According to the “M/PF-TWR Multi-Housing Outlook,” a market conditions forecasting product from M/PF Research and Torto Wheaton Research, only one-fifth of the country’s 59 largest apartment markets are likely to experience revenue growth of at least 3 percent from mid-2003 through the end of 2004 (First-Tier Markets). Another one-fifth should see revenues inch up slightly or hold stable (Second-Tier Markets). In three-fifths of the markets revenues are expected to decline further (Third- and Fourth-Tier Markets).
Los Angeles
Honolulu
El Paso, Texas
Fort Lauderdale, Fla.
Greenville, S.C.
Norfolk, Va.
Northern New Jersey
San Diego
New York
Birmingham, Ala.
Boston
Detroit
Revenue Growth Projected Through 2004: Above 3 percent
Most of the top tier markets expected to perform best through the coming year already have occupancy rates above the national norm; they have little additional product under construction; and they should lose comparatively few renters to single-family home purchase, as the for-sale sector is priced out of reach for many households. Revenue growth is projected to be above 3 percent through 2004. The few exceptions to this profile, such as El Paso, Texas, and Greenville, S.C., have rents so low that revenue growth of 3 percent or more results from adding just a handful of dollars to property balance sheets.
Notable Market: Los Angeles. As the only market anticipated to post double-digit revenue growth through the end of 2004, it offers the nation’s best outlook. Affordable neighborhoods appear likely to perform particularly well, with demand propped up by immigration. The key factor needed to meet its favorable overall expectations is success across a sizable wave of new, upscale product coming on stream downtown. While these projects are among the nation’s most impressive communities under construction, several are in locations that will require a very big dose of urban pioneer spirit.