The most delicate areas to invest in are frequently the best places to live. But COVID-19 has altered how we live and work, upending the markets for multifamily and commercial real estate. As the virus becomes widespread, the question arises: Which cities are the greatest multifamily real estate investments post-pandemic?
We recognize that real estate markets are constantly changing and examine the finest real estate investment locations continuously. We’ve built a forecasting algorithm that analyzes the top 150 markets nationwide and collects millions of data points using artificial intelligence. Our investment strategy has developed a methodology that identifies the areas with the most significant potential for multifamily rent growth and real estate investment demand.
We seek markets with expanding highly skilled jobs. In the aftermath of the pandemic, healthcare technology positions exploded, bringing waves of white-collar specialists earning six-figure salaries to different needs. This is a crucial signal for real estate investment since these employees will likely stimulate the local economy, allowing for rent rises.
However, rent inflation is just half of the problem. For example, the Huntsville, Alabama, metropolitan region has the greatest concentration of engineering graduates in the U.S. due to military firms and NASA’s Marshall Space Flight Center. Our estimate indicates that the city, which already has close to 625,000 inhabitants, will have some of the most substantial rent increases in the nation over the next five years.
However, the city already has an abundance of housing, and there is no institutional desire to purchase these properties—a crucial factor for achieving a high return on investment. Nevertheless, Huntsville is not entirely off our radar. We continuously monitor the underlying fundamentals of prospective markets throughout time and take action when the appropriate signs are there.
Alternatively, if not Huntsville, where? Our analysis identifies an exclusive set of locations with explosive employment growth and the most remarkable ability to capitalize on post-pandemic trends.
Phoenix is first.
Since February 2020, employment in commerce, transportation, and utilities has risen steadily over the last 12 months in Phoenix, despite the COVID-19 lockdown. The cybersecurity, A.I., and analytics departments at Arizona State University continue to develop a skilled labor pool for I.T. firms. Intel wants to spend $20 billion on two new semiconductor factories in Chandler’s suburbs, while Taiwan Semiconductor will shortly begin work on a $7 billion facility near Phoenix that is already attracting investment.
Because of its improved quality of life, migration from California mainly benefits the Greater Phoenix area. Roosevelt Row, an opportunity zone in downtown Phoenix, is a magnet for new restaurants and residences, including the 185-unit Union at Roosevelt mixed-use building. In addition, solid employment and cheap housing position Phoenix at the nexus of rent growth and capital demand.
Atlanta, Charlotte, and Austin Tie for Second Place.
As U.S. and foreign enterprises grow, post-pandemic regional centers in the South are desirable for real estate investments. Atlanta, Georgia, is becoming the Southeast’s technology hub.
Microsoft will create 1,500 jobs in Atlanta’s West Midtown this year by opening an artificial intelligence and cloud computing service center. Google and Airbnb also aim to establish hubs in the capital of Georgia.
The big thing that could have happened to Charlotte, North Carolina, was for Amazon to reject the city as a location for its second headquarters because it lacked sufficient STEM employment. Since then, the city has successfully endeavored to recruit STEM professionals. Health insurer Centene Corp. has vowed to generate 3,200 employment at its new $1 billion Eastern Seaboard offices in Charlotte.
Austin, Texas, has topped several most incredible places to live lists recently, and with good reason. Austin draws newcomers from coast to coast due to its expanding employment market, inexpensive housing, and thriving, significantly diversified cultural offerings. Oracle is shifting its headquarters there, while Apple, Tesla, and Samsung are growing in the capital of Texas. There is a 250-unit apartment complex in Austin, Madison, at Westinghouse.
Raleigh Places Third, With Two Important Companions
Due to the development of Research Triangle Park in 1959, Raleigh is linked with Durham and Chapel Hill, despite being one of the country’s most significant locations to live and work. The University of Carolina in Raleigh has been investigating coronaviruses for decades, and this research has helped to strengthen this area’s biotech reputation, including UNC, Duke University, and North Carolina State University.
Professional services and trade/transportation, the region’s two largest industries, both had net employment growth on the first anniversary of the epidemic. With Google’s plans to expand in Durham and Apple’s promise to build its first utterly new campus and engineering center for 20 years in Raleigh, 3,000 jobs will be added to the city’s tech sector.
Clearly, the region benefits from its links to alumni. Tim Cook, Apple’s CEO, and Jeff Williams, its COO, both obtained MBAs from Duke. Our hands-on approach to the region continues to benefit our investors.
Nashville Produces More Than Just Excellent Music
Nashville’s corporate environment is as alluring as its world-famous honky-tonk cultural scene, with Belmont and Vanderbilt Universities, the nation’s most significant health care ecosystem, and a developing entrepreneurial spirit. Before the pandemic, prominent firms such as FedEx, AllianceBernstein, G.M., Amazon, and Mitsubishi were shifting their offices or constructing new facilities in the city.
Amazon’s operations center is on track to overtake Bridgestone and HCA Healthcare as the largest employer in Nashville after the pandemic, with 5,000 jobs guaranteed. With a reproving mass of millennial professionals and a modest cost of living, JLL ranked the Nashville metropolitan area as the nation’s fifth-best prospective life sciences market, a combination that substantially advantages Music City. Oracle America will soon join a growing tech area that includes Dell and pioneering startups such as Silicon Ranch and JumpCrew.
A six-acre makeover on the site of the old Nashville Convention Center has Class-A business and residential buildings as well as retail, entertainment, and hospitality attractions, including the recently completed National Museum of African-American Music.
Tampa Has Everything and More
With its combination of a bayside quality of life and all the advantages of a significant urban region (including professional sports teams, beautiful museums, and appealing entertainment and food choices), Tampa is poised to prosper in the aftermath of the epidemic. It is easy to see why so many people regard Tampa as a paradise, given its affordability, fantastic weather, steady professional-sector development, absence of state income tax, and closeness to St. Petersburg and Clearwater beaches. Even the seawater is warmer towards the Gulf.
Already on the rise, hotel occupancy in Tampa is a positive indicator of the city’s economic expansion. Best of all, Tampa is a strong prospect for multifamily rent increases due to the housing crisis.
Our analysis indicates that these metropolitan regions have the potential to be the most prosperous cities. But without meticulous analysis and focused business execution, investors will not succeed in these high-growth areas.
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Come join us! Email me at mark@dolphinpi.us to find out more about our next real estate investment.