In the next six to 12 months, Orlando is the top choice to see an increase in apartment investment spending. That’s according to respondents in the most recent Market Momentum survey from the National Apartment Association and RealPage.
Orlando, which was followed by Seattle; Washington, D.C.; Sacramento, Calif.; and Los Angeles, is an incredibly fast-growing metro, says Greg Willett, chief economist of RealPage. The market is adding jobs at an average annual pace of more than 42,000 positions in 2017, expanding the job tally by 3.6%, according to RealPage. Those new jobs create a demand for housing that investors seem happy to help supply.
In a recent blog, Willett notes that Orlando has more than 13,200 units currently under construction, “expanding the metro’s total inventory, now at about 219,900 units, by roughly 6%. Annual completions are about to go to some 9,000 units, up from approximately 6,000 units per year in 2016-2017.”
Since 2010, Orlando has absorbed apartments at a pace of about 5,000 units annually, again according to RealPage, while long-term history shows the ability to digest up to 10,000 to 12,000 units on an annual basis.
The market’s current apartment occupancy stands at 96.5%. “While it’s good that today’s occupancy rate tops the U.S. norm of 95.5%, what’s really impressive is that Orlando’s present occupancy level is more than 200 basis points above the local long-term average, measured going back to the early 1990s,” writes Willett.
Orlando also ranked second, behind Seattle, when survey respondents were asked which markets have the potential for the highest rent growth during the next six to 12 months.
Houston and Miami were each ranked in the bottom five on the investment and rent-growth questions. According to Willett, most of the survey responses came in just after Hurricane Harvey hit Houston and during the flooding caused by Hurricane Irma in Miami, which may have impacted the survey results. However, RealPage is forecasting a big upturn in performance for Houston and a solid performance for Miami over the next year.
“It will be interesting to see how perceptions of those metros evolve during the near term,” says Willett.