Top 10 Most Resilient Employment Markets
The first step in buying real estate is evaluating the market. When evaluating a market for multifamily investments, one particularly important factor to analyze is employment trends. A strong market must have a track record for stable and diverse employment, as well as lower unemployment rates. The reason is simple – a market with strong and steady employment trends attracts more people to live in the area, a higher demand for apartments and other types of multifamily housing, a stronger tenant base, and therefore a more reliable investment. While there are, of course, several other factors that help define a strong market, make no mistake that employment trends is not one to overlook.
As COVID continues to impact our economy, there are certain industries which are less likely to be impacted. According to Newmark Knight Frank’s US Multifamily Capital Markets Report Q1 2020 industries such as education, healthcare, government, and financial are less likely to be grossly impacted, as opposed to hospitality, retail, or entertainment.
Understanding the composition of a market’s employment base is a critical factor to consider before investing in the area. Diversity is key. If there are only one or two major employers in a metroplex, and one employer closes business, the market is heavily impacted and your investment right along with it. If a local economy relies heavily on tourism, a pandemic exactly like COVID or even a natural disaster, can greatly jeopardize the stability of the employment markets. Again, diversity is key.
As of the close of Q1 2020, these are the ten most resilient employment markets in the US:
10. Salt Lake City, UT
· Top 3 Employment Industries:
o Education & Healthcare: 11.9%
o Government: 15.2%
o Financial: 7.2%
· Average 1 BR Rent: $1,235
· Renter Occupied Housing: 48%
9. Minneapolis, MN
· Top 3 Employment Industries:
o Education & Healthcare: 17%
o Government: 11.0%
o Financial: 7.4%
· Average 1 BR Rent: $1,588
· Renter Occupied Housing: 55%
8. Los Angeles, CA
· Top 3 Employment Industries:
o Education & Healthcare: 18.1%
o Government: 12.4%
o Financial: 5.0%
· Average 1 BR Rent: $2,524
· Renter Occupied Housing: 40%
7. Boston, MA
· Top 3 Employment Industries:
o Education & Healthcare: 21.2%
o Government: 10.2%
o Financial: 6.5%
· Average 1 BR Rent: $3,432
· Renter Occupied Housing: 51%
6. San Antonio, TX
· Top 3 Employment Industries:
o Education & Healthcare: 15.5%
o Government: 14.6%
o Financial: 8.2%
· Average 1 BR Rent: $1,049
· Renter Occupied Housing: 35%
5. Baltimore, MD
· Top 3 Employment Industries:
o Education & Healthcare: 19.2%
o Government: 14.8%
o Financial: 5.5%
· Average 1 BR Rent: $1,283
· Renter Occupied Housing: 47%
4. Philadelphia, PA
· Top 3 Employment Industries:
o Education & Healthcare: 22.8%
o Government: 10.1%
o Financial: 6.6%
· Average 1 BR Rent: $1,652
· Renter Occupied Housing: 45%
3. Sacramento, CA
· Top 3 Employment Industries:
o Education & Healthcare: 15.5%
o Government: 20.4%
o Financial: 5.4%
· Average 1 BR Rent: $1,579
· Renter Occupied Housing: 32%
2. New York, NY
· Top 3 Employment Industries:
o Education & Healthcare: 21.2%
o Government: 11.5%
o Financial: 10.6%
· Average 1 BR Rent: $4,208
· Renter Occupied Housing: 57%
1. Washington, D.C.
· Top 3 Employment Industries:
o Education & Healthcare: 15.1%
o Government: 28.0%
o Financial: 3.5%
· Average 1 BR Rent: $2,234
· Renter Occupied Housing: 56%
Sources:
www.ngkf.com/insights/market-report/united-states-multifamily-capital
