Key Markets for Multifamily Investments in 2022

The multifamily sector has shifted greatly since the start of the pandemic, with some markets losing steam and others experiencing historical growth. Here you will find the top 10 markets multifamily investors should consider in 2022.

Los Angeles

The Los Angeles multifamily sector took a hit at the start of the COVID-19 pandemic due to multiple factors, including local government policies and supply chain constraints. The metro has improved greatly since, as apartment demand is strong, and gains are recognizable in almost all LA areas. Since the peak vacancy rate in 2020 of six percent, vacancy now sits at 3.4 percent in Q2 2022, which is one of the lowest levels in years. Although rental gains are lower than the national average, 6.6 percent versus 9.5 percent it remains one of the most expensive markets in the United States.

Phoenix

Arizona reported a 17.0 percent year-over-year rent growth in 2021, 6.0 percent higher than the national average.

The historically high rate was due to unprecedented population growth throughout the state, especially in Phoenix, which ranked as one of the fastest-growing MSAs over the past three-year period. The market is projected to create more than 700,000 jobs over the next decade and has added roughly 90,000 new hires in the past year, proving to be among the strongest metropolitan markets for hiring. The multifamily sector has profited greatly from this increase, and the need for more housing has attracted investors from across the U.S. to pour capital into The Valley.

Atlanta

The Atlanta multifamily market continues to gain national traction and bolster demand. The area’s vacancy rate is 5.9 percent, far below its ten-year average of 8.1 percent, and values are climbing at double the national average rate. The market is home to major employers and large universities, which coupled with robust population growth, cultivates a favorable market for multifamily investors.

Nashville

Nashville saw a considerable increase in multifamily investor interest at the start of 2021, and the momentum has continued throughout 2022. The entire Southeast region is experiencing high in-migration, contributing to the need for housing, and producing high yields for investors looking to enter the growing market.

Nashville boasts one of the country’s most active multifamily development pipelines, with over 19,000 units currently underway.

Fort Lauderdale

Vacancy rates in Fort Lauderdale have further decreased reaching 3.1 percent at the start of 2022. The market is also one of the top regions in the U.S. for rent growth, with a staggering 21.9 percent year-over-year growth rate. These factors have made the Florida metro a secure investment for multifamily assets. The area is experiencing significant commercial and residential growth of its own and is most closely comparable to Miami, drawing in more crowds from around the country.

Dallas-Fort Worth

Dallas-Fort Worth (DFW) has set record numbers for multifamily over the past year. Demand increased quickly, accelerating rent and creating a high-yield market. In terms of development, the DFW metro is one of the most balanced markets in the country, growing inventory by 25 percent over the past ten years. This activity has slowed since the pandemic, but the metro still reported 4,800 units underway in Q1 2022.

Cleveland

The Cleveland multifamily sector has proven resilient throughout the global pandemic and mid-way into 2022. As many residents looked to relocate from compacted, high-price metros, Cleveland became a hot market due to its affordable housing and lifestyle costs.

Vacancy rates hit a record low in Q1 2022 at 4.6 percent, while demand is still up, driving values.

Austin

Located within a tax-free income state, Austin is one of the most competitive markets, with many investors looking for high returns and low government taxes. That, paired with high in-migration and job growth, makes for a profitable buying and selling environment. Out of any city in Texas, Austin continues to be the hottest market for companies looking to relocate their corporate offices. One of the biggest companies to relocate to Austin was Tesla. Construction has started on the Gigafactory which will be the size of 138 football fields.

Tampa

Tampa saw an incredible flood of demand in 2021, helping vacancies fall below 5.0 percent for the first time in history. The market is also experiencing booming rent growth, with rents increasing by 26.2 percent in Q2 2022. This has pushed Tampa to become an attractive option for investors who want to capitalize on these market trends.

Denver

Similar to Midwest regions, Denver had an influx of investor interest due to steady in-migration and a low-inventory housing market cultivating a competitive and profitable multifamily sector. Rent rates soared in 2021 with no signs of slowing in 2022, making Denver one of the strongest apartment markets in the country.