Research Report Category: Top Markets for Large Multifamily Investment

Top Markets for Large Multifamily investment Report 2023

Top Markets for Large Multifamily Investment Report 2023

Table of Contents

Overview | The Opportunity Matrix | Top Ranked Markets | Large Multifamily Investment | Supply and Demand Equilibrium | Rental Affordability | Climate Risk and Readiness | Market Spotlight: Orlando | Outlook | Appendix

Overview

In 2023, investors need a sharp eye to pinpoint the top multifamily real estate opportunities. With elevated interest rates and volatility becoming the new normal, the risk vs. opportunity assessments of individual markets have shifted as domestic migration and insurance market corrections have changed the calculus.

The Arbor Realty Trust-Chandan Economics Large Multifamily Opportunity Matrix analyzed the top 50 U.S. metros for real estate investment to identify those markets most prime for apartment sector growth in 2023. Rising to the top this year were Orlando, Austin, and Charlotte, three attractive Sun Belt markets ripe with opportunity.

Methodology

This report presents an analytical framework to develop a cross-market comparison for opportunistic multifamily investments. For the purposes of this analysis, “large multifamily” is considered to be assets containing 50 or more units with a combined valuation exceeding $20 million.

The top 50 U.S. metros1 are ranked using the Arbor-Chandan Large Multifamily Opportunity Matrix based on a weighted average of performance metrics. The Opportunity Matrix pays specific attention to how well metro-level economies have maintained strength over the past year and how they are positioned to handle shifting market conditions in 2024 and beyond.

 

1 The top 50 metros are based on population estimates. All metros are reported at the Metropolitan Statical Area (MSA) level.

Key Findings

  • Orlando is 2023’s most desirable metropolitan market for large multifamily investment due to its robust population growth, a rapidly growing financial services sector, and low risk of natural hazards.
  • The biggest cities in the U.S., including New York, Los Angeles, San Francisco, and Chicago, have become less attractive to multifamily investors as these metros become less affordable and more renters move elsewhere.
  • Austin ranked second out of 50 as it continues attracting new residents and has the highest percentage of renters under 35 of all metros on the list.

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The Opportunity Matrix

The Opportunity Matrix measures eight key categories, each described in more detail on the next section.

  1. Large Multifamily Investment: measured as a proxy for debt financing availability, overall liquidity, and a market’s ability to support additional multifamily investment. Multifamily loans (both acquisitions and refinancings) with original balances above $15 million are included for analysis.
  2. Labor Market: topline profile of key labor market performance indicators, including market size and growth, unemployment rate, change in the unemployment rate over the past year, and wage growth.
  3. Population Growth: overall growth of a metro over the short and medium term.
  4. Renter Demographics: spending power and age profile of existing renters (higher household incomes and younger renters assumed as conducive for higher levels of multifamily demand).
  5. Renter Vacancy: measures the current market tightness for all existing
    metro-level rental inventory.
  6. Supply and Demand Equilibrium: compares aggregate population increases to the volume of new multifamily permitting activity as a proxy for market tightness and ability to absorb new, large-scale multifamily supply.
  7. Affordability: minimum income needed to rent an apartment without
    being rent-burdened, included to capture a market’s attractiveness for
    incoming rental demand.
  8. Climate Risk: measures both risk and readiness, included to account
    for the increasing frequency of natural hazards and the evolving property insurance landscape.

The Opportunity Matrix includes factors a multifamily investor might consider in their market selection process. All eight categories have received equal weighting. In categories with more than one variable, each variable received equal weighting.

Top Ranked Markets

Orlando is 2023’s top ranked market due to its well-rounded fundamentals and impressive labor market performance over the past year (Chart 1). A premier travel destination, this central Florida city performed better than the average metro in a majority of the variables measured in the matrix. For instance, Orlando’s population inflows were impressive. In 2022, the Orlando metropolitan area saw its resident population swell by 2.4% — the second-highest mark in the country. Due in part to its inland location (42 miles from the ocean), Orlando has not only the lowest climate risk score in Florida but one of the lowest in the country.

For a full breakout of the 2023 scores and rankings, see Table 3 in the Appendix at the end of the report.

Now, with the introduction of Brightline, a privately operated high-speed train line, Orlando and Miami are enjoying the benefits of integrating two thriving economies.

Austin, the home of many large tech companies, claims the No. 2 spot in this year’s rankings. With the rental vacancy rate in Austin sitting at 7.3%
(1.6 percentage points above the top 50 median) and rents falling 1.8% year-over-year through July, the capital of Texas is going through a transition phase as it absorbs a deluge of new housing supply. Still, signs of a turnaround are already underway, and Austin’s demand drivers are too strong to ignore. Austin’s 2022 population growth rate reached 2.7%, which was 0.3 percentage points higher than any of the other 50 metros. Further, 50.8% of Austin’s renters are below 35 years of age, leading all other markets.

After ranking 10th in 2022, Charlotte has shot up the board to round out this year’s top 3. North Carolina’s largest city, where households can comfortably rent an apartment with an income of about $75,000, remains more affordable than the top 50 market average of $78,557.
Charlotte features major-city urban amenities in an affordable environment, making it a popular destination for young relocating renters. Charlotte’s population growth rate reached 1.8% in 2022 — the eighth-highest pace of the top 50 metros in the Opportunity Matrix. This southern commercial hub, which has the fifth-highest average rental household income ($95,007), also contains a strong base of higher-income renters.

Large Multifamily Investment

Large multifamily investment across U.S. markets has been anything but uniform. Here, we analyze a pool of loans across the top 50 metros with originations between July 2021 and June 2022 and original balances above $15 million. Lending volumes include loans originated for both investment sales and refinancings. These data are leveraged as a proxy to determine which markets have the most liquidity to support large multifamily investments. Leading the way were Dallas, New York, and Los Angeles, which accounted for 7.1%, 6.9%, and 6.8% of the observed sample, respectively (Chart 2).

Supply and Demand Equilibrium

To analyze the supply and demand equilibrium, we compared metropolitan markets’ 2022 population inflows to the volume of residential permitting activity from July 1, 2022, to June 30, 2023, to determine market tightness and the demand for new housing. For example, a market that is gaining new residents faster than adding new housing supply would theoretically exert upward pressure on pricing.

Applying this logic on the reverse side of the spectrum, markets with population outflows or high levels of new residential construction relative to incoming housing demand could expect softening prices. Tampa, No. 14 on the Opportunity Matrix, ranked first in the supply and demand equilibrium category (Chart 3). Tampa’s population increased by 61,653 people in 2022, while 25,854 housing permits were tracked from the third quarter of 2022 to the second quarter of 2023.

Other top performers in this category were Dallas, San Antonio, Oklahoma City, and Orlando. New York (41st), Los Angeles (46th), and Chicago (50th) — the country’s three largest cities — all rank in the bottom 10 in this category as a result of sizable population outflows in 2022.

Rental Affordability

One of 2023’s most compelling topics, housing affordability, factored heavily in the 2023 Opportunity Matrix. According to an analysis of the U.S. Census Bureau’s 2022 Current Population Survey, a desire for cheaper housing, better/new housing, a more desirable neighborhood, or another housing-centric reason motivated 35.6% of renter-moving decisions last year. Due in part to the adoption of remote work, Americans are less constrained by location than they were pre-pandemic, giving them greater flexibility in their housing choices. As a result, migration has begun accelerating to affordable metros. According to a recent analysis by Freddie Mac, “the pandemic amplified existing urban de-concentration by threefold, from large, expensive metro areas to smaller, more affordable destinations.”

To measure housing affordability in the Opportunity Matrix, we reviewed data from Waller, Weeks, and Johnson Rental Index — a collaborative research series produced by teams at Florida Atlantic University, Florida Gulf Coast University, and the University of Alabama, who calculate the minimum income required in each metro for households not to be considered rent-constrained. Those metros with lower income thresholds for affordability were then rewarded in our matrix since they are more attractive to renters in search of low-cost, high-quality housing options.

Milwaukee leads the country in terms of rental affordability in 2023. With an average monthly rental price of $1,344 through July 2023, households earning $53,760 or more are not considered rent-burdened in Wisconsin’s largest city. Just behind Milwaukee is St. Louis, another powerhouse city in the Midwest, where the rent-burdened threshold is $53,880. Rounding out the top 5 in this category are Buffalo ($54,440), Louisville ($54,640), and Oklahoma City ($54,960). Meanwhile, the threshold is more than twice as high in the coastal cities of New York ($137,800), San Jose ($137,000), and San Diego ($128,200).

Climate Risk and Readiness

A topical inclusion to this year’s opportunity matrix is climate risk and climate risk preparedness. According to a recent analysis by Redfin, migration into disaster-prone areas has accelerated in recent years. With incidences of major storms, extreme heat, and wildfires all on the rise, property owners now need to incorporate the risks into their investment decisions. Moreover, the risk to rental operators extends beyond direct damage from a climate event. Property insurance prices have skyrocketed in coastal markets in Florida, while some major coverage providers have pulled out of California due to wildfire risks. As insurance markets recalibrate to shifting climate risks, rental property owners may face a combination of rising costs and growing risk exposure.

To assess climate risk, we utilized the Federal Emergency Management Agency’s (FEMA) National Risk Index for Natural Hazards (NRI). FEMA describes the NRI as a “tool that shows which communities are most at risk to natural hazards. It includes data about the expected annual losses to individual natural hazards, social vulnerability, and community resilience.” Within our opportunity matrix, we included two composite indices tracked by the FEMA NRI: overall risk and overall readiness.

On the risk front, Miami is the most hazard-prone metro among the top 50, driven primarily by exposure to hurricanes and flooding. Following behind Miami are Chicago, Los Angeles, and Hartford. On the positive end of the spectrum are Oklahoma City, Orlando, and Charlotte — all of which are set away from the coast by at least 40 miles. When it comes to natural hazard readiness, Seattle, Minneapolis, and Raleigh receive the highest ratings among the top 50, while Riverside, Sacramento, and Providence are the least prepared metros for natural hazards.

Market Spotlight: Orlando

Does Orlando have a touch of magic — or just a strong set of economic fundamentals? Perhaps it’s a bit of both.

Driving Orlando up to the top spot in the 2023 Opportunity Matrix is a labor market continuing to grow at an impressive clip, which is, in turn, attracting new residents to Central Florida’s economic epicenter. Through July 2023, Orlando had an unemployment rate of just 2.8% while the number of jobs in the metro is up by 2.9% from the same time last year — the 6th highest mark of all 50 metros. With Orlando businesses hiring and local labor in short supply, firms have been bidding against each other for talent, leading to significant wage growth.

The largest industry in town is, of course, tourism. Orlando is America’s number one travel destination, welcoming 74 million visitors in 2022. Leisure and hospitality jobs have grown by 7.5% year-over-year and account for 20.2% of Orlando’s employment, making it the metro’s dominant sector. While tourism provides a comfortable bedrock of support, Orlando’s accelerating diversification is spurring optimism. Notably, Orlando’s financial sector has gained significant momentum since the start of the pandemic as more firms and households relocate to the area. Through July 2023, the financial services sector has swelled by 14.2% above its pre-pandemic peak.

Placing Orlando on an encouraging growth track is the Brightline — the country’s first high-speed private railway, which began service in September 2023. The Brightline runs from Orlando to Miami and completes its journey in about 3.5 hours — 30 minutes less than the average drive time. Fortress Investment Group, Brightline’s owner, estimates that ridership will stabilize at eight million people annually. This new interconnectivity of Central Florida with the state’s southeast corridor is expected to pump an additional $6.4 billion into Florida’s gross domestic product over the next eight years, Brightline has projected.

It appears that word of Orlando’s economic prowess has become universal, with the population growth rate for the metro reaching 2.4% in 2022 — more than six times higher than the national average. Looking ahead, there are credible reasons to believe that Orlando will maintain the wind in its sails. The Orlando City Government anticipates that the urban population will grow another 46% by 2050. However, the changing dynamics of climate risk may contribute to an even larger population increase. Due to its low natural hazard/climate risk and close proximity to high-risk cities, Orlando is strategically positioned to attract migrating households and businesses.

The present success of the Orlando economy and favorable outlook for its future are strengthening rental housing’s fundamentals. According to data from the U.S. Census Bureau, Orlando’s rental vacancy rate averaged 4.5% in the first quarter of 2023 — placing it 11th among our top 50. Further, it has surpassed all other Florida markets in terms of multifamily sales activity in the past year, according to CoStar, making it ripe for investment into 2024.

Outlook

In 2023, multifamily investors are in uncharted waters. Cap rates have risen and transaction volumes have slumped, a reflection of a challenging interest rate environment. But at the same time, property-level operations have held up remarkably well, and high mortgage costs have strengthened demand for multifamily properties. All else being equal, the U.S. multifamily market is balanced by a favorable combination of headwinds and tailwinds that are likely to remain into 2024.

Looking ahead, natural hazards (and their impact on insurance markets) are beginning to have more influence on the risk/opportunity calculus of multifamily investors. Concurrently, conventional considerations of local economic success and their ability to attract new residents are as relevant as ever, especially with the U.S. population growth rate continuing to sink lower.

On a metro-by-metro basis, competition for residents is poised to escalate in the years ahead, creating new opportunities for large multifamily investment in metropolitan areas.

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Appendix

About Us
Arbor Realty Trust, Inc. (NYSE: ABR) is a nationwide real estate investment trust and direct lender, providing loan origination and servicing for multifamily, single-family rental (SFR) portfolios, and other diverse commercial real estate assets. Headquartered in Uniondale, New York, Arbor manages a multibillion-dollar servicing portfolio, specializing in government-sponsored enterprise products. Arbor is a leading Fannie Mae DUS® lender, Freddie Mac Optigo® Seller/Servicer, and an approved FHA Multifamily Accelerated Processing (MAP) lender. Arbor’s product platform also includes bridge, CMBS, mezzanine, and preferred equity loans. Arbor is rated by Standard and Poor’s and Fitch. In June 2023, Arbor was added to the S&P SmallCap 600® index. Arbor is committed to building on its reputation for service, quality, and customized solutions with an unparalleled dedication to providing our clients excellence over the entire life of a loan.

Disclaimer
All content is provided herein “as is” and neither Arbor Realty Trust, Inc. or Chandan Economics, LLC (“the Companies”) nor their affiliated or related entities, nor any person involved in the creation, production and distribution of the content make any warranties, express or implied. The Companies do not make any representations regarding the reliability, usefulness, completeness, accuracy, currency nor represent that use of any information provided herein would not infringe on other third party rights. The Companies shall not be liable for any direct, indirect or consequential damages to the reader or a third party arising from the use of the information contained herein.

Top Markets for Large Multifamily Investment Report 2022

Top Opportunities in Large Multifamily Investment Report 2022

Table of Contents

Overview | The Opportunity Matrix | Top Ranked Markets | Large Multifamily Lending | Supply/Demand Equilibrium | Work From Home | Mean Home Price Reversion | Market Spotlight: San Antonio | Outlook | Appendix

Overview

In an otherwise uneven economic environment, multifamily real estate and other investment classes adept at absorbing inflationary pressures have outperformed the rest. Within the surging multifamily sector, certain markets shined brightly this year. The 2022 Arbor Realty Trust-Chandan Economics Large Multifamily Opportunity Matrix highlights the top 50 U.S. metros for investment.

 

Methodology

This report presents an analytical framework to develop a cross-market comparison for large multifamily investments. For the purposes of this analysis, “large multifamily” is considered to be assets containing 50 or more units with a valuation exceeding $20 million (note: $15 million original balance was used as a cutoff for large multifamily loans).

The top 50 U.S. metros1 are ranked using the Arbor-Chandan Large Multifamily Opportunity Matrix based on a composite of performance metrics. The Opportunity Matrix pays specific attention to how well metro-level economies have maintained strength over the past year and how markets have been positioned to benefit from continued labor and housing market shifts in 2023 and beyond. Overall, the matrix finds three western markets best suited to build on their strengths in the year ahead: San Antonio, Kansas City, and
Las Vegas.

1 The top 50 metros are based on population estimates. All metros are reported at the Metropolitan Statical Area (MSA) level.

Key Findings

  • Robust population growth and a relatively low level of new development make San Antonio the top target for multifamily investment.
  • Orlando stands out as the nation’s leading WFH importer, boasting a high share of new remote workers, many of them recent arrivals.
  • Las Vegas, previously the third-ranked market, remains near the top of the matrix largely due to its success in attracting remote workers.

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The Opportunity Matrix

The 2022 Arbor-Chandan Large Multifamily Opportunity Matrix (Table 1) measures eight key categories:

  1. Large Multifamily Investment: measured as a proxy for debt financing availability, overall liquidity, and a market’s ability to support additional multifamily investment. Multifamily loans (both acquisitions and refinancings) with original balances above $15 million are included for analysis.
  2. Labor Market: topline profile of key labor market performance indicators, including market size and growth, unemployment rate, change in the unemployment rate over the past year, and wage growth.
  3. Population Growth: overall growth of a metro over the short and medium term.
  4. Renter Demographics: spending power and age profile of existing renters (higher household incomes and younger householders assumed as conducive for higher levels of multifamily demand).
  5. Renter Migration: measures the market’s ability to retain existing renters and attract renters from elsewhere, as well as market-level affordability.
  6. Supply/Demand Equilibrium: compares aggregate population increases to the volume of new multifamily permitting activity as a proxy for market tightness and ability to absorb new, large-scale multifamily supply.
  7. Work From Home (WFH) Importers: proxy measures of which markets are attracting WFH workers from elsewhere.
  8. Mean Reversion: a control that accounts for 2021’s rapid increase in residential asset values and the possibility of a price correction.
 
Categories 7 and 8 were added this year to reflect today’s unique circumstances. The Opportunity Matrix includes factors a multifamily investor might consider in their market selection process. All eight categories have received equal weighting. In categories with more than one variable, each variable was weighted equally.

Top Ranked Markets

San Antonio is 2022’s top-ranked market, thanks to a well-rounded set of fundamentals, including one of the highest population growth rates in the country (Chart 1). Across the 21 data point inputs in the matrix, San Antonio scored better than the median metro in 15. Further, when comparing San Antonio’s population in-flows to the amount of new multifamily supply that is coming on board, it has one of the nation’s largest supply gaps, which should benefit multifamily investment outcomes. With the largest state-level economy in the country, Texas has made recent concerted efforts to increase inter-city mobility. While not as ambitious as the planned high-speed rail between Dallas and Houston, San Antonio and Austin are adding new public bus routes between the two cities — doubling down on their geographic proximity.

For a full breakout of the 2022 and 2021 MSA composite scores and rankings, see Table 3 in the Appendix at the back of the report.

After appearing as a middle-of-the-pack metro in 2021 (ranked 29 out of 50), Kansas City claimed the No. 2 spot in the 2022 rankings. Relative to its population, Kansas City had the 4th-most large multifamily lending volume of all top 50 metros in the year ending in the second quarter of 2022. Kansas City also performed favorably in key measures of renter attractiveness. It had the 10th most affordable cost of housing and the 10th highest share of apartment searchers looking to stay within the metro. In other words, Kansas City has a strong pitch for alluring new rental demand and succeeds at retaining renters to stay once they get there. Missouri’s largest city is also proving to be a laboratory for modern urbanism. In 2020, Kansas City became the first major metropolitan metro to launch a zero-fare mass transit pilot program. According to REBusinessOnline, there is currently “no end in sight” for Kansas City’s expanding multifamily housing needs.

Chart 1

Large Multifamily Lending

Large multifamily investment across U.S. markets has been anything but uniform. Here, we analyze a pool of loans across the top 50 metros with originations between July 2021 and June 2022 and original balances above $15 million. Lending volumes include loans originated for both investment sales and refinancings. These data are leveraged as a proxy to determine which markets have the most liquidity to support large multifamily investments. Leading the way were Dallas, New York, and Los Angeles, which accounted for 7.1%, 6.9%, and 6.8% of the observed sample, respectively (Chart 2). 

Supply/Demand Equilibrium

In this category, we compared metro markets’ 2021 population inflows to the volume of multifamily permitting activity over the 12 months ending June 2022. This framework is intended to proxy market tightness and demand for new supply. Markets with greater population inflows relative to the addition of new multifamily housing supply could expect upward pressure on pricing. Applying the logic on the reverse side of the spectrum, markets with population outflows or high levels of new multifamily construction relative to incoming housing demand could expect a softening of price pressures.

Dallas, which was the 7th ranked market in the overall matrix, ranked first in this category (Chart 3). Dallas’ population increased by 97,290 people in 2021 while 26,537 multifamily permits were tracked over the sample window. Other top performers in this category were Phoenix and Houston. New York and Los Angeles trailed behind thanks to sizable population outflows in 2021.

Work From Home

Historically, housing demand has been viewed as a function of local labor demand. The more jobs in an area, the more people would choose to co-locate in proximity, creating upward pressure on rental demand. The proliferation and diffusion of remote employment in recent years has disrupted the geographic relationship between where people work and where they live.

For this analysis, we sought to establish a framework that would identify which markets have been successful at attracting remote workers. Markets that are WFH importers should have an advantage in growing their rental demand base. Utilizing the 2020 American Community Survey, the following two data points were calculated and factored into the opportunity matrix:

1. WFH recent movers as a % of all local workers
2. Recent movers as a % of the local WFH workforce

For this analysis, individuals who reported having a job while having no commute time were considered “WFH workers.”

Measuring newly arriving remote workers as a percentage of total workers in the metro area, Washington, D.C., had the highest share in the nation, at 1.8% (Chart 4). Next were Portland (1.6%) and Orlando (1.6%). On the other end of the spectrum, Columbus (0.1%), Riverside (0.1%), and Oklahoma City (0.2%) had some of the lowest shares of newly arriving remote workers.

Looking only at the WFH workforce and what share had recently moved to each market, a different set of metros rises to the top. The only crossover was Orlando, where 9.8% of its WFH workers had recently moved — the highest share in the nation (Chart 5). Following Orlando were Las Vegas (9.0%) and New Orleans (7.0%).

Mean Home Price Reversion

Factoring heavily into the 2022 opportunity matrix are considerations for mean reversion. For this analysis, the mean is the national growth rate for all home values last year. Metros were compared based on how far local home price growth differed from the national average.

All of 2021 and early 2022 were exceptionally robust periods for residential valuation growth. On average, home prices grew 19.5% over the 12 months ending in March 2022 — 14.3% above their 2015-2019 average (5.2%). The trend held up for apartments as well. According to the MSCI Real Capital Analytics CPPI for apartments, asset prices grew by a steep 21.8% in 2021, rising 11.9% above their 2015-2019 average growth rate (9.8%).

There is a higher risk for downward price adjustments in markets that saw the most appreciation over the past year. In other words, given how quickly and by how much property values soared through 2021 and early 2022, mean reversion may be at play.

In designing this framework, the model assesses and ranks how closely home prices rose in respective markets compared to the national average. In doing so, the model penalizes some of last year’s most standout markets, including Austin (+33.3%), Phoenix (+30.1%), and Tampa (+29.0%). At the same time, some of last year’s laggards also received poor rankings here, including San Francisco (+9.5%), New York (+11.4%), and Philadelphia (+13.4%). The markets that tracked most closely to the national average last year, Portland (+19.1%), Los Angeles (18.9%), and Indianapolis (19.8%) were rewarded in this ranking system.

Market Spotlight: San Antonio

The San Antonio metropolitan area has dug in its spurs, rising to the top of the 2022 Opportunity Matrix. Simply put, San Antonio is expanding its metro-level population and is proving to be an attractive destination for renters.

Population trends in the San Antonio metro area point to sustained growth in multifamily demand. In 2021, the San Antonio population grew by 35,105 people. Its 1.4% annual growth rate was the fifth highest in the country. Since 2011, San Antonio’s population has swelled, expanding by 18.6% over that time — nearly three times higher than the national growth rate over the same period (+6.4%). Looking ahead, San Antonio’s “population is forecasted to grow at twice the national rate, and even faster in the 20–34-year-old prime renting cohort,” according to Fannie Mae.

Beyond the inflow of new housing demand, demographic trends are also broadly supportive of San Antonio’s multifamily sector. It ranked 11th for the highest share of renter households and the highest rentership rate for households headed by persons under the age of 35. Further, the ascending Texas metro had the 10th highest average renter household income in the country.

The San Antonio labor market has both retained its strength throughout the pandemic, as well as built upon it. While Austin often receives a lot of attention as Texas’ dominant tech hub, San Antonio is quietly making a name for itself in this arena as well. According to a Brookings analysis, San Antonio was among a collection of secondary metros to gain from the dispersion of tech jobs as workers no longer needed to co-locate near a physical office place during the pandemic. Financial services, while just San Antonio’s sixth largest sector, is also a significant area of opportunity. Through June 2022, San Antonio had already eclipsed its pre-pandemic financial employment peak by 3.9% (Chart 6). Further, its finance sector is growing at a 6.0% annual rate, more than twice the national average (+2.4%).

Altogether, the San Antonio multifamily market is ripe with possibility. According to Yardi Matrix’s May 2022 report on the metro, occupancy rates were holding above 95%, and a slowed pipeline of apartment deliveries is likely to keep upward pressure on rents in the near term. Desirable urban amenities (such as the River Walk), the availability of developable downtown sites, strong population growth, and desirable demographic factors all combine to make San Antonio the rising star of the Lone Star state.

Outlook

In 2022, the multifamily investment environment finds itself in uncharted territory once again. Historic increases in asset prices over the past year reasonably should give investors pause, especially since the Federal Reserve appears unlikely to slow its monetary tightening cycle. At the same time, multifamily assets are uniquely positioned to capture additional housing demand as the cost of homeownership has risen. All else equal, the U.S. multifamily market is likely to remain balanced by headwinds and tailwinds over the year ahead. The future of WFH, and most critically, the geographic relationship between one’s home and job, is one of the biggest open questions for rental housing demand in the years to come. On a metro-by-metro basis — whether it be along the lines of WFH attractiveness, affordability, urban amenities, or taxes — competition for residents is poised to see an escalation in the years ahead.

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Appendix

Disclaimer
All content is provided herein “as is” and neither Arbor Realty Trust, Inc. or Chandan Economics, LLC (“the Companies”) nor their affiliated or related entities, nor any person involved in the creation, production and distribution of the content make any warranties, express or implied. The Companies do not make any representations regarding the reliability, usefulness, completeness, accuracy, currency nor represent that use of any information provided herein would not infringe on other third party rights. The Companies shall not be liable for any direct, indirect or consequential damages to the reader or a third party arising from the use of the information contained herein.

Top Markets for Large Multifamily Investment Report 2021

2021 Top Markets for Large Multifamily Investment Report

Table of Contents

Overview | The Arbor-Chandan Large Multifamily Opportunity Matrix | Top Ranked Markets | Work From Home Resiliency | COVID-19 Risk Assessment | Large Multifamily Investment | Market Spotlight: Las Vegas | Outlook | Appendix

Overview

The U.S. economy continued its path back to health through the third quarter of 2021. As of the second-quarter estimate of annualized real gross domestic product (GDP), the economy is now 0.9% larger than it was before the onset of the pandemic. The multifamily sector has weathered the storm exceedingly well and is accelerating into the recovery. According to the Real Capital Analytics Commercial Property Price Index for apartment properties, asset valuations are up 14.7% from one year ago, measured through August.

 

In this report, the research teams at Arbor Realty Trust and Chandan Economics present an analytical framework to develop a cross-market comparison for large multifamily investment. The top 50 U.S. metros1 are ranked using the Arbor-Chandan Large Multifamily Opportunity Matrix based on a composite of performance metrics. It pays specific attention to how local economies have fared during the pandemic and how well multifamily investment activity has held up. Overall, the Matrix finds Sun Belt markets remain well-positioned for the year ahead, with Las Vegas, Dallas and Miami leading the way.

1 The top 50 metros are based on population estimates. All metros are reported at the Metropolitan Statical Area (MSA) level.

Key Findings

  • Work from home (WFH) resiliency and a recovering tourism industry propelled Las Vegas to the top of the 2021 Arbor-Chandan Large Multifamily Opportunity Matrix.
  • Four metros in Florida jumped significantly in the Matrix rankings, reflecting the state’s continued strong labor market performance despite pandemic disruptions.
  • As a region, the Sun Belt generally ranked well across the Matrix factors measured, despite experiencing higher COVID-19 case counts per capita.
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The Arbor-Chandan Large Multifamily Opportunity Matrix

The 2021 Arbor-Chandan Large Multifamily Opportunity Matrix measures eight key categories:

  1. Levels of Large Multifamily Investment: debt financing availability within a market and a market’s ability to support additional multifamily investment
  2. Employment Base: labor market size and growth
  3. Labor Market Performance: current labor market conditions amid the continued pandemic
  4. Population Growth: overall growth of a metro over the short and medium term
  5. Renter Demographics: spending power and age profile of existing renters (higher household incomes and younger householders assumed as conducive for higher levels of multifamily demand)
  6. Renter Migration: a market’s ability to retain existing renters and attract renters from elsewhere
  7. Work From Home (WFH) Resiliency: a market’s degree of WFH adoption
  8. COVID-19 Risk Assessment: the continued impact of the pandemic on a market
The Opportunity Matrix includes factors a multifamily investor might consider in their market selection process. All eight categories get equal weighting. In categories with more than one variable, each variable receives equal weight. For the full Matrix breakdown, see Table 1 below.
table 1

Top Ranked Markets

Rising to the top of the 2021 rankings is Las Vegas (Table 2). The metro leads the pack in several key criteria, including a favorable cost of living, a high share of apartment-searching renters looking to stay in the metro area and a resurgent labor market. The Las Vegas labor market appears to be one of the more WFH-resilient in the country, a partial function of its tourism-centric economy and a high share of workers employed in the leisure and hospitality sector. According to Chandan Economics’ analysis of the latest Current Population Survey, the Las Vegas metro had the second-lowest percentage of workers in the country that reported working remotely in the prior month due to the pandemic. 
For a full breakout of the 2021 and 2020 MSA composite scores and rankings, see Table 3 in the Appendix at the end of the report.
Table 2

Dallas, after appearing as the fifth-ranked metro in 2020, has returned back to the podium, claiming the No. 2 spot in the 2021 rankings (Chart 1). Wages grew 8.7% from a year earlier through July across the Dallas metro area, the second-fastest tally in the nation. According to Apartment List’s Q2 2021 Renter Migration Report, no metropolitan area tracked in this report does a better job of retaining its renters than Dallas. A nation-leading 82.2% of the metro’s apartment searchers are looking to stay local. Through the year ending in second-quarter 2021, Dallas comes in third and fourth for large multifamily lending volume and large multifamily lending volume per capita, respectively, reflecting the market’s size and continued ascent.

Chart 1
Miami comes in third, with the metro appearing resistant to the de-urbanizing wave of WFH adoption. Miami’s pandemic-related share of WFH employees is the 10th lowest in the country. Moreover, Miami posts the fourth-highest vaccination rate and the third most significant drop in its unemployment rate of all metro markets in the sample. Miami’s success comes as it continues to attract both firms and workers from the Northeast, offering lower taxes and warmer temperatures. According to the Apartment List report, a whopping 15.7% of inbound searchers are from New York alone — more than three times as high as the next highest inbound-searching metro, Orlando (4.5%). It should come as no surprise that Bloomberg is dubbing the blossoming market as Wall Street South, as more workers are trading the West Village for West Palm.

Work From Home Resiliency

While the long-term impact of WFH adoption is presently unknown, it is a new factor that investors are paying attention to and will continue to watch. Multifamily properties near large central business districts (CBDs) tend to achieve their high rents and tenant demand due to their proximity to the CBDs. These assumptions follow a recent Fitch Ratings paper studying New York and the potential adverse long-term effects of a shift to WFH. The report notes the potential for negative downstream effects for all other commercial property sectors, government revenues and population migration trends.
Measured across the three WFH resiliency variables in the Matrix, secondary Sun Belt metros, especially in the Southeast, are ahead. According to Google Mobility Data, compared to a pre-pandemic baseline, trips to the workplace in Birmingham are only down by 20% through August (Chart 2). Memphis and Virginia Beach follow closely behind, with trips to the workplace only down by 21% each. San Francisco and San Jose are at the other end of the spectrum, with trips to work down by 39% and 37%, respectively.
Chart 2

Data trends are similar for the share of workers who report working from home in the past month due to the pandemic. Memphis comes out on top, with just 4.6% of workers reporting they are working from home as a direct result of the pandemic (Chart 3). Las Vegas follows next at 5.2%. Again, the tech-centric San Jose and San Francisco markets are at the other end, with 41.2% and 37.5% of workers reporting they worked from home because of the pandemic, respectively.

Chart 3

COVID-19 Risk Assessment

Chandan Economics considers two criteria as a proxy for forward-looking pandemic risk: single-dose vaccination rates and current case counts per 100,000 people. Together, these two metrics reflect the presence of heightened uncertainty in today’s investment environment. While recent COVID-19 trends have had little bearing on market-level success over the past year, the unlikely (though possible) scenario of a worsening pandemic warrants consideration.

We include single-dose vaccination rates assuming that higher vaccination rates will result in less severe public health crises through the current Delta variant wave and potential future waves. Current case counts per 100,000 residents reflect how well public officials have managed the most recent surge, offering a real-time performance gauge and a starting point for future expectations if additional variants are detected.

Despite performing exceedingly well in the final rankings, portions of the Sun Belt lag in their recent public health response. Birmingham had the highest level of cases of any major metro in the U.S., confirming an average of 97.2 cases per 100,000 people through early September (Chart 4). Tampa, which sits at fourth in the overall Matrix, follows closely with 92.3 cases per 100,000. On the other end of the spectrum, Baltimore, Hartford and Buffalo lead the charge in effectively limiting the spread of the Delta variant, with caseloads of 16.1, 18.8, and 19.7 per 100,000 people, respectively.

Chart 4

Large Multifamily Investment

Large multifamily investment across U.S. markets is anything but uniform. Here, we analyze a limited pool of loans originated between the second half of 2020 and the first half of 2021, with original balances above $15 million and across the top 50 metros. Lending volumes include loans originated for both investment sales and refinancings. They are used here as a proxy for where market-level liquidity and total investment activity have held up amid the coronavirus turbulence.

Leading the way and accounting for 11.5% of the sample’s total lending volume was New York, the country’s largest metropolitan area (Chart 5). The Big Apple’s overall size means it will always remain at or near the top of the multifamily investment list when measured in the aggregate. Although New York had a uniquely challenging and downtrodden year compared to its previous performance, it remains the most liquid market in the country. The next closest metro by tracked lending volume, Washington, D.C., accounted for 7.7% of the overall sample.

Chart 5

Next, we look at the most liquid markets relative to existing market size by taking a per-capita metric of lending volume. These data adjust for population differences and allow for an ‘apples to apples’ comparison, meaning that a metro won’t just come out ahead because of how big it is. Measuring this way, Washington, D.C claims the top spot, with Chandan Economics tracking $2,075 of large multifamily lending volume for every MSA resident (Chart 6). Baltimore, Austin and Dallas follow next, with annual multifamily lending volumes per capita between $1,581 and $2,023.

Chart 6

Taking these data together with population growth figures uncovers an expected albeit meaningful relationship. The sample’s large multifamily lending volume per capita is 65% correlated with 10-year population growth totals (Chart 7). Broadly speaking, where people are moving, investment dollars tend to follow. These data suggest that while the investment prospects of a market are multifaceted and unique to local factors, how well a market is supporting residential population growth is a simple yet powerful predictor of multifamily demand.

Chart 7

Market Spotlight: Las Vegas

The Las Vegas metropolitan area hit the jackpot, rising to the top of the 2021 Matrix. The Las Vegas labor market and its post-shutdown bounce back are significant reasons for its nation-leading rank.

Total nonfarm employment grew by 9.8% in Las Vegas over the year ending July 2021, significantly higher than the 5.3% observed nationally. The Las Vegas MSA’s largest employment sector, leisure and hospitality, bounced back over the year ending July 2021, posting annual job growth totals of 13.6%. While the leisure and hospitality sector grew slightly slower in Las Vegas than the sector’s national average (18.7%), leisure and hospitality accounts for a much larger share of Las Vegas employment totals (23.7%) than it does nationally (10.3%).

In addition to leisure and hospitality, the trade, transportation and utilities sector, and the professional and business services sectors, each posted double-digit annual job growth, more than double the sectors’ national growth rates. The Las Vegas MSA notched the second-largest drop in its unemployment rate in the year ending July 2021, declining by 10.2%.

Chart 8

At the heart of the Las Vegas economy is, of course, tourism. Visitor traffic to Las Vegas had nearly recovered by July 2021, before receding 9.0% amid the Delta variant surge in August. Despite the recent setback, the return of visitors is a welcome sign for the near-term Las Vegas recovery, and with major conferences now officially back underway, the sector should receive another boost.

At the same time, Las Vegas has done an impressive job in recent years of reducing its reliance on its largest sector. According to a Chandan Economics analysis of U.S. Bureau of Labor Statistics data, between mid-2011 and the onset of the pandemic, the leisure and hospitality share of the Las Vegas workforce gradually declined by 4.4% as other sectors grew more quickly.2

The Las Vegas 1-year and 10-year population growth rates through 2020 were 3.6x and 2.8x higher than the national average, respectively.

Population and demographic trends in the Las Vegas metro are also pointing to sustained growth in multifamily demand. In 2020, the resident population in Las Vegas grew by 1.8% — the fourth-highest growth rate in the country. Further, the Las Vegas population over the 10 years ending in 2020 expanded by an equally impressive 18.7%, the 10th-fastest rate in the sample. 

 

The local rental market in Las Vegas is well-positioned to benefit from an expanding population. According to a Chandan Economics analysis of the latest American Community Survey, the homerentership rate in the Las Vegas MSA sat at 42.7%, the fifth-highest mark in the country. These trends have The Entertainment Capital of the World adding “Relocation Heaven” to its growing list of nicknames, with its proximity to expensive California markets and comparatively affordable rents making it a magnet for transient lifestyle renters.

 

Altogether, the Las Vegas local market story is one of resiliency, diversification and desirability — all of which support forward-looking multifamily market success. According to Yardi Matrix, rents are up 14.6% from one year ago through the second quarter of 2021. Yardi Matrix also notes in their latest report that apartment supply constraints and strong population growth are pushing occupancy rates to 96.0% in stabilized rentals, indicating continued demand for multifamily.

2 Analysis from June 2011 through March 2020. Sector percent share of nonfarm employment fell from 32.3% to 27.9%.

Outlook

The ongoing pandemic has dominated the market-level investment narrative since mid-2020. However, national and local economies have learned to cope with the pandemic more effectively and its impacts are less disruptive.

 

Moving into 2022 and beyond, fundamentals of supply and demand along with traditional considerations of labor growth and productivity, residential affordability, and the attractiveness of markets to new businesses and residents, will take center stage. As a result, significant shifts in the Matrix should become less frequent.

 

As employers call workers back to the office and commute times become relevant once again, the demand for apartments in coastal gateway markets will continue to recover. However, if WFH policies becoming permanent within companies, these markets would likely be negatively impacted.

 

Coastal gateway markets’ gain, however, does not mean a reversal of the Sun Belt’s positive trajectory bolstered by the pandemic. Sun Belt markets will remain attractive and continue to grow due to their relative affordability and appeal to renters with the means and flexibility to relocate. However, the growth rate across these smaller markets will likely return to a more normal pace.

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Appendix

Table 3
Disclaimer All content is provided herein “as is” and neither Arbor Realty Trust, Inc. or Chandan Economics, LLC (“the Companies”) nor their affiliated or related entities, nor any person involved in the creation, production and distribution of the content make any warranties, express or implied. The Companies do not make any representations regarding the reliability, usefulness, completeness, accuracy, currency nor represent that use of any information provided herein would not infringe on other third party rights. The Companies shall not be liable for any direct, indirect or consequential damages to the reader or a third party arising from the use of the information contained herein.

2020 Large Multifamily Investment Report

2020 Large Multifamily Investment Report:
Top Opportunities

Table of Contents

Overview | Opportunity Matrix | Top Ranked Markets | COVID-19 Risk Assessment | Renter Performance | Large Multifamily Investment | Market Spotlight: Seattle | Outlook

Overview

The U.S. economy was gliding into 2020 along a path of consistent yet unspectacular growth. After more than a decade of expansion, multifamily asset pricing remained exceptionally tight, with investors searching for yield in secondary and tertiary markets. When the full magnitude of the COVID-19 pandemic hit the U.S. in March, it became readily apparent that the multifamily sector would see a recessionary reshuffling of fundamentals, in a pace unrivaled in recent history.

This report develops an analytical framework to predict where large multifamily investment opportunities will be most abundant in the year ahead. Through the use of an opportunity matrix, the top 50 U.S. metros are ranked based on a composite blend of performance metrics. The analysis pays specific attention to how local economies have fared during the pandemic and how multifamily investment activity performed. The top 50 metros are based on population estimates. All metros are reported at the Metropolitan Statistical Area (MSA) level.

Key Findings

  • Seattle tops the Arbor-Chandan Opportunity Matrix.
  • Phoenix and Austin follow closely behind, benefiting from resilient labor markets.
  • Texas metros, led by Dallas and Houston, continue to capture an outsized share of large multifamily investment activity.
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Opportunity Matrix

The 2020 Arbor-Chandan Large Multifamily Opportunity Matrix features eight categorical criteria: levels of large multifamily loan volume, levels of multifamily construction, labor market size, labor market performance during COVID-19, mobility trends, renter performance and sentiment, renter preferences and an assessment of COVID-19 risk. These variables account for many of the considerations that investors would make before deploying capital.


All eight categories receive equal weighting. In categories with more than one data field, each indicator receives equal weight. (For a full breakout of the Opportunity Matrix, see Table 1.)

Top Ranked Markets

Rising to the top of the 2020 rankings is Seattle, Washington (Chart 1). Seattle finds itself at the top of the list for several reasons, though none are more apparent than its all-around consistency. Measured across all 18 indicators that filter into the composite matrix, Seattle never sinks below the 31st rank in any one component. In short, it performs exceedingly well in critical areas, such as wage growth, employment growth and COVID-19 risk assessment, while never performing much worse than average across the board. These results follow a recent Wallet Hub Report, which similarly ranks the Seattle metro as the country’s top real estate market. 

Other cities rising near the top of the matrix rankings include Phoenix and Austin. Both combine better than average COVID-19 risk assessments, robust pipelines of incoming multifamily supply and ample liquidity. According to a 2019 Apartment List Study, of the top 15 U.S. MSAs, Phoenix has the lowest share of millennials on track to transition into homeownership within the next five years – a market feature that should support demand for rental housing even as homeownership rates rise nationally.

 

Well before the great “work from home experiment” of 2020, household preferences were already rapidly shifting. Maturing millennial households have a growing desire for mixing the amenitization of Class A multifamily while also enjoying the space of the suburbs. Metros that are less space-constrained and can add ample, garden-style multifamily offerings with convenient access to urban job centers are well-positioned to capture transitioning demand. According to a recent report published by CREXi, Phoenix and Austin are two of the country’s best markets for suburban multifamily performance.

COVID-19 Risk Assessment

If the year to date has imparted any lasting wisdom, it’s that meaningful economic growth is impossible without first containing the risk of COVID-19’s local spread. Thus, this report leverages the Harvard Global Health Institute’s COVID Risk Assessment Model, which tracks the number of confirmed positive cases in the last seven days per 100,000 people. The metro areas with the lowest COVID-19 risk factors share several commonalities. In this respect, the best performing metros are New York, Pittsburgh, Phoenix, Seattle and Hartford (Chart 2).

Excluding Phoenix, these metros were all among the earliest examples of community spread in the U.S. Nevertheless, all five have their first wave peaks solidly in the rearview and have managed to suppress a second wave to date. Birmingham sits on the other side of the COVID-19 risk spectrum, followed closely by Miami and Kansas City. At 33.3 cases per 100,000 people, Birmingham’s case density is more than 11 times higher than that of New York City.

Renter Performance

COVID-19 went from a distant news item to an immediate threat to most American household finances at breakneck speed. To capture the pandemic’s effects in real time, the U.S. Census Bureau launched the Weekly Household Pulse Survey. While phase one of the measurement period concluded in mid-July, we use the last week of the survey to capture how well renters in different metro areas were weathering the storm and meeting their monthly rent obligations. The Census Bureau reports data nationally, statewide and for the top 15 metros. In metro areas where there is no data coverage, we substitute state-level data.

 

Apartment renters in Omaha were outperforming all other tracked metros, with the share of renters who reported making their previous month’s rent payments at 93.3%, well above the national average of 79.2% (Chart 3). The San Francisco Bay Area came in a close second with 92.6%. Birmingham counted the lowest share of renters meeting their payments with just 63.2% reporting in July.

Large Multifamily Investment

Multifamily investment across U.S. markets is anything but uniform. Differences exist along the lines of urban density, labor composition, geography and economic fundamentals. Moreover, in 2020 there is the added layer of the pandemic risk. Investors are considering where the virus might move, the preparedness of localities, and the “stickiness” of demand in the event of an outbreak. We analyze a limited pool of loans originated year-to-date through August 2020, with original balances above $15 million and across the top 50 metros. Lending volumes include loans originated for both investment sales and refinancings. They are used here as a proxy for where market-level liquidity and total investment activity have held up amid the coronavirus turbulence.

 

Leading the way and accounting for 7.8% of all tracked lending volume is Dallas, Texas (Chart 4). Reportedly, rental collections in Dallas have held up better than expected, and the local multifamily market is already transitioning out of its “wait and see” mode as deal closings are once again on the uptick. When measuring by loan count instead of dollar volume, Dallas similarly leads our sample, picking up 7.9% of the total (Chart 5).

Measured both ways, Houston and Phoenix follow closely behind in second and third positions. While not unscathed, Houston has continued to enjoy well above average economic success compared to most other metros, with a critical dependence on industrial, logistics and healthcare occupations that have buoyed the city’s resiliency. Texas, led by Dallas, Houston and San Antonio, is the only state to have more than one metro reach the top ten. Taken together, these three Lone Star state metros account for 18.4% of the sample’s large loan lending volume and 19.0% of the loan count. 

 

We also track lending volume per capita (or the total number of large multifamily lending dollars per person in each MSA). This measurement normalizes the results and accounts for population differences, allowing for an “apples to apples” comparison. Rising to the top of the rankings are Orlando and Denver. In our sample, these two metros capture $350.97 and $342.05 of lending volume per MSA resident, respectively. This is well above the average set  across the top 50 of $103.36 per resident (Chart 6).

Market Spotlight: Seattle

Seattle rises to the top spot in our 2020 rankings, driven by a diverse set of favorable macroeconomic conditions. As COVID-19 arrived in the U.S. earlier this year, the state of Washington immediately found itself in the spotlight. When a nursing home in Kirkland, an eastside suburb of Seattle, became the nation’s first known case of community spread, Seattle’s economic outlook dimmed. 


Despite its dark spring, the Emerald City is already regaining its glisten. By September 1, Seattle charted as the fourth lowest-risk area in the top 50, according to the Harvard Global Health Institute’s COVID Risk Map. After establishing the most comprehensive statewide database in the country, Washington state bolstered its prowess in testing and tracing cases, helping its economy recover quicker and more sustainably than its fellow compatriots.


Before the recession, Seattle led all U.S. cities in local wage growth, registering a weighty 7.4% year-over-year increase, sustained in large part by the city’s tech industry. Seattle’s relative dominance in tech and other STEM-area job growth has attracted a wave of higher-earning renters, benefiting its multifamily sector. Through July 2020, the Seattle MSA was back to growth, with employment jumping 1.8% month-over-month, edging out the national average by more than half a percent. This was calculated using seasonally-adjusted metrics measured by the U.S. Bureau of Labor Statistics (Chart 7).


While no metro labor market was spared from the pandemic-provoked crisis, by June, Seattle’s employment base was down only 4.0% from the prior year. Similarly sized cities did not fare nearly as well. Detroit, comparable in size and growth to Seattle before to the recession, suffered the worse job losses nationwide. Its employment base shrank by an incredible -18.2% from a year ago (Chart 8). Meanwhile, Minneapolis and Phoenix, which ranked closely behind Seattle in the final rankings, saw more muted job losses of -5.8% and -6.3%, respectively.


Rental demand remains more resilient in Seattle compared to other cities, supported by a durable labor market in a housing landscape with relatively limited available supply. As cities from coast to coast experienced an uptick in vacancies from large outflows out of city centers, Seattle proper saw apartment inventory fall during the pandemic. According to Zillow research published in August, for-sale inventory in the urban center dropped by an annualized 20.0% from February to May.


While our metro-level analysis covers the impact on both the urban core and its surrounding areas, like other cities across the country, Seattle’s urban core is still facing concerns of an exodus. As pandemic-related fears have some renters eyeing a flee to the suburbs, Seattle residents are staying put in higher numbers compared to other large cities. According to metrics gathered by Apartment List, urban renters searched outside of their home-city at an average of 31.0% nationwide. Meanwhile, Seattle residents searched outside of the city just 20.7% of the time, placing it in the top quartile of inner-city searches among the metros in the study.


The impact of the virus will continue to ebb and flow as the situation evolves in each city. Even as the crisis wanes in certain regions of the country, it will still take some time for growth to return to pre-pandemic levels. Nevertheless, the state of Washington continues to have one of the more methodical approaches to handling the turbulence and the economics of the Seattle area were a supportive tailwind heading into COVID-19. Across the top 50 U.S. metros, Seattle is best positioned to attenuate the downside risks and offer upside.

Outlook

The coronavirus will continue to create a unique set of challenges for multifamily operators and investors for the foreseeable future. Of course, where there are changes and disruption, there is also opportunity. Metropolitan areas with healthy labor markets and the development economics to support horizontal, well-styled apartment communities are strategically positioned to add supply that captures migrating demand. While headlines suggest that urban households are flocking to exurban alternatives, many highly urbanized metros, led by Seattle, are improving fundamentals and outcomes despite macro headwinds.

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Disclaimer All content is provided herein “as is” and neither Arbor Realty Trust, Inc. or Chandan Economics, LLC (“the Companies”) nor their affiliated or related entities, nor any person involved in the creation, production and distribution of the content make any warranties, express or implied. The Companies do not make any representations regarding the reliability, usefulness, completeness, accuracy, currency nor represent that use of any information provided herein would not infringe on other third party rights. The Companies shall not be liable for any direct, indirect or consequential damages to the reader or a third party arising from the use of the information contained herein.