor force in the area has grown by nearly 5% in recent years.
Indeed, over the last five years, the area has added a staggering 130,000 jobs, attracting workforce talent from throughout Minnesota as well as neighboring states such as Illinois.
In addition, over the last four years, approximately 42,200 new households have entered the market, with another 17,500 expected to form in 2023.
This population influx, combined with rising housing prices, should keep rental demand high in both urban and suburban markets.
2. San Diego, CA
Employment Growth: 1.5%
Construction: 3,220 units
Rent: +5.7%
Vacancy: +0.10%
Southern California is one of the hottest multifamily and commercial real estate markets in the country, but not all areas are suitable for investors, particularly those who are new to the market.
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San Diego, fortunately, offers viable options for both first-time and experienced apartment buyers. More than 20,000 jobs were added to the San Diego market between March 2022 and March 2023.
While unemployment rose slightly during that time, it remains well below long-term area averages. Furthermore, overall employment is expected to grow by 1.6% through 2023, so the area’s slight increase in unemployment shouldn’t be too concerning.
Due to the aforementioned employment factors as well as the high cost of single-family homes in the area, there is still a high demand for rental housing.
3. Orlando, FL
Employment Growth: 4.9%
Construction: 6,200 units
Rent: +7.8%
Vacancy: +0.60%
Tourism has been a major pillar of the Orlando economy since Disney World opened in the 1970s, and the industry appears to be growing. In fact, a record 75 million people visited Orlando in 2022, which helped the area add more than 50,000 jobs that year.
Orlando’s job market, like its tourism sector, is expected to grow at a healthy rate of 1.6% per year through 2022 (compared to 0.6% growth in the United States as a whole).
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There are currently 12,400 units under construction in Orlando, but demand is expected to remain strong for several years.
4. Knoxville, TN
Employment Growth: 2.1%
Construction: 1,100 units
Rent: +4.0%
Vacancy: -0.60%
Knoxville, Tennessee may not be the most visually appealing real estate market on this list, but it can still offer a diverse range of opportunities for multifamily investors.
Knoxville, the state’s third-largest city, is home to the headquarters of numerous regional and national corporations, as well as the University of Tennessee.
Construction activity in the Knoxville area is slow, but demand for quality housing remains high, with a 96.6% apartment occupancy rate.
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While employment growth has been slow, a new automotive parts plant and a planned airport expansion should help the local job market in the next 24 to 36 months.
5. Tampa- St. Petersburg, FL
Employment Growth: 2.3%
Construction: 3,500 units
Rent: +7.3%
Vacancy: -0.60%
The Tampa-St. Petersburg area, like Orlando, has one of Florida’s fastest-growing economies, adding approximately 10,300 jobs between February 2022 and February 2023.
According to economic estimates, this trend of job growth is likely to continue, especially since several major corporations have recently relocated their headquarters to the area. Aside from the influx of corporate activity,
Tampa’s hospitality and tourism markets remain strong, with nearly 6,000 jobs added in the last year. And, while a significant number of units will be added to the market in 2023, demand remains high, with rents expected to rise by 3.3% by the end of the year.
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6. Phoenix, AZ
Employment Growth: 3.8%
Construction: 10,600 units
Rent: +6.2%
Vacancy: +0.20%
The Phoenix area is another of the nation’s hottest multifamily markets, with over 60,000 jobs added between Q1 2018 and Q1 2023.
While unemployment rose slightly during the same time period, the large increase in employment has kept local housing demand strong.
In fact, nearly 3,000 units were absorbed in 2019, lowering the vacancy rate to 4.7%. Rent growth in Phoenix has also been strong, increasing 8.1% in the last year, with asking rents increased by as much as 10.4% in some submarkets.
This is all good news for multifamily investors looking to buy an apartment building (or buildings) in the area.
Wrapping Up
The above cities are the best Cities for Multifamily Investing from 2022 to 2023. If you have any questions, you are free to message us. We’re looking forward to hearing back from you. Thank you for your time.
