Top 10 Multifamily Markets

March 5th, 2014 by Alisa Sava

With more and more people looking for apartment homes as a solution for their housing needs, multifamily sector continues to be one of the most successful segments in U.S. commercial real estate with even more growth expected for this year.

Top 10 Multifamily Markets

Rising demand and restricted supply makes multifamily housing a good investment option for developers and investors. According to CoStar Group forecast for the top 54 U.S. metropolitan areas, more than 240, 000 new multifamily units will be added in 2014 in the U.S.


Here, we take a look at the 10 top multifamily markets that are expected to generate the highest rental rate growth and the highest occupancy levels. All the markets will see a significant supply, as they have had a lack of multifamily production over the past few years. The following ranking is based on Meyers Research.

#1 Oakland, California


Oakland, California

Oakland is a top choice for 2014 performance in the multifamily market. There is a huge demand for new multifamily units in every Oakland neighborhood. Much of this demand comes from neighboring San Francisco, as it becomes overpriced with the rents a third higher than in Oakland.


“As San Francisco and the peninsula becomes even more expensive, I think we’ll see more people realize how far their dollar will go in Oakland,” predicts John Sebree, vice president and national director of Marcus & Millichap’s group.


Indeed, today, Oakland has all the chances to become the country’s rent growth leader in the coming years. Over the next three years, the local market is expected to experience population growth of 1% annually (approximately, 27,000 people). With a 97,1% occupancy level, the unemployment rates has dropped below 7 % and average household income increased by 4%, Oakland’s economy offers promising opportunities for those who are willing to develop or invest in multifamily housing.


A significant amount of young people, searching for affordable houses, is another factor that contributes to the development of multifamily construction. The age composition of Oakland’s population reflects a high percentage of young working-age individuals from ages 20 to 44. The majority of them are mobile and do not want to be stuck in mortgages. Additionally, experts are making bets on the pent-up demand from the so-called generation-Y who are currently living with parents. Many of them will find jobs and leave the nest to form their own households.

#2 Portland, Oregon


Portland, Oregon

Portland is one of the hottest multifamily real estate markets in the U.S. It also remains one of the tightest housing markets in the country: at the end of 2013, the occupancy rate was 96,7%. As a consequence, the rent growth increased by 6,4%. Portland’s economic and population growth creates a demand for new apartment units.


Known as the place where young people go to retire, Portland experiences a steady population growth, averaging 1.3 percent over the past three years. This trend is expected to continue until 2015. Moreover, job rise has become another factor stimulating a need for new apartments. According to Jay Denton, vice president of research for Axiometrics:


“There are still approximately nine jobs being created for each new apartment unit delivered to the market. That is a strong demand/supply ratio.”


The Multifamily Northwest, an apartment industry association, projects that the tight market in Portland will continue for a few years with another 2,300 apartments to be added each year to keep up with the region’s growth.


“People like Portland,” says Deborah Imse, Executive Director of Multifamily Northwest. “ They like to come here. They like to live and work here and the quality of life is considerably better than in other parts of the country.”


One of the multifamily trends in Portland is the popularity of micro-apartments: these small units are below 200 square feet, representing a living area and a bathroom, with a shared kitchen down the hall.

#3 San Francisco, California


San Francisco, California

According to the “Emerging Trends in Real Estate 2014” survey, for the second year in a row San Francisco becomes a top-ranked city for the real estate business. San Francisco remains a solid investment area for all property types. Despite being one of the most expensive markets, San Francisco will continue to prosper in 2014. The analysts predict 36% of new residents moving into the metropolitan area, 4,2 % growth of gross metro product and 5.5% growth in personal income. The population growth is caused by the tech-related employment rise of 51,8%.


Since single-family housing becomes unaffordable for the majority of people, there is a huge demand for apartment units. Thus, high occupancy gives pricing power to landlords.According to the latest reports, San Francisco’s stock is 96.5% full, while the rent growth in the past year was recorded at 6%. Today, there are more than 5,800 multifamily units under construction in San Francisco.


“While that future new supply isn’t all that big compared to what’s on the way in some other metros, it’s a huge block of completions by San Francisco’s historical standards,” comments Greg Willett, vice president of research and analysis for MPF Research.

#4 San Jose, California


San Jose, California

San Jose ranks fourth place on the list. Its rapid economic growth is caused by the development of the technology industry. The rising income and high employment rates will support real estate demand in this area. Leading tech firms, innovative companies and highly educated population – all these factors will remain the drivers of San Jose economy rise.


MPF Research states that San Jose had an occupancy rate of 96.6% at the end of 2013, and the rent growth at 7%. The same positive trend is expected to continue in 2014. The construction of Levi’s Stadium that will host the San Francisco 49 ers during the 2014 season, will bring thousands of permanent jobs to the area.


The construction development is expected to beespecially active in the North San Jose/Milpitas submarket. In ultra-tight submarkets, such as Mountain View/Palo Alto and Santa Clara, investors with long-term strategies will pay high prices to secure assets. The buyers seeking value-add deals will find opportunities in the cities between Mountain View/Palo Alto and downtown San Jose.

#5 Miami, Florida


Miami, Florida

After the 2008 economic crisis, followed by the investment paralysis of 2009, we are witnessing a revitalization of purchasing capacity and the overall growth of investments in the Miami multifamily building.


The Miami market is definitely on the rise and the latest figures clearly indicate that now is the best time to invest in local real estate. New demand for rental housing has emerged this year as evidenced by newly-constructed 1,700 units. Over the past two years, local developers have launched dozens of new residential projects, including a considerable number of elite apartments.


That is why, a multistory buildings and other types of condos have emerged to facilitate the housing problem as well as to save a free public space. Thus, the demand and under-supply combine to justify new constructions in Miami. Creditor interest and low borrowing rates facilitate financing and give developers a positive spread.


Miami District has a number of areas that could offer easy entry to multiply profit. Among the most active submarkets are Doral, Coral Gables and Dadeland. For instance, in Dadeland there are several apartments of class A, some of them are completed, others – under construction. These are the first new rental projects implemented in this area in about a decade.

#6 Houston, Texas


Houston, Texas

Housing, nonresidential construction, and revival in exploration industries will be the key economic drivers for Houston in 2014. Employment gains are projected to come from related manufacturing and professional services, as large companies relocate more of their headquarters operations to Houston. Over the longer term, the population growth and expansion in energy, health-related, and distribution industries will help propel above-average economic rise.


According to National Real Estate Investor, in Houston the multifamily developers deliver nearly 14,00 units annually. Since the demand for multifamily is not going to reduce in the near term, Houston is expected to remain one of the top-performing apartment markets of Texas:


“Developers are increasingly confident in their ability to lease up buildings, new construction or repositions. 20,000 apartment units are under construction and another 20,000 units proposed,”comments Ed Cummins, Senior Vice President. of Transwestern Multifamily Investment Services Group .

#7 Denver, Colorado


Denver, Colorado

Denver is an ideal market for development, as its high industrial diversity and well-educated workforce provide numerous perspectives for economic growth. There is also predicted a robust in-migration growth provoked by the plentiful job opportunities. Thus, Denver has become one of the top ten relocation destinations in the United States for people 25 to 34 years old. MFP Research forecasts more than 95% occupancy and 4% rent growth for 2014 multifamily market in Denver. As the apartment demand surpasses supply, landlords are able to push rents.


“Denver is at the beginning of its apartment cycle,” says Jeff Hawks, principal of ARA Colorado. “It is hard to imagine anything slowing it down. The same-store rents have just reached 2003 levels and Denver renters have the ability to withstand significant rent increases.”

#8 Seattle, Washington


Seattle, Washington

According to an “Emerging Trends” report, Seattle is the eight-best place in the country in terms of investment, development and homebuilding. One of the reasons for Seattle’s rapid economic growth is a “high rate of educational attainment.” In 2013, Seattle’s market added 7,000 units and increased the occupancy up to 95,7%. The rent growth reached 5.5%.


Due to the growing concentration of tech companies, such as,,, etc., a huge influx of foreign investments is expected in 2014.


“With lots of job additions occurring in the heart of the city and apartment construction very significant in and around downtown, Seattle appears likely to be the next U.S. metro that will offer a 24/7 urban core similar to the environments seen in Manhattan and the downtowns of San Francisco and Chicago,” Greg Willett says.


Dupre + Scott Apartment Advisors expects 38,000 new units to be introduced to Seattle’s market, while job growth will create 40,000 renters over the next five years.

#9 Orange County, California


Orange County, California

The outlook for investment prospects in 2014 increases a little and is ranked number nine in the list. At the end of 2013 the rent growth in Orange County was 3,6%, while the occupancy rate increased up to 95.9%. The increasing price for the single-family homes as well as growing employment rates, creates a robust demand for apartment buildings. In fact, Orange County is one of the 50 counties nationwide in terms of the percentage of households that rent rather than have their own residences.


Although the situation in Orange County is far from the full recovery, half of the jobs that were lost during the recession period have been successfully restored. In 2014, more than 6,300 units are expected to be added in Orange County.


“Performance results in 2014 probably won’t quite hit the levels seen in 2014, but the overall outlook remains very positive,” Greg Willett says.

#10 San Diego, California


San Diego, California

According to Meyers Research, San Diego ranks ninth out of 28 markets in terms of its multifamily investment index. In 2013, San Diego experienced an upturn in apartment construction. At the end of 2013, the rents increased by 3.6% while the market’s occupancy rate was 96.2 %.


“Unlike the rest of Southern California, San Diego didn’t really lose ground meaningfully during the downturn so today’s revenues are close to 6 percent above pre-recession levels,” notes Greg Willett, vice president of research and analysis for MPF Research.


Therefore, multifamily construction and development activity will continue to be strong in 2014 with the new 5,200 units to be added in the near term. The biggest challenge in San Diego will be affordability, as the rent prices continue to rise, whereas the lower-priced units are concentrated in the suburbs.



The demographic jump has leveraged a great shift in the real estate market, promising favorable multifamily climate in 2014. It’s important to note that half of the list is located in California, and seven of the ten markets are located on the West Coast. Only one market from the East Coast is involved the list: Miami.


Alisa Sava

Alisa Sava is an experienced journalist and translator of Spanish and English languages. She has studied in Spain and Poland. In her articles she is focusing on the financial analytics and real estate perspectives. She loves travelling and is passionate for Basque culture and baking.

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