Typically centers of economic development, it’s not uncommon for the largest cities in the country to also experience the fastest population growth, driven largely by in-migration. This was not the case in 2018, however, according to the latest population data released by the U.S. Census Bureau. A flood of multifamily development is underway in fast-growing metros that many Americans may labor to find on the map.
Demographer Sandra Johnson, a member of the Census Bureau’s Population Division, emphasized that residents nationwide have begun to trend toward smaller, rapidly growing metros.
“One interesting trend we are seeing this year is that metro areas not among the most populous are ranked in the top 10 for population growth,” said Johnson. “This trend is consistent with the overall growth we are seeing in the south and the west.”
Understanding these recent in-migration shifts will provide helpful insights into predicting how the secondary multifamily markets of today evolve and expand into the primary markets of tomorrow.
This piece examines some of the major factors that three of the top ten metros for population growth in the nation (Midland, Texas, Lakeland-Winter Haven, Florida, and Boise, Idaho) have in common.
1. New Economic Realities
One of the most important elements that each of these metros have in common is recent economic developments, driven both by private or public interests, that position the metro for rapid job growth and a subsequent boost in in-migration.
- In Midland, a recently diversified economy defied expectations in 2018 by maintaining momentum despite instability in the petroleum market. Local experts cited that this may be the first time that the local economy was not hamstringed by a dip in the petroleum index.
- Boise has enjoyed an ongoing stream of businesses and renters flooding into the metro from the rest of the country, especially Seattle and California. Thanks to the local cost of conducting business being considerably lower than it is in western coastal states, the metro has experienced significant interest as a destination for corporate headquarters, with hundreds of new jobs following suit.
- Located squarely between Orlando and Tampa along the Interstate 4, Lakeland-Winter Haven has evolved into a major destination for corporate headquarters and distribution centers alike. Local government has supported this trend through investing recent property taxes increases back into improving the metro’s infrastructure, including upgrades for the all-important Interstate 4.
2. Resilient Occupancy
Apartment operators in each of the three fast-growing metros have faced unique challenges as they’ve adapted to their respective evolving markets, but few have had issues finding renters to fill units. Through the end of 2018, each metro enjoyed occupancy exceeding 95%, even in cases like Midland, where supply side pressure had a downward impact on occupancy year over year.
Occupancy is expected to remain elevated in each market through the end of 2019 despite hundreds of units currently under construction across the three cities.
3. Healthy Rent Growth
Substantial gains in effective rent are always a positive sign for a metro’s local multifamily industry. In addition to reflecting persistent demand for multifamily, the emergence of high-end multifamily developments catering to more affluent residents also signal the emergence of a more talented, experienced renter pool. That said, each metro’s upward rent tells its own unique story.
- Rent growth in Boise has been driven in large part by the increased presence of major employers, especially tech and health care companies established in the metro’s CORE technology corridor.
- Rents continued to rise in the Lakeland-Winter Haven, a market catering toward low-income renters employed in the metro’s bevy of distribution center, mirroring a nationwide trend in low-rent markets. Sheer population growth was likewise a major driving force behind rent growth exceeding 5% in the past year, as population growth in Lakeland-Winter Haven led all metros in the United States
- Among the three metros, annual rent growth was most impressive in Midland, where rates increased by more than 20%. Playing an important role was the metro’s increasingly diverse economy. This development has expanded opportunities for residents, especially those migrating from out of state, to find high-paying jobs in industries outside of petroleum.
While this analysis of the fastest growing metro’s in the country is a helpful start, there’s far more to be learned from the Census Bureau’s latest estimates. You’ll find even more insightful takeaways about population growth trends courtesy of Berkadia Research by checking out our latest newsletter, available May 24.
– Remy Antonio Albillar