While the entire multifamily industry anxiously awaits an economic recovery, the apartment markets of California's Inland Empire, Broward County, Fla., and Tampa, Fla., are best positioned to receive a performance boost from an upswing. That's the conclusion of a new report by Carrollton, Texas-based M/PF Research.
“Once a recovery takes place, these would be the first markets in which we would expect to see meaningful improvement in terms of occupancy and/or rent growth,” says Greg Willet, director of research products for M/PF.
Why these markets? First, all three have long histories of consistent job growth, the fundamental component of apartment demand, the report says. Secondly, the markets have experienced significant slowdowns recently in new construction, as opposed to areas such as Atlanta, Denver and Phoenix, which have hardly scaled back despite job losses.
Hessam Nadji, who is managing director of Marcus & Millichap Real Estate Investment Brokerage Co. research services, doubts that Tampa's label as being among the apartment markets best positioned to take advantage of an economic recovery.
“Tampa will be an improving market,” he says. “But I don't know if it can create enough jobs to fill its vacancies.” While M/PF calculated Tampa's fourth-quarter 2001 vacancy rate at 6.4%, Marcus & Millichap pinned it at more than 10%.
Nadji says that Riverside, Calif., Sacramento, Calif., and Washington, D.C., are markets that stand to gain significantly from a recovery. “They're already strong markets,” he says. “With the economy coming back, they will get stronger.”