Job Growth in 2016: Leading and Lagging Markets
Job growth is one of the most important factors to consider when deciding where to invest in multifamily properties. After all, a property owner will only be as successful as his or her tenants. The good news is that all major metros are expected see positive employment growth in 2016, according to Fannie Mae’s January 2016 Multifamily Market Commentary.
In fact, the numbers (which come from Moody’s Analytics) forecast a national employment growth rate of 1.9%. Three markets — Phoenix, Orlando and Las Vegas — are predicted to see a growth rate above 3%. The markets with the highest and lowest expected employment growth are outlined below.
The research issues a bit of caution regarding Houston. While the city is projected to see sub-1% employment growth, there are still nearly 20,000 apartment units under construction. This could lead to “diminished rent growth, particularly in certain submarkets, over the next 12 to 24 months,” according to Fannie Mae.
January’s market commentary also examines forecasts for multifamily supply and demand. Unit deliveries have been ramping up since 2012, and are expected to peak in 2016, according to CoStar data. This could lead to increased vacancy overtime. Fannie Mae’s own research team expects vacancy rates to rise to 5.25% during the first half of 2016, though they could potentially reach 5.5% by year end.