Dallas/Ft. Worth

The Top U.S. Metros for Employment Growth

Orlando experienced the best year-over-year employment growth rate in August among the 41 largest metros in the U.S. at 4.0%, nearly triple the national rate of 1.4%.

New York and Dallas/Ft. Worth led the country for total job growth, gaining, respectively, 134,000 and 116,000 jobs year-over-year.

The metros with the highest rates of job creation remained concentrated in the South and West. Cincinnati continued to lead the 10 Midwest metros with a 2.5% gain. Among the seven Mid-Atlantic/Northeast metros, Boston, New York and Philadelphia tied for highest growth rate at 1.4% (equal to the U.S. average).

The employment growth rate was essentially unchanged from three months ago in over half of the metros analyzed (25 out of 41). One-fifth of the metros had faster job growth than three months ago. Orlando’s growth increased significantly.

Eight (20%) of the metros experienced slower employment growth rates— by less than one percentage point in all instances except for Sacramento and Las Vegas.

Unemployment rates in 26 of the 41 metros were at or lower than the U.S. average of 3.8% (not seasonally adjusted). Boston and Denver had the lowest levels at 2.6%, followed by San Francisco, San Jose and Nashville (2.7%). Nine of the metros had unemployment levels of 3.0% or lower.

Low unemployment represents solid economic expansion. With unemployment at historic lows, labor shortages in a wide array of industries are now common in many metros. Many jobs are not readily being filled, and labor shortages are holding back employment growth in many, possibly all markets.

Employment Percentage Change Year-Over-Year

By Jeanette Rice, Americas Head of Multifamily Research, CBRE.

Multifamily Business

The New York metropolitan area led the county in total multifamily acquisitions over the first four months of 2017 with $3.4 billion or close to 10% of the total. While impressive, New York’s share has come down from previous years (12% in 2016).

Southern California (Los Angeles, Orange County, Inland Empire) and Dallas/Ft. Worth had the second and third highest volumes (as they also did in 2016).

New York, Southern California and Dallas/Ft. Worth represented nearly one quarter of all U.S. multifamily acquisitions year-to-date. Half of the volume was represented by only 12 metros.

Based on units acquired rather than dollar volume, Dallas/Ft. Worth was the leader with a total of 19,500 units purchased year-to-date (7.8% of the U.S. total). Atlanta came in second with 13,400 units (5.4% of total), followed by Southern California (12,300 units, 4.9%) and Metro New York (11,800 units, 4.7%).

Combined, these four metros represented 23% of the 251,000 units acquired year-to-date.

Year-Over-Year Change by Metro

For the U.S. as a whole, the total year-to-date investment volume dropped 26%. For individual metros, the experience varied greatly. Among the more active metros (acquisitions of at least $500 million), Baltimore and Orlando had the largest gains both at 59%, followed by Jacksonville (58.7%).

Miami/South Florida area experienced the largest year-over-year decline (-76.8%). Other larger markets with notably reduced investment activity included Houston, New York and Denver.

Note, however, that changes in buying volumes are not only governed by market performance and investor sentiment, but also by product availability as well as large portfolio purchases which can skew year-over-year changes in both directions.

Analysis of Investment by Metro Tiers

In search for yield, product availability, better market performance and/or other factors, capital appears to be moving to smaller markets.

Year-to-date investment acquisitions (as measured by dollar volume) were holding up better in the secondary and tertiary markets than primary markets.

Total investment for assets in the nine Tier I metros (the six gateway markets plus Seattle, San Diego and Miami/South Florida) fell 43% year-over-year.

The Tier II metros – Atlanta, Austin, Baltimore, Dallas/Ft. Worth, Denver, Houston, Minneapolis, Orlando, Philadelphia, Phoenix, Portland, Sacramento and Tampa – collectively experienced a smaller drop than Tier I metros (about the same as the U.S. market overall.

Similarly, total investment in the Tier III metros fell just slighty less than the U.S. market overall.

Investment outside the major metros rose, indicating that capital is reaching out to additional tertiary markets and even some smaller markets.

The other key statistic in the tier summary statistics is that investment activity for the 13 Tier II metros appears to be closing in on Tier I metros in terms of market share. Tier I metros still have the largest market share at 34% but Tier II’s is close at 29%.

By Jeanette Rice, Americas Head of Multifamily Research, CBRE

*Figure 1 – Source: CBRE Research, Real Capital Analytics, Q2 2017 (thru April)