Southern Cities Top CONTI Capital's Multifamily Investment Index

The Dallas-Fort Worth metro tops CONTI Capital’s list of the best US cities for multifamily investment, as the region outperforms in job growth, total employment (and office-using employment) and labor force participation.

The metrics “speak to the structural strength of the DFW economy and its long-term development trajectory,” CONTI Capital analysts say — and they also are a testament to the market’s diversification and resilience, which “is not overly exposed to any one industry.” In addition, DFW has been the single best market for total population growth over the last decade.  The amount of people living in the market increased by about 122,000 per year.

“While we expect the pace of corporate and individual in-migration to moderate somewhat over the next few years, the organic growth of companies and the local population will be sufficient to drive DFW multifamily to new heights,” CONTI Capital predicts.

Atlanta follows behind at #2, with its multifamily strength lying in demographics: the city has one of the highest proportions of “prime renters” within the 50 major metros the firm measures. Austin comes in at #3, despite lingering concerns about tech layoffs, thanks to long-term demand drivers including a structural shift in the city’s economy to high-tech manufacturing and research and development jobs.

“While we expect an increase in unemployment in Austin over the next year as the U.S. economy continues to slow, Austin has a uniquely resilient labor force thanks to the concentration of government employment tied to the state capital and the University of Texas,” the analysis Staes.  ”Furthermore, UT Austin contributes to the population of young adults with high educational attainment living in the metro. This is why we are particularly bullish on demand for Class A multifamily in Austin.”

Charlotte’s burgeoning fintech sector helps the city slide into the #4 spot, with the third highest rank across CONTI’s multiple measures of net migration. A significant share of that net migration is also within the firm’s target “prime renter” age cohort. Orlando takes the #5 slot, thanks to a high quality of life and thriving tourism, hospitality, professional services, healthcare, technology and aerospace/defense industries.

“Orlando is one of our top markets for momentum in office-using job growth,” the report notes. “As we look to market-level performance for our typical hold period, we are particularly attentive to these momentum measures as they indicate the extent to which markets will outperform their own historical norm. In our view, a market characterized by high growth in leisure-related and office-using employment categories is ideal for investments in both the Class A and Class B segments of the multifamily market.”

Orlando is followed on the rankings by Tampa, which also measures high for quality of life, net migration, and its ultra-low unemployment rate of 2.6% as of November 2022. Houston is #7, with CONTI analysis calling it an “underrated multifamily market, too easily dismissed for its dependence on the notoriously volatile oil and gas industry.”  Houston has diversified  the most across the top 50 markets CONTI track over the past 5 and 10 years, with “robust growth” in sectors like technology and health care, and also clocks in as the firm’s second-best market for household formation in its top 50 markets, behind New York City.

With the highest Labor Market Durability score of all the markets CONTI tracks, Nashville comes in at #8, with a high rate of participation in the labor market, an industrial mix conducive to apartment demand and resilience during national economic downturns. It’s followed by Raleigh-Durham at #9 and Phoenix, “the single best market” for overall employment, in CONTI’s rankings.