5 Emerging Tech Hubs that Are Hot Multifamily Markets
Technology drives modern society. It is the undercurrent of our economy and factors into almost every aspect of business.
This is also true of multifamily housing, but likely not in the way you think. We know that management companies are using more and more apps to improve the tenant experience; that investors can track trends from their phones, and that geofencing is helping developers find the perfect locations to build.
However, consider some facts on the technology industry and how it affects multifamily developments. More than 80% of Americans now live in an what is classified as an urban area; start-ups and big tech companies are attracted to cities with cheaper costs of living and affordable office space; and tech jobs account for 8% of the American workforce.
While cities with historically strong tech scenes continue to be enticing as multifamily investment opportunities, metro areas large and small that are becoming tech hubs have the need for workforce housing specifically for tech. That makes them worthy of consideration for investors looking to invest in multifamily properties. As you consider trends in multifamily investment, here are five tech hubs you may want to consider.
Ann Arbor, Michigan
This is the eighth fastest growing tech submarket out there, and the tech industry is driving an office and multifamily building boom. The University of Michigan plays a big part in this number as does Ann Arbor’s revitalized urban core. Its City Council got hit pretty hard last fall when it changed a neighborhood designation from multifamily to single-family because many proponents of affordable housing see multifamily as the best way to meet the growing need for workforce housing
Aerospace has long driven the industry in this city, but Huntsville is also emerging a tech hot spot. Roughly 17% of all job posting are in the tech industry. When it comes to multifamily units, Huntsville has a 93.8% occupancy rate, which is tops in the state and one the best in the Southeast. The effective rent per unit is low at $855 per month, which may give investors an opportunity to stabilize properties and grow value
People know Fayetteville as the home to Walmart and the University of Arkansas, but it also is a tech center that is growing, which in turn is sparking a need for multi-family units. Combine a strong student housing need, and multifamily investors have lots of ways to keep units rented.
Charleston, South Carolina
Charleston is another city that has changed its perception thanks to technology. This historic city is considered the top mid-sized metro for millennials, according to the US Bureau of Labor Statistics. They are coming because of a fast-growing economy that has been skyrocketing since city government got behind the idea of the Charleston Digital Corridor in 2001. This program aimed at spurring economic development has launched more than 80 startups, including Blue Acorn, GoodDoneGreat (acquired by corporate social responsibility platform YourCause), and PeopleMatter (acquired by hiring platform Snagajob). The MSA is also home to major manufacturing facilities for Boeing and Mercedes-Benz Vans.
Our fifth market to watch is Richmond. Thanks to two colleges in the urban core (Richmond and Virginia Commonwealth) and a host of government work (it is a state capital and less than two hours from that nation’s capital), tech is changing the landscape. The average home price is now at $225,000, which is close to the national average. However, that price has risen quickly, which has created demand for more multi-family units. Apartment rental rates are increasing at nearly eight percent a year due to demand.
The Bottom Line
Is the tech industry driving multifamily growth in these areas, or is it happening in areas that are already growing? It’s hard to separate correlation from causation completely. Either way, though, the tech booms in these towns reveals opportunity that real estate investors need to be aware of. So use these prompts to do your homework and decide whether these areas are right for your investment strategy.
Once you do, Lima One Capital is ready to help you capitalize on the opportunities you find. Whether it’s a value-add rehab project or a situation where a stabilization loan helps you get Freddie ready, Lima One’s 24-month multifamily bridge loan is a great solution. Contact us today to find out how we can help you add the next property to your investment portfolio.