The best places to live are often the best places to invest. But COVID-19 has changed the way we live and work, upending the multifamily and commercial real estate markets. As the virus becomes systemic, it begs the question: what are the best cities to invest in multifamily real estate, post-pandemic?
At Origin, we understand that real estate markets are always evolving and evaluate the best places to invest in real estate on an ongoing basis. We’ve developed a proprietary predictive model that looks at the top 150 markets across the country and aggregates millions of pieces of data using AI. In keeping with our investment strategy, we’ve built our model to identify the most promising places for multifamily rent growth and real estate investing demand.
We look for markets where highly skilled employment is growing. Post-pandemic, healthcare technology jobs, for example, have skyrocketed, sending influxes of white-collar workers earning six-figure wages to various markets. This is a key indicator for real estate investment because we can expect these workers to boost the local economy, allowing for rental increases.
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But rent growth is only part of the picture. For instance, the Huntsville, Alabama metro area hosts the country’s highest concentration of engineering graduates thanks to defense contractors and NASA’s Marshall Space Flight Center. Our analysis says the city, now nearing 625,000 residents, is in line to produce some of the most robust rent growth in the country over the next five years. Yet the city already has plentiful housing and there isn’t a lot of institutional demand to buy those properties—an important element to secure a great return on investment. Yet that doesn’t mean Huntsville is completely off our radar. We ceaselessly monitor the underlying fundamentals of potential markets over time, and act when the right signals are present.
If not Huntsville, then where? Our research points to a group of superstar cities that have booming job growth, plus the best potential to capitalize on post-pandemic trends.
Phoenix is No. 1
The Phoenix economy was resilient through the COVID-19 lockdown; trade, transportation and utility employment continued to rise in the 12 months since February 2020. Arizona State University’s industry-leading cybersecurity, AI and analytics programs continue to produce a talented labor pool for tech employers. Intel plans to invest $20 billion in two new semiconductor plants in suburban Chandler, and Taiwan Semiconductor soon will break ground on a $7 billion Phoenix factory that is already drawing related investment.
Metro Phoenix is a primary beneficiary of migration from California for its superior quality of life. The Roosevelt Row arts district, a downtown Phoenix opportunity zone, is a magnet for new restaurants and apartments, including the 185-unit Union at Roosevelt mixed-use development funded by our tax-advantaged Origin QOZ Fund. Plus, robust hiring and affordable housing put Phoenix at the intersection of rent growth and capital demand.
Atlanta, Charlotte and Austin Take 2nd in a Three-Way Tie
Southern regional hubs are attractive for real estate investment post-pandemic as U.S. and international employers expand. Atlanta, Georgia is evolving into the tech capital of the Southeast. Microsoft will add 1,500 jobs this year in Atlanta’s West Midtown with an AI and cloud computing service center that will open near an Origin IncomePlus Fund project, the 409-unit Star Metals mixed-use development. Google and AirBnb are also planning hubs in Georgia’s capital city.
The best thing that happened to Charlotte, North Carolina was being rejected by Amazon as a site for its HQ2 because they didn’t have enough STEM jobs. Since then, the city has made a concerted effort to court STEM employment, with great success. Health insurer Centene Corp. has committed to 3,200 jobs at its new $1 billion East Coast headquarters in Charlotte, where we are breaking ground for a 327-unit QOZ Fund development in the city’s Greenway District.
For the past few years, Austin, Texas has topped many best places to live lists—and for good reason. With a growing job market, affordable housing and vibrant, exceptionally diverse cultural offerings, Austin attracts transplants from coast to coast. Oracle is relocating its corporate headquarters there, while Apple, Tesla and Samsung are expanding in the Texas capital. We have a 250-unit multifamily building in Austin, Madison at Westinghouse.
Raleigh Takes 3rd, With 2 Significant Sidekicks
While significant on its own as one of the nation’s best places to live and work, Raleigh is synonymous with Durham and Chapel Hill thanks to the 1959 creation of Research Triangle Park. Ironically, decades of coronavirus research at the University of North Carolina in Chapel Hill preceded the COVID-19 pandemic and burnished the biotech reputation of this area, which is defined by UNC along with its other two anchors: Duke University in Durham and North Carolina State in Raleigh.
Metro Raleigh passed the pandemic’s one-year mark with a net jobs gain in its two biggest sectors, professional services and trade/transportation. The Triangle is a tech hub as well, with Google planning to expand in Durham and Apple committed to building its first entirely new campus and engineering hub in 20 years in Raleigh, boosting the city’s stable of tech companies that already includes IBM, Red Hat, Cisco Systems and Epic Games and adding another 3,000 jobs to the area.
Clearly, the area’s ties to alumni serves it well. Apple’s CEO Tim Cook and COO Jeff Williams both earned MBAs from Duke. Our boots-on-the-ground approach with the area continues to serve our investors well. In April we sold our Trinity Place property in Raleigh, and still hold a Durham office asset, Keystone 100.
Nashville Makes More Than Great Music
With Belmont and Vanderbilt Universities, the nation’s best health services ecosystem and its growing entrepreneurial spirit, Nashville’s business landscape is as enticing as its world famous honky-tonk cultural scene. Pre-pandemic, major corporations such as FedEx, AllianceBernstein, GM, Amazon and Mitsubishi were pouring into the city, either relocating their headquarters there or opening major new facilities.
Post-pandemic, Amazon’s operations center is on pace to surpass Bridgestone and HCA Healthcare as Nashville’s major employer, with 5,000 jobs promised. JLL scored metro Nashville the nation’s fifth-best potential life sciences market, with a critical mass of Millennial professionals and moderate cost of living–a combination that broadly benefits the Music City. A budding tech hub that includes Dell and pioneering companies such as Silicon Ranch and JumpCrew is about to be joined by Oracle America.
Downtown Nashville offers unique attractions that speak to the city’s special identity, including a six-acre redevelopment on the site of the former Nashville Convention Center with Class-A office and apartment towers and retail, entertainment, and hospitality attractions, including the newly opened National Museum of African American Music. For good reason, we have a deep development pipeline at work in Nashville sourcing deals for our IncomePlus and QOZ Funds.
Tampa Has It All, and Then Some
With its blend of a bayside quality of life and all the amenities of a major metropolitan area (think pro sports teams, great museums and enticing entertainment and dining options), Tampa is positioned to thrive post-pandemic. Factor in its affordability, fabulous weather, sustained professional-sector growth, lack of a state income tax and proximity to the beaches of St. Petersburg and Clearwater and it’s easy to understand why many consider Tampa a paradise. Even the ocean is warmer Gulf-side.
Tampa’s hotel occupancy already is on the upswing, a great sign for the city’s economic growth. Best of all, a housing shortage makes Tampa a prime candidate for multifamily rent growth. We are closing on our first Tampa project later this spring and have more exciting projects in the investment pipeline in this vibrant city, Florida’s second largest metropolitan statistical area.
Our research suggests these urban areas hold promise as best performing cities. But investors won’t thrive in these high-growth markets without the diligent research and disciplined business execution that makes Origin the best place to invest.
