PALM SPRINGS, CA—From the Northeast to the West, panelists at NMHC's Apartment Strategies Outlook Conference here last week gave an overview of where the hot spots are and where rent growth is cooling for apartments. During the panel “The Markets: A Full Sweep,” moderator Jay Lybik, VP of market research for Equity Residential, said he expects continued demand for apartments in 2015 because national vacancy has been at or below 5.8% since 2012.

Lybik added that with Millennials' shift toward delaying marriage and away from homeownership, the multifamily sector has great fundamentals. “Boomerang kids living home” after college are moving out as the economy has picked up, and they're moving into apartments. “The 24-to-25 age cohort is the largest in the Millennial generation, and this is the prime age for starting households.”

Nationally, supply is not a problem for multifamily, Lybik said. “Oversupply is not happening since permitting numbers are half of what they were in the '80s.”

The panelists broke down the country into five regions and spoke about the strength of multifamily in each region. In the West, G. Ronald Witten, president of Witten Advisors LLC, said the San Francisco Bay area is strong because of its high-wage industries, with the East Bay leading the way and San Jose active in construction. The Pacific Northwest has “a lot of supply coming; we anticipate 3.5% to 4% rent growth, and the Inland Empire is making a comeback due to employment growth. San Diego is a sleeper, with many jobs in the high-wage category.”

Nicholas Buss, director of research for INVESCO Real Estate, said the West continues to perform well and even “outperformed our expectations.” His firm is attracted to the Bay Area and the Northwest due to wage growth, he concurred. “Southern California is catching up, with job growth in San Diego and Orange counties and growth in the creative industry surrounding West L.A.” Jay Denton, VP, research, for Axiometrics Inc., said most areas of the West will lead the country in terms of rent growth and that L.A. will see the same strong rent growth in 2015 it saw in 2014.

Moving on to the Southwest, Lybik asked if plummeting oil prices will have an impact on the region. Witten said, “Generally, lower oil prices are good for most of the country, unless you're in an area where jobs are involved in oil and gas extraction. Denver and Dallas benefit from lower oil prices, but in Houston there has been a big slowdown. Phoenix is the last market to recover.”

Denton said even after oil prices started to slip, the Southwest continued to perform. “There's more stress in Austin, growth in Houston rent and the Phoenix suburbs. The urban cores are being tested in Texas. Atlanta and Vegas are later in the recovery.”

Buss said Texas has been strong on the demand side, but he's “more cautious on Houston” than the other panelists. He likes Austin, but is still cautious on the supply side. There's a lot of energy leasing in Downtown Denver, which could impact Union Station development. As for what will happen with oil and gas prices, he compared it to interest-rate prediction, which is fairly impossible.

Regarding the Midwest, Witten said there are a lot of “good stories here,” from Detroit, which is back in the auto business and has no new supply, to Indianapolis and Columbus, which are seeing some construction. “Metro Chicago is the outlier. 'Everything in moderation' applies to Chicago—the fundamentals apply, and it's steadily improving.”

Buss said that Chicago is “head and shoulders above the rest in liquidity for the Midwest.” His firm is focused on Chicago and Minneapolis, where job growth has been notably above Chicago.

Denton said rent growth has been steady in the Midwest, with supply nearing the CBD delivering few properties. In other markets, no properties have been delivered. “Once supply delivers, the urban cores will bounce back the way Chicago and the Gold Coast did.”

In the Southeast, Charlotte, NC; and Nashville are the early leaders, said Witten, so they should lag the other Southeast markets in 2015. Raleigh, NC, felt the weight of supply and Atlanta is the laggard but also the top performer now and throughout 2015. South Florida is solid, even with a big pipeline, and Central Florida is steady along with Tampa and Orlando. “2015 is another good year for the Southeast, with 3% to 4% rent growth expected, except in Nashville.”

Denton expects to see strong growth for class-A space in the Southeast, with the “best sites going condo. Atlanta will remain strong for the next few years.”

On the East Coast, 2015 should be a better year for Boston and New York, but not as good for Washington, DC, and the Mid-Atlantic, said Witten. Buss said there's great interest in the Northeast, with high demand and low cap rates. “There's a lot of interest in DC, it seems, but not as many builds getting done.” Meanwhile, “Brooklyn, Queens and Jersey City are where people want to live.”

Denton said rent growth has been weak on the East Coast, but some submarkets are strong and will continue to be for 2015. The Whole Mid-Atlantic and Northeast region is difficult to qualify because results differ among markets. “In DC south and west, supply is outpacing demand, but there are some strong pockets—it's very submarket specific.” In Boston, the north is stronger than the south, while the Philadelphia, New York, New Jersey and Connecticut area is market specific.

When Lybik asked the panelists which market is stellar or concerning for 2015, Witten said, “Houston is the most interesting because of the oil industry.” Denton agreed, adding that he is more bullish on L.A., Atlanta and Orlando. Buss said, “Wage growth may come in and surprise us in all markets,” while Lybik predicted that Southern California will have a fantastic 2015.

Denton summed up: “The apartment industry should remain strong for the next five years,” while Lybik said, “Global instability helps keep demand for apartments higher.”