Origin Investments: Phoenix Tops List of Cities for Investing, Developing Multifamily Properties
CHICAGO — According to Origin Investments, a Chicago-based private equity real estate firm, the seven multifamily markets in the United States best poised to capitalize on post-pandemic trends are: Phoenix; Atlanta; Charlotte, North Carolina; Austin, Texas; Raleigh, North Carolina; Nashville, Tennessee; and Tampa, Florida.
Origin’s analyzed 150 markets to identify the cities with the highest chance of success as pandemic restrictions loosen. Origin has been refining this model for the past three years to inform its investment strategy and acquisitions.
All these cities are undergoing economic development that will spur rent growth and attract institutional real estate investment. The following is a breakdown of what industries each state grew in:
1. Phoenix: Phoenix’s economy grew during the pandemic with an increase of jobs in trade, transportation and utility. Arizona State University’s industry-leading cybersecurity, artificial intelligence and analytics programs continue to produce a strong labor pool for tech employers. Intel and Taiwan Semiconductor will break ground soon on facilities that are already drawing related investments. Additionally, robust hiring and affordable housing put Phoenix at the intersection of rent growth and capital demand.
2. Atlanta, Charlotte and Austin (three-way tie for second place): Atlanta is evolving into the tech capital of the Southeast with expansions by Microsoft, Google and AirBnb. In March of this year, Google announced the company will occupy five floors in an office building currently under construction in Midtown Atlanta.
Since being rejected by Amazon as a site for its second headquarters, Charlotte has tried to increase the amount of science, technology, engineering and math jobs. For example, Centene Corp, a St. Louis-based health insurance company, announced in July 2020 that it will bring at least 3,237 jobs to Charlotte over the next 10 years.
For Austin’s part, Apple, Tesla and Samsung are expanding to the city and Oracle is relocating its corporate headquarters there. These companies chose Austin because the city has a growing job market, affordable housing and diverse cultural offerings.
3. Raleigh: Raleigh is about 15 miles away from the Research Triangle Park in Durham. Exactly one year after the pandemic started, metro Raleigh had a net jobs gain in professional services and trade/transportation. In and around Raleigh are places with increased tech jobs growth. For example, Google is planning to expand in Durham. Also, Apple says it wants to build its first entirely new campus in Raleigh, which will add to the already long list of tech companies the city hosts including IBM, Red Hat, Cisco Systems and Epic Games. Apple’s move would add 3,000 jobs to the area.
4. Nashville: Nashville is known for having a strong healthcare services sector. Additionally, before the pandemic, major corporations such as FedEx, AllianceBernstein, GM, Amazon and Mitsubishi were racing into the city. Now, coming out of the pandemic, Amazon’s operations center has hired 1,000 employees at its Nashville location, according to CNBC, making the company a big employer for the city.
5. Tampa: Due to affordability, sustained professional-sector growth, access to beaches and a lack of a state income tax, Tampa is positioned to thrive post-pandemic. Tampa has seen an increase in hotel occupancy, which is a good sign for the city’s economy. Additionally, a housing shortage makes Tampa a good candidate for multifamily rent growth.
— Julia Sanders