RangeWater Featured in the December Issue of NAA Units Magazine

By Barbara Ballinger | Contributor, NAA Units

Hot Markets for Development

Where they are and why isn’t a matter of guesswork on developers’ parts, but careful analysis based on a host of drivers before shovels go into the ground. 

Many people pride themselves on making discoveries, whether a fabulous restaurant, new playwright, fashion designer, vacation retreat or a favorite athlete. 

Pinpointing the next hot real estate markets is no different. Developers hope to uncover them while land is still available and affordable. But what predictors do they use to ensure that if they build (or convert), renters will come? Is it full occupancy in existing apartment inventory to indicate need for more housing, especially if for-sale home prices are high? Is it a population increase that signals more units are warranted? The list of what makes a market take off includes additional factors: 

• A favorable business climate that offers incentives to relocate, low or no state income taxes and easy barrier-to-entry to foster development 
• A diversity of businesses relocating so the local economy doesn’t rely on one industry when down cycles occur 
• Good transportation to and within an area to make navigation easy 
• Availability of key facilities such as universities, hospitals, retail and other services 
• Good water and sewer infrastructure for building, says Lesley Deutch, Managing Principal with John Burns Research and Consulting 
• A good climate and recreational facilities to make life pleasurable for a healthy work-life balance 
• A safe environment as some businesses relocate to avoid crime, what Citadel CEO Ken Griffin talked about when he moved his company to Florida from Chicago 
• Adequate electrical grids or the ability to install them as energy becomes a bigger concern, says Ed Del Beccaro, Executive Vice President, San Francisco Bay Area Manager for TRI Commercial Real Estate. 

Other data helps developers more such as a look at historical absorption patterns that may reveal future patterns, says Peter DiCorpo, co-founder and COO of multifamily developer Brook Farm Group. Even a check of U-Haul’s list of top growth cities based on where vans are headed can be an indicator, says Josh Kassing, Senior Vice President, Mary Cook Associates. 

Few locations reflect all the key factors but enough may come together to make a city or suburb so desirable that it attracts interest and at every tier of the apartment market, says Al Lord, founder and CEO of Lexerd Capital Management, a real estate firm that sponsors investments in multifamily assets. 

Conversations with these sources and others who develop multifamily communities cited a handful of areas they expect will mirror the excitement witnessed as Austin, Texas, Nashville, Tenn., and Miami gained buzz in recent years. Despite the similar drivers they share, most also have something novel about them that developers try to showcase in their building plans. “It’s akin to putting together the pieces of a jigsaw puzzle,” says Mary Cook, President of her eponymous firm. 

Raleigh-Durham and Charlotte, N.C.  

The Sun Belt markets continue to be the country’s fastest-growing areas because of long-term migration patterns, job growth and population growth, says Claire Hansen, Director of Development, RangeWater Real Estate. “Sun Belt markets offer a lower cost of living and great job opportunities compared to other regions around the country. However, right now, there are many Sun Belt pockets with temporary supply issues through 2024-25. Most Sun Belt developers are expecting absorption to bounce back in 2026-27,” she says. 

Read the full article in NAA Units here.