Job growth has been widely known as a key driver of multifamily demand for a long time now, with steady employment expansion generally supporting apartment absorption. However, studies show that this relationship is complex, varying widely across different periods and market. Hence, it’s impossible to deduce a universal job-to-demand ratio.
Examining U.S. employment trends is essential for understanding potential shifts in multifamily demand. However, focusing on industry-and market-specific dynamics offers deeper insight into the relationship between job growth and housing needs, beyond simply looking at gross employment aggregates.
MMG’s latest white paper, 2024 Analysis of Employment Expansion Trends Across Major Industry Sectors explores these dynamics, offering a focused look at employment growth across the 50 largest U.S. metros. By identifying emerging markets and highlighting sector-driven demand patterns, the report provides essential guidance for multifamily investors on capital investment and development planning.
A robust job market is a cornerstone of strong multifamily demand. There is an understanding that increase in employment opportunities bodes well for demand for housing. By pinpointing areas and industries experiencing significant job growth, investors can identify promising and more comprehensive investment opportunities
Data from the MMG report highlights strong growth across various sectors to take note of, particularly in the South and West. Cities like Austin, Phoenix, and Las Vegas exemplify a shift in regional economic hubs:
Among the primary employment sectors, industries like Education, Health Services, Construction, and Professional Services are main drivers of housing demand across key urban markets:
Beyond the significant overall employment growth seen in major U.S. cities, specific industry trends highlight unique economic strengths in select metros. Austin-Round Rock, TX, led multiple sectors from 2019 to 2024, with impressive growth rates of 31.0% in information sector and 38.3% in professional services, fueled by corporate relocations and tech industry expansion. Jacksonville, FL, experienced a 43.7% surge in the information sector, establishing itself as a rising tech hub.
Booming job markets, sector-informed strategies, and customized investment approaches are essential. High-growth cities like Austin, Phoenix, and Las Vegas stand out for their robust employment and population increases. These diverse economies offer stable demand across housing types.
The report highlights sectors like professional & business services and construction as drivers of housing demand. For example, business-focused metros might see demand for luxury living, while construction-heavy areas may need more workforce housing.
Investors can use sector-specific insights to tailor properties to each metro’s unique needs.Tech-driven areas may prioritize amenities for young professionals, while construction-focused markets might benefit from workforce housing solutions.
Understanding employment trends offers a critical edge in navigating the multifamily landscape. By leveraging insights from the MMG report investors can make informed decisions and position themselves for success in a dynamic market.
The recent employment growth trends across the U.S., along with the early growth forecasts for the next five years, shed light on the future of multifamily investment opportunities. By targeting metros and sectors with solid employment fundamentals, investors can strategically position themselves to meet shifting demand patterns. Strong job creation in key markets often signals optimism for sustained housing demand, enabling investors to capitalize on anticipated growth across the multifamily market in the coming years.
