5 Top MF Markets That Have Increased Activity

For more information on multifamily news, join us at RealShare APARTMENTS in Los Angeles, CA from October 29-30, 2018. This event attracts more than 1,000 of the industry’s top owners, investors, developers, brokers and financiers as they gather for THE MULTIFAMILY EVENT OF THE YEAR! This conference is powered by GlobeSt.com, the go-to-source for multifamily news and analysis. To register for RealShare APARTMENTS visit here. 

The question of the day for multifamily investors has been when will fundamentals start to turn. And indeed, there are signs here and there of caution. For example, 2018 building permits issued for multifamily housing have fallen for the past five months.

But for the most part, fundamentals are strong for this asset class. That drop in building permits this year? Even with that decline, the year-to-date permit volume as of August 2018 is 1.8% ahead for the same period in 2017.

Now here is another positive to note: In the first half of 2018, five of the top 10 markets for commercial and multifamily construction starts showed increased activity compared to the same period last year.

Top Markets With Growth

Leading the pack is New York City, where Brooklyn is outpacing Manhattan for the highest dollar volume. The city’s multifamily market as a whole enjoyed a strong first half, yet a gradual softening of the market there—along with rising interest rates and property taxes—means we’re seeing more assets up for sale.

Next in line is Washington D.C., home to high-wage industries, healthy job growth, and a thriving tech sector, which all support an optimistic outlook for multifamily.

Miami, Boston and Seattle round out the top five markets for construction starts. The South Florida market is trending toward apartments after years of condo building, with some conversions taking place to satisfy demand.

Boston beat out Seattle even though a study showed nearly two-thirds of its residents oppose multifamily project housing. In Seattle, projects are getting bigger due to the cost of land.

Although Houston did not make the list, it’s worth noting that multifamily there is rebounding one year after Hurricane Harvey as a strong asset class for investors. Investors also remain bullish on the hot Dallas-Fort Worth multifamily market due to a strong economy, growing population and corporate relocations.

But these cities are not the only ones attracting investors. Smart multifamily investors are carefully evaluating all multifamily market drivers along with local, regional and national economic indicators as we proceed into 2019.

Chris Roach is CEO of BBG.