The Top 10 Multi-Family Markets
- Jun 10, 2015
Several markets in the United States recorded outsize multi-family completions during the past year with West Houston and Denver leading with the highest number of units finished, according to a survey by Yardi Matrix.
West Houston saw 22,087 units completed in the past 12 months while Denver had 15,695 completed, according to the survey. Austin followed with 12,826; Washington, D.C., with 12,150; Seattle with 11,202; North Dallas with 10,435; the Carolina Triangle in North Carolina with 9,763; Northern Virginia with 9,072; Urban Atlanta with 8,516 and Charlotte with 8,473.
Steve Sorensen, associate director of analytics for Yardi Matrix, which is part of Yardi’s Pierce-Eislen unit, said a clearer picture of the impact of the new construction emerges when comparing rental trends with the top supply markets using the most recent 12 months of Topline rents. Topline is another Pierce-Eislen unit report that surveys monthly rents and rental promotions. Yardi Matrix and Pierce-Eislen are both part of Santa Barbara-based Yardi, which is the parent company of Commercial Property Executive.
Sorensen noted that Denver and Seattle both continue to see very strong rental increases of 9.7 percent and 7.2 percent respectively. Those markets, along with Urban Atlanta and North Dallas, are positioned very well to absorb additional supply. Urban Atlanta had rental increases of 6.8 percent during the 12-month period while North Dallas had 6.0 percent rental increases.
Washington, D.C., and Northern Virginia have both been considered overbuilt for some time now and Sorensen said that is supported by the below trend increases of 1.6 percent and 1.4 percent respectively for rent increases.
In North Carolina, the Carolina Triangle and Charlotte markets are showing strong returns with rent growth of 4.6 percent and 4.5 percent respectively even with a significant number of new properties completed.
Sorensen said West Houston has nearly 30,000 units under construction now and Austin has about 17,000 being built. But the most recent rental rate increases of 3.9 percent for West Houston and 3.3 percent may be signaling an end to the development boom in both markets, according to the Yardi Matrix report.
With the oil prices collapsing in recent months, Houston’s commercial real estate markets are beginning to suffer. An executive at a Texas tenant representation and development company noted in a recent CPE magazine story that dozens of multi-family projects have been put on hold.
“Certainly if oil prices tank for an extended period, Houston will suffer,” Sorensen told CPE. “It does not appear that rent growth has slowed since oil prices fell, but that could also be more directly related to the 22,078 units completed in the market this past twelve-month period.”