Semi-urban metropolitan areas are gaining traction in the multifamily sector after a decade of major forces re-shaping the market, including the urban renaissance of the early 2010s, the workforce housing push of the late 2010s and the post-pandemic reshuffling of geographic demand. With room for new construction and a cost structure that remains more favorable than dense downtowns, semi-urban multifamily has emerged as one of the sector’s primary growth engines, according to a Chandan analysis of the multifamily market. The Census Bureau’s American Community Survey defines three types of metro areas: central cities, non-central cities and mixed. Chandan defines these mixed areas, which blur the line between city cores and suburbs, as semi-urban.
Demand has spilled into transitional neighborhoods as affordability pressures in major cities rose throughout the late 2010s, according to the report. The pandemic accelerated this trend as remote work and shifting lifestyle preferences made semi-urban living more appealing to both renters and developers.
High-rise downtown apartments account for 32.4% of multifamily households, while true suburban accounts for 24.2% of the sector. In the gray area between these two markets is the largest share of multifamily demand, with 43.4% of the market, or 8.7 million households. That's almost two million more than the 6.5 million multifamily households that live in central cities and 4.8 million that live in suburban markets.
Over the past decade, the number of semi-urban multifamily households increased by 25.5%, followed by central city, which rose 23.7%, and suburban, which grew by a more modest 15%, Chandan said. All three categories outpaced U.S. household growth over the same period by 13.5%.
“The dominance of semi-urban multifamily over the past decade is no accident,” said Chandan. “These areas often offer the best of both worlds — urban amenities, paired with lower land costs and more space compared to the urban core.”
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