Printer Friendly

Apartment Trends.

Martin S. Stolzoff describes The breakdown of apartment Trends in cities throughout The United States.

Real estate in general and multifamily markets specifically, have responded with relative strength to a volatile economy. Supply-demand ratios in many multifamily markets have ensured continuing investment activity. Federal action in lowering interest rates has spurred economic hopes that there will be no long-term recession." This has kept alive the expectation for economic growth--although at a substantially slower pace--and kept money available for financing.

Vacancy rates and a slow-down in new apartment construction help keep up rents and increase property value in many areas. Construction, affected by economic declines and higher unemployment in some sectors, is likely to be significantly slower. But real estate is location driven, people need an affordable place to live and single-family homes are often not affordable, so multifamily is still the strongest sector in real estate.

Market Samplings by Location


Job market strength results in the migration of young professionals for newly opened opportunities in the computer programming and services industry. Making the area more attractive still, are higher paying jobs coupled with a higher living standard. Low 3 percent unemployment in the Atlanta area keeps the economy strong. Home prices in choice areas have risen in the last year, making renting the most viable option for many. In these tighter markets, rents too will increase as vacancy rates stay low. However, in the more affordable markets, rental vacancies will be in the 7 percent range, keeping the marketplace stable. Reportedly, active apartment buyers are "institutions and high net-worth individuals with multiple investments."


Housing shortages are a double-edged sword in the Northeast. In the strong business climate of the past few years, employment opportunities soared, resulting in strong demand for living space and a dwindling supply, causing higher rents. With a downturn in high paying technology and telecommunications jobs, there is likely to be a downturn in the demand for apartments, though rents still reflect a limited supply. The recent economic events have not dampened the market appreciably, but housing shortages and cost of living increases may drive away some of the labor force and that adversely impacts demand.


The strong Chicago economic climate feeds its strong real estate marketplace and fuels the interest of national real estate investors. Housing has not kept pace with growth. Although several major developments are expected to begin this year, the shortages will not be met. Rents are expected to increase and low vacancy rates are expected to continue.


Slowing economic growth in the Denver area is caused by high construction costs and labor shortages, among other things. Fueling a slowdown is high median home pricing, which may make businesses reluctant to relocate to the area. A large number of new units hitting the market in 2001 will contribute to a slightly rising vacancy rate, but these probably will be absorbed, thus stabilizing at about 5 percent.


With the transition in the national economy, Detroit faces a slower economic pace. But apartment vacancies are low, which should allow rents to increase, especially in middle- to lower-end properties. Values of apartment properties are likely to hold up and even grow.


Orlando has overbuilt apartments, vacancies are high and sales are low. Construction of new multifamily products has slowed, which should bode well for absorption in this thriving economic market. Tampa Bay's venture capital marketplace is quite strong. Unemployment is low and job availability high. Vacancies too, are high, attributable to high construction rates.

South Florida has a growing economic base. Greater technology, venture capital, expanding trade and tourism support the growth. A growing economy yielded growing job opportunities allowing lower vacancies in affordable housing which led to more apartment construction. But due to shortages of land, land values are rocketing. Opportunities lie in redevelopment, in-fill and mixed-use development projects.

Las Vegas

There is no personal income tax in Nevada. More than 2 million visitors and 4,000 new residents come to Las Vegas each month. It has had the fastest growing population in the nation for nearly a decade. These are incentives for businesses to come to Las Vegas--and they do. There has been strong construction activity in the apartment sector. Vacancies stand in the 7 percent range. Short-term, investment possibilities are limited.

New Jersey

In the Northern and Central parts of the state, both population and personal income grew last year. Lower vacancy rates in the multifamily sector drove rents higher. It is likely that the continuing strong demand will result in still higher rents. Part of the demand arises from higher single family home prices around the Newark and Patterson areas, keeping some renters in apartments and clogging the rental pipeline for newly arriving people. Sales of apartment properties reflected a holding pattern in higher priced properties and brisker sales in smaller ones.

New York City and Manhattan

Employment in the media and entertainment and business services industries contributes to the growing population. Space is at a premium. New living spaces, redevelopment projects, a rise in formerly undesirable neighborhoods in unlikely settings: warehouses, office buildings, whatever an imaginative developer can lasso. Average rent for a one-bedroom Manhattan apartments has soared to $2,400 a month. Redevelopment of lower level properties and the stock market and technology industry fallout, will result in stronger demand for more affordable living space, cooling slightly the hot, high-priced apartment markets.

Northern California

San Francisco's booming economy was reflected, in part, by record low unemployment, low apartment vacancies and record high rents. Strong investor demand coupled with scarce land for development heated up the market. Challenges to the California economy will be sharply felt in this high-tech marketplace. Not only technology-related problems, but also energy shortages and a slowing national economy will affect the tight apartment investment market, stabilizing prices and further slowing new construction.

San Jose and the Silicon Valley suffer the effects of a slowing national economy, technology meltdown and energy problems. Rental rates will probably rise more conservatively than in the past, reflecting low increases in sales prices.


There are a lot of question marks about the Seattle marketplace. The effect of Boeing's departure has not yet been felt. Microsoft's embattled year gave a sense of gloom, but with better earnings in a downward economy, the story is not necessarily gloomy--for now. In the apartment markets absorption of new product brought demand and supply closer, thus leading to stability. Some renewals of sub-markets and gentrification have increased investor interest and sales. Multifamily properties are expected to remain good investments.

Southern California

Southern California is less reliant on technology than the North. Local economies will probably be less dramatically impacted by changes in that industry.

Venture capital funding fuels growth in Los Angeles. Apartment construction increased in 2000, demand continued to exceed supply, and rents rose accordingly, creating incentives for increased building. Costs of homes are rising, feeding the need for more rental units. Rents should continue to go higher.

San Fernando/San Gabriel Valley has a greater demand than supply. Rents are among the highest in the area, except for the Westside in Los Angeles. They will rise.

Riverside/San Bernardino is drawn by lower costs, and population and employment grew strongly in 1999 and 2000. This is expected to continue. Single family home shortages and lack of new construction will likely increase sales prices.

Stronger economic growth is at a slower rate than in the past in Orange County. New jobs and low unemployment contribute to a demand for housing, but single family homes are less affordable to most of the population. Apartment rents rise, but demand continues. Sales prices have risen, though the number and volume of sales has slowed.

In San Diego, a new economy driven by telecommunications, high-tech and biotech has not changed appreciably by difficulties afflicting the Silicon Valley. But rising housing and energy costs could cause business slow downs. Vacancy rates are low and absorption is high. 2001 will not bring enough units to market to satisfy demand. Rents and prices will continue to rise.


Austin is the most expensive place to rent in Texas. Technology industry manufacturing movement into the city created booming growth of other businesses and populations as well. Demand for apartments exceeded supply, driving up both rents and the number of investors and developers coming into the area to feed the supply of units. With building regulations, it is unlikely that the market will be saturated any time soon. Meanwhile new construction means higher rents in areas where demand is strong. Sales prices should continue to rise because of investor demand.

In Dallas-Fort Worth high vacancies are being absorbed. Free rent concessions will decrease in length from months to just weeks. Fewer sales are forecast.

In Houston the economy is thriving. Apartment absorption is strong and vacancies are expected to decline. The expectation is for high-end apartment values to lead the rise in sales prices.

Washington, D.C.

With a record low vacancy rate, rents increased more than 10 percent in the past year. The economy in the capital continues to grow, though more slowly than in 2000. The slowing economy is likely to slow construction; but on the other hand, the economy is still growing and residential construction too, will grow. As a result of land being scarce, the key to development is urban renewal projects like redevelopment and conversion.

These issues and others will be more fully explored at Apartments 2001 on Sept. 24, 2001 at the Century Plaza Hotel, Los Angeles. For information visit

Martin Stolzoff will be speaking at 2001 NAA Education Conference & Exposition, Simply the Best, on Thursday, June 14 on Multifamily Housing Industry Trends.

Martin S. Stolzoff is a Partner at Real Estate Conference Group.
COPYRIGHT 2001 National Apartment Association
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2001, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
Printer friendly Cite/link Email Feedback
Author:Stolzoff, Martin S.
Date:Jun 1, 2001

Related Articles
NYC rental market improves with stronger economy.
How Do Your Properties Compare?
On Fire!
Taking Charge.
Apartment professionals test new technology.
Developers get creative as land prices climb.
Reis economist addresses housing correction.

Terms of use | Privacy policy | Copyright © 2018 Farlex, Inc. | Feedback | For webmasters