Suburban Continue To Outperform Urban Markets! Is It Time To Get In Now?

Suburban Continue To Outperform Urban Markets!

Is It Time To Get In Now?

 

Large cities that dominated the list of the top real estate markets in the past, are less affordable and appealing as people discover they can work from anywhere, spend less, and escape dense crowds. And that has unleashed a flood of demand for smaller metro areas.

 

At the same time, the supply and demand fundamentals for apartment homes are improving across the US, which leads to an important question for real estate investors regarding urban vs. suburban market demand.

 

Where do you want to position yourself in the current environment?

 

Market Overview

The multifamily sector has become the largest leg of the U.S. commercial property investment market in recent years, but that was not the case in the past.

 

From 2005 to 2014, investment in apartment assets accounted for only 24 percent of the total market. Last year, as investment in secondary and tertiary markets increased substantially, it represented 41 percent of the market and more than $335 billion worth of multifamily properties were traded in the U.S. in 2021.

 

On the other hand, close to 460,000 multifamily units were absorbed by the market in 2021, more than double the previous year and more than 50 percent higher from the previous annual peak.

 

With the increased cap of $78 billion on multifamily purchase volumes by Fannie Mae and Freddie Mac we can expect another record year for multifamily investment in 2022.

 

Urban Vs. Suburban

Multifamily values are increasing faster for suburban properties than urban ones in major metros.

Prior to the pandemic, renters valued the location, walkability and urban perks of urban properties. However, since COVID that is no longer the case.

Despite the improving situation and outlook of the pandemic, there is an ongoing migration out of urban markets that are strongly reliant on mass transit into more suburban and car-driven markets where people can enjoy more space, peace, and value for their money.

Suburban areas offer less bidding competition, better access to financing and value add opportunities and strong growth potential that additionally fuel the influx of real estate investors looking to maximize their returns and future cash flow.

Urban used to be the hottest place on the market, but now suburban is.

2022 Outlook

Due to the pandemic many areas that did not classify as high-growth before 2020 suddenly became attractive markets in the past 18 months.

 

As growing number of people started working from home, they started relocating from major metropolitan areas with high rents to properties in less densely populated areas with lower rents.

 

The market trends and affordability of suburban markets are making them attractive relocation spots but at the same time they present excellent new investment opportunities for real estate investors.

 

Making the selection of right strategic partner with a strong track record that can execute the entire process from start to finish can represent a key difference between poor, average and outstanding returns for future real estate investors to avoid potential delays, loss to lease and higher construction costs.

 

Ready to start your next investment project?

 

Please contact us to learn how we can best help you to turn your next investment project into a success.

 

Email: [email protected]

Telephone: (954) 570-0300

Address: 850 SE 7th Street, Deerfield Beach FL 33441

 

About Adivo Construction

We are a national general contractor with over 50 years of combined construction expertise specializing in the value-add improvements of apartment communities.

Our mission is to assist our clients in finding the right balance between capital expenditure and appreciation potential by designing and executing customized renovation programs that are focused on increasing cash flow return and overall return on investment.

 

We have completed over 100 repositioning projects for publicly traded and privately held domestic and foreign companies in states such as Florida, Texas, Kentucky, Oklahoma, Georgia, South Carolina, Utah, North Carolina, Tennessee, Indiana, Michigan, Missouri, Arkansas, Ohio, Arizona, Nebraska, and Kansas.