Top states with large multifamily investment

Housing market remains tight as household formation accelerates. Don’t have an account? Paul climbed two spots to top the firm’s index. In the last year, it has more than doubled its historical growth with a 3. Tech Marks the Spot The biggest takeaway from this report is that the presence of a thriving tech industry has become a key determinant of multifamily activity and is differentiating prime cities for multifamily investment from the less-attractive metros. This has contributed to stellar rent growth, especially for a secondary market. As the report documents, an influx of STEAM workers distinguishes the leaders in all three tiers of the Arbor Large Multifamily Opportunity Index, it is responsible for the emergence of larger investments in the smaller, Tier 3 cities, and it has reinvigorated the New York market.

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His family, health and real estate investing are his passions. Investors have a plethora of choices when investing in real estate. If you are looking to diversify your investment portfolio, you should consider income-producing real estate, such as multifamily apartment buildings. Over the years, my colleagues in the real estate industry and I have touted multifamily real estate investing as the best way to invest and grow money. Some of the benefits of multifamily investments are stable cash flow and tax benefits.

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Property intelligence empowering you to discover new opportunities, uncover insights and connect with owners. Our property intelligence, your way. Build on the most expansive dataset in CRE with our enterprise solutions. Our unique algorithms consolidate records from any source. At the end of Q1, our research indicated the Opportunity Zone OZ legislation seemed to have little to no influence on the market for assets in designated areas. Now, with the program more established, we decided to investigate if this declining trend has continued in individual asset classes and identify any standout markets investors should look toward. First on the list: Multifamily.

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Property intelligence empowering you to discover new opportunities, uncover insights and connect top states with large multifamily investment owners. Our property intelligence, your way. Build on the most expansive dataset in CRE with our enterprise solutions. Our unique algorithms consolidate records from any source. At the end of Q1, our research indicated the Opportunity Zone OZ legislation seemed to have little to no influence on the market for assets in designated areas.

Now, with the program more established, we decided to investigate if this declining trend has continued in individual asset classes and identify any standout markets investors should look. First on the list: Multifamily. Backed by our trove of proprietary transactional data, this report provides comprehensive analysis on how multifamily investments are trending inside Opportunity Zones compared to non-designated areas, other asset classes, and across various geographical markets.

Since legislation passed in7. In non-OZs, only 6. Read more. Since Based on cumulative sales price growth, the top-performing markets for OZ multifamily investments are in unassuming states like Nevada, Oklahoma, and Kentucky. A report from Newmark noted that Q2 was the ninth consecutive quarter in which the multifamily sector had the highest sales volume of all major property types. The substantial increase in new supply, consistency of rent growth, and vacancy decline are directly related to the rising cost of homeownership, changing demographics and consumer preferences.

About two-thirds of this age group currently live in rental housing, and with a strong job market, apartment demand has only increased. Opportunity Zone markets were designated to encourage investment in economically depressed areas that need capital to revitalize.

For an in-depth understanding of all things Opportunity Zones, their impact on the CRE community, and how to invest in them, go. Investors take a multitude of factors into account before making an Opportunity Zone acquisition. MSA growth can be a significant factor, or indicator, in making informed investment decisions.

Earlier this year, Bisnow reported that supporters of the program say a lack of clear rules has caused the activity to gravitate to places like New York City and other gateway markets that already attract a lot of capital. The purpose of the OZ legislation is to encourage development in low-income areas, especially in underdeveloped markets, but the need for in-depth research and understanding of community needs, in combination with compliance to the OZ rules and regulations, means a greater risk for less-seasoned investors.

Investing in low-income neighborhoods often comes with nuances that inexperienced investors may be ill-equipped to handle, creating a higher barrier to entry than perhaps intended by lawmakers.

While there are opportunities in larger cities, the most significant investments that will simultaneously benefit investors and respective communities, are expected to fall in secondary and tertiary market MSAs with burgeoning employment and population rates, but limited infrastructure and affordable housing to support such growth. In exploring our multifamily data which covers over 4. Of the multifamily properties IN OZs, 7. While only This is somewhat consistent with non-Opportunity Zone sales, as the multifamily market has been performing.

While the largest proportion of total sales across all asset classes is vacant land, there is a much larger proportion of vacant land parcels 28M than multifamily parcels 4. For multifamily properties in OZs at least, it appears activity is flowing—more so than most other asset classes. While OZs are not necessarily driving a major increase in multifamily investments in large markets, they are having a tangible impact on non-traditional players. This is likely a result of the economic shifts and lifestyle changes that are causing more people and companies to venture outside of major primary metros.

Where exactly is the most investment occurring? New York leads the pack with After New York, the top states for the number of transactions in OZs are California, Illinois, Florida, and Ohio all of which have the highest number of multifamily properties of any state, so no shock. Though our data indicates the OZ legislation hardly catalyzed any sales or development in OZ markets, it does seem that multifamily is performing better than any other asset class, and at a proportionally higher rate than non-OZs.

Gateway and emerging markets receive the most attention in multifamily reports, but we wanted to expand our scope of research to better understand where exactly multifamily seemed to be thriving since the OZ legislation was passed.

To do this, we explore data at the state level to determine larger trends in multifamily markets, and isolated markets that seem to be thriving over a longer term. Below is a map representing the percentage of all multifamily assets in OZs state-by-state that have sold since The standout states are Nevada That means that in the past 2 years, one-fifth of all multifamily assets in Nevada Opportunity Zones have transacted.

To identify top-performing multifamily markets in OZs, we looked at the consistency of year-over-year YoY growth in average sales price, and overall growth in average sales price state by state. The top-performing states witnessed an increase in average sales price, but the proportion of Opportunity Zone sales remained almost constant, with slight increases in certain states.

Based on these findings, investors looking for high growth markets may want to target the following states and MSAs:. The U. Census Bureau named Nevada the second-fastest growing state in the nation for its rate of population growth. It looks positive; Nevada not only had the largest proportion of OZ assets sold than any other state, but also had a consistent rise in average sales price.

The tech sector, specifically, has also thrived due to a few key players moving to Nevada headquarters. Amazon also has its hand in the Reno market, with asquare foot fulfillment center. To pile on the Nevada benefits, it has no corporate income tax, no personal income tax and no estate tax, making it an ideal state for companies to relocate to. These are Capital Improvements Programs that use a one-cent, limited term sales tax to pay for debt free projects to improve the quality of life and to revitalize the area.

Obviously, both of these initiatives were intended to improve the quality of life in Oklahoma City, and have been in place for nearly 10 years. The recent spike in sales price and volume may have to do with the OZ incentives, but is likely spurred from an increase in government supported projects like modern transit systems, park developments, health and wellness centers and improved public facilities intended to offer a better quality of life for employees, which encourage movement of businesses to the area.

In the first half of38 businessesmany focused on the aerospace industry, have announced plans to make investments in Oklahoma. The Prime Air hub will likely create thousands more induced and indirect jobs. In combination with direct jobs, the total annual payroll and benefits associated with the project will be hundreds of millions of dollars.

One of the factors that are influencing development and improvements across Illinois comes from the Illinois Growth and Innovation Fund. The innovation hub is part of a statewide initiative led by Illinois Innovation Network, whose goal is to facilitate research, create new jobs, and grow the state economy. Initiatives such as these, paired with the hefty OZ incentives, could play a role in why there is such strong growth in these areas.

The first areas selected to stimulate job growth and spur private investment in commercial businesses were Dover, Wilmington and Seaford. The largest amount of investment growth and increase in sales price that we saw was in Wilmington. The prices have been increasing YoY, but in have seen an especially large increase in value. Dover has seen less dramatic, more consistent growth over the past four years of investment activity. Due to expanding metro employment bases, there is a large growth in multifamily housing demand within the metro areas of Charleston, Columbia and Greenville-Spartanburg.

Inapartment demand outpaced supply, allowing for continued rent growth and unprecedented vacancy rates. But only time will tell which markets will come out on top. Until then, we will continue to investigate and report any and all OZ trends and market changes across the nation. For more information on Opportunity Zones and an extensive analysis across all 50 states, read our report.

Solutions For Individuals Property intelligence empowering you to discover new opportunities, uncover insights and connect with owners. Modules Discover Identify new opportunities faster than ever. Research Understand properties and markets in a single source. Outreach Go beyond the LLC and connect directly with property owners. For Enterprise Our property intelligence, your way. Log In Free Trial. State of the Multifamily Market in Opportunity Zones At the end of Q1, our research indicated the Opportunity Zone OZ legislation seemed to have little to no influence on the market for assets in designated areas.

Key Takeaways: Multifamily is thriving in OZs. Compared to other asset classes, multifamily stands. Multifamily investment is driving tertiary markets. But what is driving this continued investment success? So, how does this all affect opportunity zone markets? Attention is Turning to Tertiary Markets Investors take a multitude of factors into account before making an Opportunity Zone acquisition.

But which of those assets are in opportunity zones?! How Does this Compare to all Multifamily Sales? A larger proportion of multifamily assets are selling in Opportunity Zones. The Bottom Line So, what does all this mean? Individual Market Analysis Large states, gateway markets see more deal volume Where exactly is the most investment occurring?

Top States for Increased Investment Activity Though our data indicates the OZ legislation hardly catalyzed any sales or development in OZ markets, it does seem that multifamily is performing better than any other asset class, and at a proportionally higher rate than non-OZs. High-Growth Markets To identify top-performing multifamily markets in OZs, we looked at the consistency of year-over-year YoY growth in average sales price, and overall growth in average sales price state by state.

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The True Bull of the Market: Multifamily

Log In. Scouring the nation for your next cash cow multifamily acquisition? Google Tag Manager. Paul climbed two spots to top the firm’s index. Over the course of this cycle, Tacoma has increased its job base by Despite worries about its slightly declining population, New York continues to be a top market, with every sign of it remaining the largest, most vigorous multifamily market in the nation. Load More. Salinas, California Salinas is a rural market stirring from its slumber. Please Sign Up. Things are a little too competitive for to be profitable for many investors in the primary markets. These were some of the conclusions highlighted in the edition of Top U. Post was not sent — check your email addresses! In the last year, it has more than doubled its historical growth with a 3. Their inventory and population require outsized multifamily lending. Not surprisingly, New York once again captured the highest share of large multifamily lending of any U.