The strong performance displayed by the rental sector during the past two years has finally started to moderate in the fall.
Source: “Top 10 Emerging Multifamily Markets” by Anca Gagiuc for Multihousing News
Based on Yardi Matrix data, this year’s list includes both familiar names and surprises.
The strong performance displayed by the rental sector during the past two years has finally started to moderate in the fall. That trend is anticipated to continue in 2023, affected by softening housing demand and weakening economic growth. Gateway markets, badly hit by out-migration during the peak of the pandemic, are rebounding, boosted by limited supply, increased return to the office and resurgent immigration. The most pressing woes currently—rising inflation and interest rates—are high on everyone’s watch list.
Meanwhile, a handful of smaller metros have showed strong performance in 2022. Using Yardi Matrix data, we were able to select them by analyzing employment growth, deliveries and the construction pipeline, occupancy, and property values. We assigned each of those key metrics a final score, which determined our ranking. Here is our list of 10 emerging multifamily markets in the U.S.
1. Madison, Wis.
A new entry in our series, Madison’s positioning—some 150 miles from Chicago and 80 miles from Milwaukee—has helped it weather the pandemic better than other regions. By June 2021, the metro had already recovered all the jobs lost during the health crisis, with the unemployment rate back at pre-pandemic levels in the fall of 2021. The rate has been below the 3 percent mark ever since, according to data from the Bureau of Labor Statistics.
Madison has a tight rental market and strong demand for housing, as shown by the occupancy rate in stabilized properties, at 98 percent in November. The rate was almost unchanged (down just 0.1 percent year-over-year) despite robust stock expansion—2,430 units delivered in 2022—the third-largest volume among the markets on this list. Developers remained highly active in the market, with 7,846 units underway as of December, the highest volume in our top 10.
Investors traded $273 million in multifamily assets in 2022, the third-smallest volume among the markets included in this ranking. However, the metro led in per-unit prices, which rose a hefty 68 percent year-over-year, to $139,668. Despite the solid price jump, Madison remains the most affordable metro in this ranking, and well behind the $215,719 national average.
Chart created using Yardi Matrix data.
2. West Palm Beach–Boca Raton, Fla.
Florida’s multifamily market has had a stellar performance in recent years, so it comes as no surprise that one of Miami’s main spillover markets is so high on our list. West Palm Beach–Boca Raton had already recovered jobs lost during the health crisis by November 2021 and then outperformed pre-pandemic unemployment levels throughout 2022. In November, unemployment stood at 2.6 percent, an 80-basis-point improvement since January, and 100 basis points below the U.S. rate. Meanwhile, employment growth posted a 4.7 percent expansion year-over-year, the highest among the markets on this list, alongside White Plains.
Developers delivered 2,540 units in the [multifamily] market in 2022, only trailing Madison. Considering that the occupancy rate in the region dropped 200 basis points in the 12 months ending in November, to 95 percent, demand has slowed. Still, developer interest remains high, as the construction pipeline had 6,795 units underway in December.
Investment volume rose to $1.4 billion in 2022, the highest total on this list. Furthermore, the average price per unit increased by a solid 55 percent year-over-year, to $384,905 as of December. This value makes the region the most expensive among the markets in this ranking, and well ahead of the $215,719 U.S. average.
| Rank | Market | Employment Growth | Units Delivered | Units under Construction | Occupancy | Occupancy YoY |
| 1 | Madison | 2.4% | 2,430 | 7,846 | 98% | -0.05% |
| 2 | West Palm Beach – Boca Raton | 4.7% | 2,540 | 6,795 | 95% | -2.01% |
| 3 | Huntsville | 2.1% | 1,567 | 7,374 | 96% | -1.11% |
| 4 | White Plains | 4.7% | 2,224 | 6,973 | 97% | 0.12% |
| 5 | Spokane | 2.3% | 1,321 | 2,503 | 96% | -1.30% |
| 6 | Louisville | 3.9% | 2,521 | 5,457 | 95% | -0.17% |
| 7 | Colorado Springs | 3.1% | 781 | 7,695 | 95% | -0.92% |
| 8 | Knoxville | 4.5% | 1,331 | 2,361 | 98% | -0.46% |
| 9 | Albany | 1.6% | 771 | 2,243 | 97% | -0.19% |
| 10 | New Orleans | 4.6% | 554 | 873 | 95% | -0.80% |
3. Huntsville, Ala.
After leading the fold in our 2020 Emerging Markets ranking, Huntsville has made a strong comeback, aided by its geographical position close to high-performing Nashville, Chattanooga and Atlanta. In addition, the metro boasts beautiful weather and lower living costs. By January 2021, the market had recovered all jobs lost during the pandemic, and since the summer of 2021, the unemployment rate hasn’t risen above the 2.8 percent-mark. In November 2022, Huntsville’s unemployment had dropped to 2 percent, according to the BLS, while the U.S. rate stood at 3.6 percent. The job market expanded 2.1 percent in the 12 months ending in November.
The occupancy rate in stabilized properties slid 110 basis points year-over-year through November but remained at a solid 96 percent. Developers brought 1,567 units online in Huntsville in 2022 and had another 7,374 units under construction in December, the third-largest pipeline on the list, behind only Madison and Colorado Springs. Investors traded $472 million in multifamily projects in 2022, with the per-unit price appreciating by a consistent 63 percent, to $177,367. This places it in the middle of the pack analyzed in this ranking, and well behind the $215,719 national average per-unit price.
4. White Plains, N.Y.
The New York-Jersey City-White Plains region was heavily impacted economically at the onset of the pandemic, with unemployment spiking to as high as 18.6 percent in May 2020. Overall, the unemployment rate remained in double-digit values for 10 months. In 2022, White Plains posted robust results, with unemployment clocking in at 4.2 percent in November, from 6.1 percent at the start of the year. The metro has yet to recover all the jobs lost during the health crisis, with the employment market expanding steadily—up 4.7 percent year-over-year, 60 basis points higher than the U.S. rate.
White Plains is the only market in this ranking where the occupancy rate in stabilized properties actually rose, even if only by 0.1 percent, to a tight 97 percent overall rate as of November. The market saw the addition of 2,224 new rental units delivered throughout 2022 were easily absorbed, and demand remains elevated. Consequently, developers had 6,973 units under construction as of December.
By multifamily investment volume registered in 2022, White Plains occupied the third rank in this top—behind West Palm Beach and Louisville—with a total of $802 million in multifamily transactions. The average price per unit posted a 47 percent year-over-year increase, to $346,508, well above the U.S. average and below only West Palm Beach.
Chart created using Yardi Matrix data.
5. Spokane, Wash.
The eastern Washington state market’s post-pandemic recovery continues, paused briefly by an increase in the unemployment rate, at 5 percent in November, according to preliminary data from the BLS, lagging the 3.6 percent U.S. rate. Still, Spokane’s unemployment dropped to as low as 3.7 percent in 2022, having increased 60 basis points since January. By September 2021, the metro recovered all the jobs it lost during the pandemic, and year-over-year as of November, the employment market posted a 2.3 percent increase.
Deliveries amounted to just 1,321 units in 2022, while occupancy slid 130 basis points year-over-year, to 96 percent. Developers had another 2,503 units under construction in the market. Multifamily investment volume amounted to $296 million in 2022, for a price per unit that rose 64 percent year-over-year, to $234,427 in December, slightly above the $215,719 national average. The increase in the per-unit price was the second-best in this ranking.
| Rank | Market | Price per Unit | Price per Unit YoY Change | Investment Volume 2022 | Overall Score |
| 1 | Madison | $139,668 | 68% | $272,632,000 | 29 |
| 2 | West Palm Beach – Boca Raton | $384,905 | 55% | $1,424,918,586 | 39 |
| 3 | Huntsville | $177,367 | 63% | $471,974,033 | 42 |
| 4 | White Plains | $346,508 | 47% | $801,126,586 | 43 |
| 5 | Spokane | $234,427 | 64% | $295,612,300 | 62 |
| 6 | Louisville | $152,449 | 28% | $1,129,038,145 | 72 |
| 7 | Colorado Springs | $269,065 | 34% | $713,828,300 | 79 |
| 8 | Knoxville | $214,138 | 36% | $607,938,071 | 87 |
| 9 | Albany | $164,609 | 36% | $265,350,000 | 100 |
| 10 | New Orleans | $221,286 | 117% | $269,083,333 | 100 |
6. Louisville, Ky.
Manufacturing, along with transportation and warehousing, had a good year in 2022, and Louisville made the best of the situation. By mid-year 2021, the metro had managed to recover all the jobs it lost during the pandemic and continued on a growth path ever since. The unemployment rate stood at 4.1 percent in January 2022, then consistently improved, down to 3 percent as of November, outperforming the U.S. rate. Meanwhile, employment growth was 3.9 percent year-over-year as of November.
Developers brought 2,521 units online in 2022 and had another 5,457 units underway as of December. This has yet to put a meaningful dent in the occupancy rate in stabilized properties, which was down just 20 basis points year-over-year, to an average of 95 percent.
Louisville had the second-highest multifamily investment volume among the metros in this ranking, surpassing $1.1 billion in 2022, behind only West Palm Beach–Boca Raton. The metro lagged all the other markets in average price per unit, up 28 percent year-over-year, to $152,449. The value is well behind the national figure, and makes Louisville the second most affordable market on this list, behind only Madison.
7. Colorado Springs, Colo.
Colorado Springs is slowly making a name for itself, following years of picking up as a Denver spillover market. The metro has a great geographical location and a strong job market. The pandemic’s job losses had been recovered by June 2021, with the unemployment rate sliding below the 4 percent mark since March 2022, down to 3.6 percent as of November, on par with the national rate. Meanwhile, the employment market expanded 3.1 percent year-over-year.
Deliveries were among the weakest in the pool of markets studied in this ranking, amounting to just 781 units in 2022. The market’s average occupancy in stabilized properties was 95 percent as of November, following a 90-basis-point decrease year-over-year. Construction activity is robust, as developers had 7,695 units underway at the end of the year, the second-largest pipeline on this list. Investment volume rose to $714 million in 2022, and the per-unit price increased 34 percent year-over-year, to $269,065 in December, leading the U.S. average.
8. Knoxville, Tenn.
Knoxville’s multifamily market posted a stellar performance in 2022, sustained by a robust local economy which had recovered all jobs lost during the pandemic by October 2021. The unemployment rate fell below the 3 percent mark since September 2021 and stayed there, except for a two-month spike in the summer of 2022. The rate stood at 3 percent as of November, according to preliminary data from the BLS, leading the U.S. The employment market also expanded 4.6 percent year-over-year.
Developers delivered 1,331 units in 2022, a record-high for an in-demand market—the occupancy rate in stabilized assets clocked in at 98 percent, following a 50 basis-point year-over-year decline. Development activity remained elevated, with 2,361 units under construction. Investors traded $608 million in multifamily assets, a new high for the metro’s investment market. The price per unit also increased, up 36 percent year-over-year through December, to $214,138.
Chart created using Yardi Matrix data.
9. Albany, N.Y.
Albany became home to a big portion of New Yorkers looking to relocate early on during the pandemic, which intensified housing demand. The metro recovered all the jobs lost during the pandemic by May 2022, and the unemployment rate, although not steady, fluctuated somewhere below the 4 percent mark since September 2021. In November 2022, the metro saw the rate drop to 2.4 percent, leading the U.S. rate by 120 basis points. Meanwhile, employment growth was slowest among the metros in this ranking, expanding 1.6 percent year-over-year.
Inventory expansion was scarce, with just 771 units coming online in 2022, but construction activity was solid, with 2,243 units underway. The occupancy rate slid just 20 basis points, to 97 percent. Meanwhile, transaction volume totaled $265 million through December, and the per-unit price posted a 36 percent annual increase, to $164,609 in December, keeping the metro in the affordable markets pool.
10. New Orleans, La.
The market that rounds out our top 10 for the year had a hard time during the pandemic. However, in February 2022, New Orleans had managed to regain the jobs lost during the health crisis and has been in expansion mode ever since. The unemployment rate dropped to 3.1 percent as of November, outperforming the national rate. Meanwhile, the job market expanded 4.6 percent year-over-year.
Deliveries were fairly limited in New Orleans, with just 554 units coming online in 2022, and development activity was slightly tempered—developers had 873 units underway as of December. This kept occupancy in check, with the rate clocking in at 95 percent in November. Investment volume totaled $269 million in 2022, with the price per unit posting a massive 117 percent year-over-year increase, to $221,286, just slightly above the $215,719 U.S. average.
Working with Yardi Matrix data, we first filtered out all metros with 2 million residents or more, and we ended up with a list of 58. Then, we decided on a series of significant data points that would separate the best-performing markets from the rest. We looked at the increases in the average per-unit price for transactions closed in 2022 through December compared to the same period of the previous year, at how the employment market performed year-over-year, as well as the number of units completed in 2022 and the number of apartments underway as of December. We then compared the 58 markets based on the performance of these data points and eventually assigned them a final score.
