• Atlanta

Widespread Job Tightening & Rent Growth in the Southeast

By Kristina Garcia, Research Manager

Cushman & Wakefield’s Southeast Multifamily Advisory Group released third quarter 2018 market reports that cover 33 markets in the nine-state Southeast region that encompasses Alabama, Florida, Georgia, North Carolina, South Carolina, Louisiana, Mississippi, Tennessee, and Kentucky. This region boasts a combined GDP of $3.57 trillion in 2018, according to the U.S. Bureau of Economic Analysis. At this productivity level, the Southeast as a whole is the 5th largest economy in the world after Germany and ahead of the U.K., according to International Monetary Fund 2018 data.

Key findings in the Southeast note that labor markets are tight, with the majority of metros maintaining unemployment rates near or below 4.0% as of the third quarter. Nashville has the lowest unemployment rate at 2.8%, with Gulfport-Biloxi-Pascagoula, Mississippi, at the top end at 5.1%. However, a rate of 5.1% is still considered to be within 50 basis points above full employment per the U.S. Federal Reserve. The U.S. average is 3.8% for third quarter 2018, which is the lowest the nation has seen since the 1960s and 1970s.

Continued low unemployment will limit job growth going forward, unless workers are drawn back into the active labor pool because of rising wages or more attractive opportunities. The upside is that low unemployment is also finally spurring wage growth, which has increased by 2.8% year-over-year as of September.

What does this all mean for the multifamily market? Average effective rent growth in the U.S. was a healthy 4.0% year over year, and markets such as Greenville, Charleston, Greensboro- Winston Salem, Charlotte, and Nashville roughly kept pace with the national average. Markets that stood out were Atlanta (+5.6%), Birmingham (+6.0%), Huntsville (+7.2%), Orlando (+6.9%), Jacksonville (+5.7%), and Knoxville (+6.3%).

Looking ahead five years, rent growth nationwide is projected to normalize, which is a positive sign that the market is not overheating and leading to a bubble. This trend will reward investors who adopt a long-term hold strategy to capture cashflow and those investors who become “surgical” in finding pockets of above-average growth due to hyper-local catalysts.

Click here to download a copy of the report.

Kristina Garcia is the lead multifamily research specialist in the U.S., overseeing quarterly multifamily market reports for the Southeast and South Central regions in addition to providing in-depth macro market analysis for brokers and clients that reaches beyond the multifamily space.

  • Atlanta

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