The Top 7 Cities to Watch for Multifamily CRE Investing
We believe these are the best multifamily commercial real estate markets to invest in right now—plus, others to look out for.
June 24, 2021
Location, location, location.
When it comes to real estate, you’ve probably heard location is everything. The adage holds true when it comes to investing in real estate: an asset’s physical location is a critical determinant for its future appreciation.
What separates a good commercial real estate (“CRE”) investment from a not-so-good one depends not only on the quality of the building but also on centrality, walkability, nearby development, crime rates, and migration into and out of the area.
There is one factor, however, that doesn’t get the attention it deserves: the rate of venture capital investment in a region.
That’s right, we’ve found that the amount of funding for innovative startups strongly correlates with increased demand for commercial multifamily real estate. It makes sense: a promising startup economy creates an influx of young renters with an affinity for multifamily apartment complexes.
Historically, cities like Boston, New York, and San Francisco have taken the lion’s share of venture capital. But there are less established markets that provide high-growth investment opportunities for both startups and commercial real estate. These markets typically have high-earning STEM employment opportunities, impactful anchor institutions, natural and cultural features, a history of innovation, and an above-average job and population growth.
Using this VC mindset, here are 7 markets where commercial multifamily real estate could be a fantastic investment:
Culturally, Atlanta has come to be known as the “Hollywood of the South,” competing with LA for the most motion pictures shot in the city each year. In turn, a thriving cultural network of film creators has been growing throughout the city.
Adding to this energy, Atlanta's Hartsfield-Jackson International Airport has long held the title of the world’s busiest airport. It gives tens of millions of people a glimpse of the city—something that not a lot of competitors can claim. The airport is expected to gain even more popularity as the world emerges from the pandemic. UPS and Delta Airlines, both of which operate out of Hartsfield-Jackson, are the 2nd and 4th largest employers in the city, respectively.
In more post-pandemic good news for Atlanta, the Centers for Disease Control and Prevention, set to receive its largest boost in discretionary funding in 20 years, is based in the area. In fact, medical services and public health represent the largest public sector in the state of Georgia.
After decades of rapid population growth, Austin now has deep-rooted and innovative networks in the fields of civil engineering, environmental conservation, medicine, and consumer technology. It was ranked as the 12th most innovative city in America based on data from the U.S. Patent and Trademark Office in 2018. And the future looks bright: as one of the fastest-growing cities in the U.S., Austin is expected to double its population within the next 30 years.
As companies moved to Austin at an unprecedented pace, the city began hosting Austin Startup Week, an annual showcase celebrating the best of innovation and entrepreneurship in Austin. To boot, an accelerator called the Capital Factory partnered with the Austin Chamber of Commerce to open a 22,000-square-foot co-working space in the city.
With the availability of several high-achieving colleges and universities, Austin has ranked at the top of the STEM Job Growth Index for four consecutive years and has garnered a reputation as an emerging tech hub capable of rivaling Silicon Valley.
As one of the largest universities in the country, The Ohio State University draws tens of thousands of students to campus each year. In the last five years, Columbus had a surplus of 67,000 tech graduates seeking employment and increasing demand for new jobs. Because of the massive supply of young STEM professionals, CBRE named Columbus one of the top tech markets for several years in a row.
Anchor institutions across tech industries have used the supply of OSU talent to achieve lofty goals. One of those, research giant Battelle, has led the charge across the Midwestern region to work alongside the Department of Energy in developing technology to fight climate change.
In the startup world, Ohio VC funding hit a record $1.5 billion in 2020, while several unicorn startups like Root Insurance and CoverMyMeds have established headquarters in the city. Beyond startups, major companies like Nationwide and JPMorgan Chase continue to employ a vast network of young STEM professionals.
The Dallas-Fort Worth Metroplex has been one of the fastest-growing cities in the country for several years. From 2019 to 2020, the area added 120,000 new residents and was labeled one of the most financially stable cities during the economic downturn caused by the pandemic.
The Dallas region holds three of the country’s top 15 Fortune 500 companies, including AT&T and ExxonMobil, and 22 total. These companies employ swaths of young professionals in and around Dallas and generated $857 billion in 2020 alone.
Colorado boasts a thriving green-tech industry and, in fact, the state’s governor is the co-founder of seed accelerator Techstars. Denver in particular received $931 million in VC investment in 2019, and is home to hundreds of fast-growing tech startups spanning various industries. SendGrid, an email marketing communications platform, was acquired by Twilio in 2019 for $3 billion. Instead of joining Twilio in San Francisco, the company remained in Denver, a decision touted as a sign of the city’s bright future.
The unique culture and lifestyle of Denver residents also draw the attention of potential new residents. The city has a young, diverse population who enjoy an array of natural and cultural amenities, from the Rocky Mountains to the Scientific and Cultural Facilities District, which contributes over $60 million to arts and culture annually.
With low housing costs and a growing startup industry, Reno has enjoyed a steady influx of talented Californians seeking a higher quality of living. This growth, combined with a surge in tech jobs driven by the data center industry, has led Reno to have the highest number of VC-backed startups it’s ever had—almost a hundred companies have moved to the city, too. Among these companies are restaurant tech startup Toast and medical monitoring company Algorithmic Intuition. Neither received any state incentives or abatements for expanding to Reno.
Reno’s arts and culture scene has often been dismissed, or at best loosely associated with the iconic Burning Man festival. However, the Stremmel Gallery, the Nevada Museum of Art, and the summer Artown festival have shined a spotlight on Reno’s burgeoning cultural network.
Utah boasts the country’s fastest growth rate, with Salt Lake City alone amassing over 100,000 new residents since 2010. National real estate service provider Cushman and Wakefield reported in 2018 that the number one driving force for new renters in Salt Lake City was its tech sector. Multifamily developments of all sizes have dramatically changed the city’s skyline, and SLC now has a reputation for being one of the most exciting new cities to be in.
Residents of Salt Lake City had more tech degrees per capita than Boston, Denver, or San Francisco. It was ranked the 8th best city for STEM professionals in the country according to a comprehensive study by WalletHub in January 2021.
In 2018, SAP acquired the SLC-based software company, Qualtrics, for $8 billion. It made major headlines as the largest acquisition of a Saas company in history, drawing attention to the city for being home to such valuable tech innovation.
Other Cities to Watch:
Now it’s just a matter of making these exciting investment opportunities accessible to everyone.
Rhove allows investors of all backgrounds to invest in the places they love while helping lay the foundation for economically, socially, and culturally thriving cities.
Rhove’s innovative new platform has eliminated the systemic barriers that have long prevented everyday people from investing in commercial multifamily real estate. By making investments fast, easy, and attainable, with no account minimums, Rhove empowers investors to expereince ownership with unprecedented accessibility.
Download Rhove today to connect with a community of people who are passionate about building new multifamily real estate, increasing ownership access, and being a part of the foundation for our growing cities.
When everyone is empowered to invest and experience ownership, we all thrive.