Downtown Apartment Construction Ramps Up, Especially in the South

A lot of attention has gone into suburban multifamily development. Understandably, as demographic shifts have sent businesses, followed by existing and potential workers, out of old population concentrations and into burgeoning ones. “Go West, or South if you’re so inclined,” a modern Horace Greeley might write. People cluster around metros and they need housing.

But they also live in the metros. StorageCafe.com, one of the sites that Yardi Matrix runs, crunched the numbers and found that southern states have taken the lead in downtown multifamily construction over the last decade. Atlanta was on top with more than 21,500 units added. In Nashville, St. Petersburg, and Phoenix, “housing in 50+ unit buildings built between 2013 and 2021 represents more than 70% of the large-scale apartment inventory.” Tampa and Miami came in fourth and fifth with 69% and 66%.

But a look at the actual data shows other areas with high downtown housing development: Los Angeles, Denver, Jersey City, Brooklyn, Minneapolis, Baltimore, Chicago, and San Diego, to name a few. Something for investors to remember is that trends, while notable, never offer a full view.?There will always be outliers, distributions are important, and averages and medians never tell the whole story.

The most interesting parts to us are twofold. One is that such information can lead to making the wrong investment decisions. There’s already activity in the top-rated metros, and many people and institutions will take that as a sign of where to put their money now. But it’s already too late. When the development has been hot and heavy, you now have established players who know the local field as well as growing competition coming from the outside. The new kids on the block help drive up prices and costs.

The other part is implied. If you are going to take advantage of opportunities in multifamily, how do you see them before they’re overpopulated by late-comers? Easy—check the data. We spend a lot of time working with our clients, using our data and analytic engines, to find patterns that are the early signs of opportunities. Get in touch and we can explore how Offerd could help you.