The Latest from MPF Research: America’s Top 2 Hottest Submarkets Revealed
Today, we cover our final two submarkets in the “Top 10” for apartment construction. For our last article in the series, we’ll look at some of the common characteristics of these multifamily construction hot spots, as identified by MPF Research.
#2: Frisco/Prosper (Dallas area)
The apartment base in this bustling area has very nearly doubled since 2012. The submarket has added 4,298 new apartments since 2012, with an additional 4,009 units under construction and slated to be available by 3rd quarter 2017. At over 230,000, the large population of this suburban area is testament to its rapid growth over the past two decades. Just 15 to 20 years ago, Frisco was nearly all farmland, with a population of a mere 6,000: an incredible rate of growth.
Driving apartment demand in this submarket, which lies to the north of the Dallas metro in the path of the city’s relentless northern creep, is the area’s recent emergence as an employment hub. Frisco boasts the so-called $5 Billion Mile, with four mixed-use developments funded by over $5 billion in capital investments within a single mile centered at the intersection of Dallas North Tollway and Highway 121. At the end of the first quarter of 2016, the occupancy rate stood at 94.4%.
For years, Frisco housed mostly commuters who cashed in on the extension of the relatively new Dallas North Tollway to get to their metro jobs. Then, taking advantage of lower commercial real estate prices and plenty of nearby housing for employees, companies such as Nexius and Jamba Juice began moving to the area, sparking its growth as an employment hub. Abundant retail establishment began popping up to serve the relatively well-off residents (median household income is over $100,000). And a highly-rated school system with modern facilities has added to the appeal of the area.
The neighboring suburb of Plano has been booming for decades, attracting dozens of major companies, and their employees have the option of living in Frisco and making a modest commute to their Plano jobs. So there are Frisco citizens commuting to both Dallas and Plano in addition to the increasing numbers now working in Frisco proper.
Future indicators look strong. Companies continue to announce plans to locate headquarters and regional offices in the submarket, driving even more demand for nearby employee housing. And Dallas, Plano and other nearby markets remain robust, for those wishing to take advantage of Frisco schools and other amenities while commuting to their jobs.
At #1: Uptown/South End, Charlotte
If you were asked what the hottest apartment construction submarket in America is right now, you probably wouldn’t peg it as somewhere in North Carolina. But that’s where it is: the Uptown/South End section of Charlotte.
Here’s an interesting MPF Research factoid: while the average household income in this submarket is right around $70,000, the average rent runs around $1,400. Compare this to the #2 hottest submarket, Frisco, Texas, with a much greater average household income of around $100,000, but rents averaging a more modest $1,100. Even so, the occupancy rate in Uptown Charlotte comes in higher, at 95.5%.
The submarket is benefiting from a push that began way back in the 1980’s to bring some life to the downtown area, which like many back then was deserted at night. The area was rebranded as “Uptown Charlotte,” and the city promoted it heavily. In the 2000’s, as other downtown areas around the nation were also burgeoning, Charlotte’s began to take off. Retail, apartments and light rail followed, and then new, major employers began moving in.
Today the submarket is a vibrant live/work/play environment, as well as the city’s main destination area due to its many restaurants, clubs, entertainment venues and the convention center. With the Uptown area increasingly built out, the adjacent South End neighborhood has become part of the boom and a feeder into Uptown. In its second year of implementation, the South End Strategic Plan aims to attract more amenities to mitigate this feeder status and make the South End neighborhood more well-rounded.
The Uptown/South End area is drawing in a relatively young population, with around 43% of residents being 20 to 34 years old, compared to the 20.7% of the U.S. population in this age range. Naturally this has contributed to the submarket’s sense of vigor.
Apartment development has been explosive, with the more apartments as a percentage of the existing base since 2012 than any other submarkets MPF Research studies. With big employers such as Bank of America and Duke Energy now here, along with as many as 1,300 other companies, the future looks quite promising for this year’s big winner in apartment construction.
This brings to a close our “Top 10,” but as mentioned above, we’ll soon publish a wrap-up article looking at elements shared by these hot submarkets.
You can find other segments in the MPF Research “top submarkets countdown” here: