Graphic by Rice Kinder Institute
If you own or operate apartment communities, it’s hard to find a better part of the country to be in than the Sun Belt. I might even say it’s impossible.
Strong multifamily markets abound in the region, and the foundation for this strength stems from the Sun Belt’s impressive population growth. According to Clarion Partners, the area accounted for roughly 75% of the total population growth in the U.S. over the past decade. During the next 10 years, the Sun Belt population is expected to increase by 19 million people, or 13%, whereas non-Sun Belt states are projected to see their population increase by a total of only 3 million people, or 2%.
People are moving to the Sun Belt because of the area’s high quality of life, warm weather and lower cost of living (neither Texas nor Florida, for example, have a state income tax). Employers are attracted to the region because of its business-friendly environment and large and talented labor pools. For apartment owners and operators, an added attraction comes from the fact that millennials are moving to the Sun Belt – and this cohort is more comfortable with renting later into their lives than their predecessors.
Add these various factors up, and it’s easy to see why many multifamily investors are so bullish on the region. With that as a quick primer, here – in no particular order – are five Sun Belt apartment markets that are especially poised for long-term success.
When it comes to population and employment growth, the Dallas-Fort Worth Metroplex is an impressive performer year in and year out. The area added 294,700 jobs in the 12 months ending in May, for an increase of 7.7%, according to the Bureau of Labor Statistics. That compares favorably to the national increase of 4.5% during the same timeframe. The Metroplex also led the country in population growth in 2021 by adding more than 97,000 residents, according to the Census Bureau.
With a robust job market and a healthy influx of new residents, it’s no surprise that the rental market in Dallas-Fort Worth is experiencing strong demand. At the end of March, the region had experienced year-over-year rent growth of 18.5%, a CBRE Market Report says.
Atlanta is a vibrant, exciting city that people from across the country want to move to. It’s also home to an outstanding job market: according to the Metro Atlanta Chamber of Commerce, 31 companies that are headquartered in the metro are included in the 2022 Fortune 1000 ranking, and 17 of those companies are in the Fortune 500.
With all that Atlanta has going for it in terms of lifestyle and employment opportunities, it’s not surprising that renter demand has been strong, and that should continue for the foreseeable future. Metro Atlanta’s rent grew by 9% in July when compared with one year earlier, according to research by Apartments.com. Nationally, rents increased by 8.4% in the same period.
Like Atlanta, Tampa enjoys a diversified economy that features strong professional, business and financial services, hospitality, construction and healthcare sectors. The Port of Tampa and MacDill Air Force Base also are stable long-term contributors to the local economy.
The area also has seen its population grow by 230,000 residents over the past decade, according to the U.S. Census Bureau, and projections call for the population to increase by another 126,000 residents by the end of 2024. At the end of July, the average rent in Tampa stood 12% higher than one year earlier, Apartments.com says (again: the average rent nationally rose by 8.4% during the same timeframe).
Orlando, Fla., and Jacksonville, Fla.
As is the case with the other Sun Belt metros discussed here, both Orlando and Jacksonville feature robust rent growth, thriving and diverse economies and impressive population growth.
One stat that sticks out about Orlando concerns absorption. In the 12 months ending in March, renters in the metro absorbed more than 16,000 apartment homes, which more than doubled the area’s previous record, Marcus & Millichap says. New construction is proceeding at a brisk pace in Orlando, but that figure just goes to show the strength of demand in the city.
Regarding Jacksonville, every submarket in the metro had double-digit rent gains in May when compared to the same time in 2021, according to CoStar. That is an incredible story.
Overall, the Sun Belt is an immensely attractive area for multifamily investors. But the five metros outlined above especially stand out.