While there are still headwinds facing the multifamily industry, Kimberly Byrum, managing principal of multifamily advisory at Zonda, highlighted key opportunities she sees ahead during her recent market update webinar in early May.
“It’s a very complex market, but we are ripe for opportunity going forward,” she said. “I think the biggest challenge right now is the cost of capital, and, as that hopefully comes down toward the end of the year, we will start to see more activity on the development side, and certainly we would love to see more acquisition activity occur.”
On the bright side, she noted the supply pipeline is starting to contract and by 2027 the industry will need housing in many markets.
Byrum highlighted she’s closely watching potential market opportunities that could unlock significant growth around four resilient economy sectors: energy, technology/artificial intelligence (AI), pharmaceuticals, and semiconductors.
“This really started through the last administration, especially because of the supply chain disruptions during the pandemic, looking at the things we want on U.S. soil,” she said.
To determine her lists of markets, she examined jobs, location quotients, and where these industries are emerging. She then broke the markets down into several different buckets:
- Epicenters: Big job centers with projects that have at least 5,000 employees either there or promised to be there at some point;
- Dominant markets: Those with industries having between 1,000 to 5,000 employees and probably already operating at a high level;
- Emerging markets: Those with a strong industry there having between 500 and 1,000 employees; and
- Micro-hubs: Primarily university markets where there are smaller opportunities with fewer than 500 employees in these occupations or industries.
“I’m watching energy, and not only traditional fossil fuel, but also clean energy,” she said. “And those are things like the gigafactories and lithium battery plants.”
Traditional Energy
On the traditional energy side, Byrum pointed to Houston as the epicenter of fossil fuel as well as Midland and Odessa, Texas.
Dominant markets:
- Bakersfield, California;
- Greeley, Colorado;
- Houma and Lafayette, Louisiana;
- Longview and San Antonio, Texas;
- Pittsburgh; and
- Tulsa and Oklahoma City
Emerging markets:
- Casper, Wyoming;
- Farmington, New Mexico;
- Grand Junction, Colorado;
- Phoenix; and
- Shreveport, Louisiana
Micro-hubs:
- Abilene, Beaumont, College Station, San Angelo, and Victoria, Texas; and
- Baton Rouge, Louisiana
Clean Energy Infrastructure
Epicenters:
- Austin, Texas;
- Greensboro, North Carolina; and
- Memphis, Tennessee
Dominant markets:
- Athens, Georgia;
- Buffalo, New York;
- Columbus and Youngstown, Ohio;
- Elizabethtown, Kentucky;
- Kalamazoo, Michigan;
- Kansas City, Missouri;
- Kokomo, Indiana;
- Reno, Nevada; and
- Stanton, Tennessee
Emerging market:
- Florence, South Carolina
Micro-hubs:
- Clarksville, Tennessee;
- Greenville, South Carolina;
- New Orleans
Pharmaceuticals
“That is an old-school industry, but there are a lot of different market opportunities within that area,” Byrum said.
Epicenters:
- Boston;
- Philadelphia;
- Salt Lake City;
- San Diego;
- San Francisco;
- St. Louis; and
- Washington, D.C.
Dominant Markets:
- Ann Arbor, Michigan;
- Baltimore;
- Boulder, Colorado;
- Columbus and Dayton, Ohio;
- Gainesville, Florida;
- Lexington, Kentucky;
- Madison, Wisconsin;
- Minneapolis;
- New Haven, Connecticut;
- Raleigh-Durham, North Carolina;
- Sacramento and San Jose, California;
- Trenton, New Jersey
Emerging markets:
- Albany, New York;
- Charlottesville, Virginia;
- College Station;
- Indianapolis;
- Iowa City, Iowa;
- Los Angeles;
- New Orleans;
- Portland, Maine;
- Seattle; and
- Wilmington, North Carolina
Micro-hubs:
- Albuquerque, New Mexico;
- Allentown, Pennsylvania;
- Athens;
- Bismarck, North Dakota;
- Cincinnati
- Corvallis, Oregon;
- Denver and Fort Collins, Colorado;
- Gainesville, Georgia;
- Kalamazoo; and
- Oxnard, California
Technology
“There’s technology, and there’s always been technology, but now specifically artificial AI,” she noted. “The Bay Area is that strong area for AI as well as Seattle.”
Epicenters:
- Austin;
- Boston;
- New York;
- San Francisco and San Jose; and
- Seattle
Emerging markets:
- Los Angeles; and
- Washington, D.C.
Semiconductors
Byrum noted semiconductors really gained momentum with the CHIPS and Science Act signed into law in 2022.
“And finally and by far the biggest investment in terms of market opportunity are the semiconductor fabricators. The epicenter of that is Phoenix and Austin, followed closely by Syracuse, New York,” she said. “Keep in mind, the TSMC is a $165 billion investment in Phoenix. Intel was already there with about $35 billion and adding another $20 billion. To put those numbers in perspective, the smallest investment in a semiconductor fab is $20 billion. Overall, these jobs that are created at these fabricators are a minimum 2,000 people, and that’s working there and not building it.”
Dominant markets:
- Albany;
- Columbus; and
- Hillsboro, Oregon
Emerging market:
- Boise, Idaho
