5 Surging Multifamily Submarkets Near America’s Job Growth Hubs

December 19, 2019

5 Surging Multifamily Submarkets Near America’s Job Growth Hubs

December 19, 2019

Job growth and commercial expansion are strong indicators that demand for multifamily housing will soon follow. With these metrics in mind, we dug into Berkadia’s soon-to-be-released 2020 Multifamily Forecast Report. Our goal? To pinpoint submarkets where strong hiring and economic development will continue to make apartment construction attractive and viable heading into the new year.

Here are five submarkets in America’s job growth hotspots that we expect to be uniquely attractive for multifamily development over the next twelve months:

East Austin (Austin, TX)

Austin employers are expected to bring on an additional 25,000 new hires in 2020.

  • 1,273 Units Scheduled for 2020

The presence of a massive millennial cohort will continue to drive apartment development in the East Austin submarket. So will the currently under-construction 133-acre Apple corporate campus that is expected to initially support close to 5,000 employees. The massive 314-acre Velocity Crossing mixed-use project, located near the Austin-Bergstrom International Airport, is another major driver of the widespread development underway in the submarket.

UNC Charlotte (Charlotte, NC)

Effective rent will increase 2.5% by the end of 2020 as Charlotte residents absorb over 4,000 apartment units.

  • 1,089 Units Scheduled for 2020

The recently completed light rail extension has been a major boon for development in the UNC Charlotte submarket. Developers have followed up with a $82 million project that will connect the light rail stop to a 24,000-square-foot convention center and add a new Marriott hotel. Also, under construction in the submarket is a long list of large-scale multifamily developments, including the 309-unit Bainbridge Research Park.

Katy (Houston, TX)

Over 50,000 new hires are expected to join the Houston workforce in 2020.

  • 2,523 Units Scheduled for 2020

Apartment construction in the Houston metro is expected to continue favoring neighborhoods near major trade and transportation routes. This benefits the Katy submarket, which overlaps the intersection of the Interstate 10 and Grand Parkway. With over 6 million square feet in warehouse transactions taking place in the Katy submarket over the past two years, the submarket has begun evolving into a development hub in its own right. Fittingly, two separate industrial parks are scheduled to be completed or break ground in the Katy submarket as early as the first quarter of 2020.

South Orange County (Orlando, FL)

Population and job growth will encourage Orlando apartment operators to raise effective rent 2.6% in 2020.

  • 1,342 Units Scheduled for 2020

New apartment developments, including the 344-unit The Addison at Universal Boulevard, are expected to be completed in the South Orange County submarket in 2020. The supply has been buoyed by ongoing growth near the area’s world-famous theme parks and the Orlando International Airport. Case in point: the area’s first Cambria hotel is already under construction in the submarket, less than two miles away from one of the most frequented airports in the world.

Capitol Hill / Central District (Seattle, WA)

Seattle residents will absorb nearly 8,500 units in 2020 as effective rent ramps up over the previous year.

  • 2,005 Units Scheduled for 2020

There’s no doubt that much of the apartment demand in the Capitol Hill/Central District is being driven by hiring at Microsoft and Amazon.com Inc. The companies expect to add space for over 28,000 new workers to the metro by the end of 2024 alone. In addition to driving demand for Class A development, the surge in population and hiring supports a wide range of opportunities, including for renters in service industries. Seattle recently approved over $100 million to invest in affordable housing in the submarket. The upcoming Capitol Hill Station development will deliver a mix of market-rate and affordable housing to the submarket as well as a new grocery store in early 2020.

  • We here at Berkadia ended the year on a high note by putting the final touches on our comprehensive Forecast 2020 report. We’re excited to share our extensive research on upcoming multifamily trends across the country. The report can be found here.