IRVINE AND SILICON VALLEY, CALIF. — Ten-X, formerly Auction.com, has released its list of the multifamily sector’s top buy and sell markets in the United States, with Orlando ranked as the No. 1 market for buyers. The list was included in the company’s Multifamily Market Outlook report, which is based on third-quarter 2015 data from Reis and forecasted fundamentals from Ten-X Research.
Rounding out the top five apartment markets for buyers are Raleigh-Durham, N.C.; Fort Lauderdale, Fla.; Phoenix; and Sacramento, Calif. Ten-X ranked Orlando as the No.1 market for apartment buyers because the metro’s monthly effective rental rate per unit is expected to jump from $970 in 2015 to $1,169 in 2019, a nearly 21 percent increase during that period. The market’s vacancy rate is also expected to contract from 5.3 percent in 2015 to 4.3 percent in 2019.
Ten-X expects Orlando’s multifamily supply pipeline to remain heavy in the near future. Even with the new construction, vacancies are expected to decline to the low 3-percent range and settle in at the low-4 percent range during the next few years.
Orlando’s total employment is now at a record high, surpassing its 1990s peak and recently notching greater than 4.5 percent year-over-year growth, according to Ten-X. Employment is up in the professional/business services sector, which has grown year-over-year by 9 percent.
Northern New Jersey Tops List of Top 5 Sellers
On the seller’s side, the top five apartment markets are Northern New Jersey, Philadelphia, Miami, Pittsburgh and Boston. Northern New Jersey’s monthly effective rental rate per unit is expected to climb from $1,673 in 2015 to $1,832 in 2019, but Ten-X forecasts that the region’s vacancy rate will increase from 4.7 percent in 2015 to 5.2 percent in 2019.
Northern New Jersey’s apartment sector outlook is constrained due to slow employment growth and unfavorable demographics, according to Ten-X. The economy’s progress has been slow and employment growth has been inconsistent and barely topping 1 percent gains from a year ago. Unemployment, meanwhile, is higher than the U.S. average at the low 5 percent range.
Ten-X’s report also outlines how multifamily construction in the U.S. is heating up as demand drivers are holding strong. Effective rents are up by 4.3 percent nationwide from one year ago, an all-time peak. Other multifamily findings in the report include deal volume inching up to $34 billion in third-quarter 2015, and third-quarter cap rates dropping by 20 basis points from the prior quarter to 5.8 percent.
“The overall multifamily sector remains healthy and the trend of renting instead of owning continues across the U.S.,” says Peter Muoio, chief economist of Ten-X. “Despite being six years into its expansion, the demand drivers for multifamily are still in place with no signal of waning in the coming years.”
Ten-X is headquartered in Irvine and Silicon Valley, Calif., with offices nationwide. Investors in the company include Google Capital and Stone Point Capital. Ten-X has sold more than 200,000 residential and commercial properties totaling more than $37 billion since 2007.
— John Nelson