Orlando and Las Vegas claim the top spots in Marcus & Millichap’s 2022 US Multifamily Index by ranking at the top nationwide in job creation and household formation, which in turn are fostering outsized jumps in effective rent.
High rates of rent growth, bolstered by robust in-migration, distinguish many of the top-performing metros in the Index, including Phoenix (#5), Salt Lake City (#6) and Austin (#7). Many coastal residents are moving to these metros for lower-cost living arrangements.
Besides that, Florida dominates the top 10 for similar demographic reasons. Individuals, predominantly from the Northeast and Midwest, are relocating to the warmer climates of Fort Lauderdale (#3), West Palm Beach (#4) and Tampa (#8).
Rapid hiring in Miami (#10) is also driving renter demand in the market, while strong pre-pandemic property performance and a relatively quick economic recovery placed Atlanta in the ninth slot.
Population Booming in DFW, NC Markets
Other metros favored with hearty population expansions, including Dallas-Fort Worth (#12), Charlotte (#13) and Raleigh (#15), sit slightly lower due to large construction pipelines that add short-term vacancy pressure.
Larger markets have more ground to make up, falling lower on the Index. The Bay Area metros of San Francisco (#25) and San Jose (#26) lie in the middle of the Index as the region continues to recover from the pandemic despite growing staff counts.
Employers in tech-centric Seattle-Tacoma (#22) are also hiring, although a heavy development pipeline adds near-term pressure.
Lack of Building Hampers LA, Indy, KC
Conversely, minimal building activity is benefiting Los Angeles (#23), where vacancy is also tight. Less new supply also aids renter demand in Indianapolis (#24), while Kansas City (#28) is distinguished among Midwest metros for its high rent growth.
Uncertainty regarding the degree and speed to which companies and public agencies return staff to offices plays a prominent role in the positioning of Washington, D.C. (#33) and New York (#34) in the bottom half of the Index.
As with the higher-ranked markets, demographics heavily factor into which metros fall into the lower bound of the Index. The populations of Chicago (#37) and Cleveland (#41) are expected to mildly contract this year, while slow household and job creation places Pittsburgh at No. 46.