By: The Working Forest Staff
GLOBEST.COM — Secondary and tertiary markets across the American West and Florida are projected to be multifamily outperformers in 2022, led by Phoenix, Las Vegas, Tampa, Tucson, and Albuquerque, according to new research from Freddie Mac.
Those cities are projected to post annualized growth in gross income ranging between 6 and 7.6%, with vacancies hovering in neighborhoods of between 3.3% (Albuquerque) and 4.6% (Phoenix). Atlanta, Sacramento, Riverside, West Palm Beach, and Fort Lauderdale round out the top 10.
Meanwhile, in a change from 2021, the bottom 10 markets by projected gross income are no longer urban gateway cities; instead, they are located across the Midwest and the Northeast. They include Omaha, Buffalo, Northern New Jersey, Nashville, and Central New Jersey.
“The migration changes initially brought about by the pandemic appear to be continuing. New trends, however, are also emerging,” the report notes. “During the early days of the pandemic, many residents fled expensive, densely populated, coastal urban city centers for less expensive and less dense suburban locations.”
Freddie Mac analysts note that while the demand for lower-cost living “continues to reshape the demand seen in markets across the nation,” urban cores are being populated by renters who are 10 years younger on average than those who left.
“Many young professionals now have the flexibility to work remotely, which doesn’t necessarily mean wide, green pastures, but provides the ability to live in a different city than where their job is anchored,” the report notes.
Freddie Mac predicts vacancy will improve in more than 40% of the markets it covers, and will remain unchanged or will increase to under 60% of markets. Gateway and some Rust Belt markets are expected to see improving vacancy rates in 2022, with the largest projected drops in vacancy concentrated in Northeast and Mid-Atlantic cities like Washington, D.C. (core) and Boston, where vacancy rates are expected to decline 160 and 130 bps, respectively.
Freddie Mac expects growth to be positive in all 74 markets it covers, led by Phoenix at 8.2%, Tampa at 7.7%, Las Vegas at 7.4% and Tucson at 7.1%. The weakest rent growth is expected in the suburbs of New York City and in Milwaukee, but ‘Even then, these metro areas are still expecting to see a modest growth rate of 2%-2.5%,” the report notes.
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