Industry professionals say now is a good time to increase their investments in the Miami/South Florida market, according to the latest Market Momentum survey from the National Apartment Association (NAA). Respondents ranked Miami first when asked where they're planning to increase investments in the next six to 12 months, signaling the potential for long-term returns in the market.
“Miami was maybe the most surprising result of the whole survey, simply because people tend think that whatever’s happening now will be sustained,” says Greg Willett, chief economist of RealPage, which partnered with NAA on the survey, adding that, “Miami isn't really at the top of the list for revenue growth at the moment, so it does indicate some anticipation that the performance is going to accelerate.”
Down the road, he says, Miami will be a good market in which to have resources invested.
Willett notes that construction activity in Miami is “relatively under control compared to some of the more active markets,” and the area tends to have a higher barrier to entry for multifamily businesses. “Because it's a condo market as well as a rental apartment market, it makes it a little bit of a wild card,” he says.
Whereas Miami surprised analysts in a good way, Houston earned poor rankings in the second quarter, matching its disappointing first-quarter survey results.
The roughly 100 senior-level developers, owners, and managers who responded to the survey ranked Houston as the top market they plan to decrease investments in over the next six to 12 months. It was also the market respondents most anticipated having flat or negative rent growth in over the same period, in addition to earning the top spot on the question, “Compared to a year ago, which markets have experienced a decreased frequency of resident retention/renewals?”
NAA director of research Paula Munger says it’s not all bad for Houston, though. “We’ve seen a lot of construction there, but the good news with Houston is, the economy and jobs are starting to come back,” she says. “So after the oil downturn, I think we’re looking up there, but, still, there’s just a lot of building.”
Houston, Willett adds, is “getting close to bottoming out for this cycle just in terms of ... what’s under construction,” while employment growth is picking back up. “This will be a really interesting one to watch as we move forward in this survey, because it’s going to go from bottom of the list to top of the list very quickly.”
When asked which markets have fared the best and worst compared with a year ago in terms of resident retention/renewals, Atlanta; Washington, D.C.; and Charlotte, N.C., appeared on both lists. Why? Munger says real estate is all about perspective.
“It’s just such a local business,” she says. “It varies by landlord, it varies by submarket, it varies by the quality of space, so it's kind of unusual, but it’s such an asset-specific question.”
To view the full report, click here.
