Tech, Healthcare and Young Job Seekers Drive Fastest-Growing Cities

A recent study from the Kenan Institute of Private Enterprise examined a variety of factors across the top 50 EMA's (Extended Metropolitan Areas) in the US, including population growth, employment rate, housing costs and economic output. The results showcase just where people in the workforce are moving to most. The results support much of what we've been looking for while examining multifamily deals - a strong local economy that's attractive to young job seekers and tech workers will create a strong tenant base that should be less impacted by an economic downturn.

Even with recent news of layoffs at companies like Meta and Twitter, having a core of top talent in a market will (ideally) help support the overall job base and keep local economies strong, especially compared to some of the lower ranking metros in the report.

One other thing that's clear from the report is that the shift to remote work has helped balance the scales for traditionally mid-sized metros. In fact, Dallas & the San Francisco Bay Area are the only metro areas in the top 10 that are also in the top 10 most populous cities in the US.

This has created tremendous opportunities outside of major cities like New York, Chicago and Los Angeles. Overall, the results of the report highlight the U.S. population's shift toward the South and the West, the power of tech hubs, and the continuing recovery of leisure and hospitality sectors.

North Carolina boasts 2 EMA's on the list with Raleigh-Durham and Charlotte cracking the top 10. We've been bullish on the Research Triangle area for some time. That area checks all the boxes for what we're looking for in the multifamily market; a strong job base in tech and healthcare jobs, close proximity to top notch educational resources (leading to a highly educated tenant base), a relatively affordable cost of living, and a great quality of life.

As the Kenan Institute highlights, "even amid possible cuts in the industry nationwide, more than $1 billion worth of biotech laboratory construction is underway in the greater Raleigh area." With an equally strong base of tech companies like Cisco, Epic Games, IBM and Red Hat. plus the upcoming Apple East Coast HQ, and it's clear that the future is very bright for the region.

It's worth noting that the potential growth of these cities could help create a self fulfilling prophecy of sorts for the local economies. These areas will need to invest in infrastructure (including housing), education and job training to fuel their growth potential. This will only create more job opportunities, more need for housing and fuel even more growth in the future, assuming local leaders can capitalize on their momentum.

Top 10 Fastest Growing US Cities in 2022

1. San Francisco Bay Area, California

2. Austin, Texas

3. Seattle, Washington

4. Raleigh-Durham, North Carolina

5. Dallas, Texas

6. Denver, Colorado

7. Salt Lake City, Utah

8. Charlotte, North Carolina

9. New Orleans, Louisiana

10. Orlando, Florida 

Key Takeaways

• Keeping tabs on demographic trends can help shape your strategy for targeting real estate investments.
• There's a clear shift in trends towards the South and West. (There were 0 Northeast Metros listed in the Top 25.)
• With the costs of single family residences still running high, the need for multifamily housing should continue to be strong and should continue if the influx of younger workers into these markets continues.
• Even with a recent pullback in the tech industry, having a diverse tenant base with a strong tech and healthcare focus will ultimately help local economies and attract even more interest from young job seekers in the future.

While there's still a lot of uncertainty in the overall economy, we feel that things will begin to stabilize by mid to late 2023. The momentum some of these metro areas have created should continue to pay dividends for some time, especially for metros that are investing in infrastructure now and will be able to support growth once the economy starts expanding again.

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