March 1, 2017

Investors made multifamily a primary target in 2016. In the United States alone, the sector saw transaction volumes exceed US$150 billion last year, outpacing 2015’s total by 4.3 percent.

Primary markets like New York and Atlanta saw incredibly high investment volumes in 2016, but secondary markets were no slouches either.  Year-end investment sales volumes in secondary markets reached US$52.7 billion, up more than eight percent over 2015, according to JLL’s U.S. Investment Outlook.

Cities in the Western United States were particularly active in the apartment sector last year. Denver and Phoenix led secondary market growth with US$6.5 billion and US$5 billion in activity, respectively. Las Vegas and Salt Lake City were also top performers, driven by economic growth.


Denver is experiencing a wave of population growth that outpaces the national average. Millennials, in particular, are flocking to Colorado’s capital for the breathtaking mountain views and laid back culture.

Job growth is double the national average in Denver, particularly in construction. Over 25,000 multifamily units are under construction right now and an additional 26,000 units are in planning. However, many of those planned units won’t actually be built as developers are having a hard time getting construction financing. Those units that are built will be absorbed, which will spur another round of rent growth.

“People want to be in Denver right now. That population growth is driving job growth, which has stimulated the local economy,” said Ray White, Vice President of JLL’s Capital Markets. “Because single family housing is so expensive here, many of Denver’s new residents are instead choosing apartment living.”

Las Vegas

Las Vegas is still recovering from the recession, experiencing continued economic growth and giving investors continued confidence. Tourism, now fully recovered, continues to be a main driver of dollars in the city, and gaming is well on its way to its pre-recession peak.

Institutional investors are digging deeper into the city’s multifamily market as fundamentals improve. Because development in Las Vegas is more expensive compared to other western markets, the city has had limited new multifamily construction loans and rents have stayed high.

“We’re starting to see new multifamily development in Las Vegas, and those new projects are being absorbed,” said John Cunningham, Executive Vice President for JLL’s Capital Markets Group. “Investors recognize that the city is still recovering and are interested in value-add opportunities.”

Salt Lake City

Salt Lake City is also benefitting from population and job growth, especially in finance, education and healthcare. A combination of new residents and a lack of new supply is driving the uptick in multifamily rents.

“A major benefit of living in Salt Lake City is that rents are much cheaper compared to other Western cities,” White explained. “Lower rents help keep occupancy high and also keep investors’ acquisition costs lower than what they would be in other Western markets.”


There’s limited new supply on the market in Phoenix because capital has been selective and construction takes longer than it does in other cities, which keeps occupancy high and encourages rent growth.

Healthy job growth has also driven strong multifamily performance. New jobs are in stable fields such as high tech, healthcare, finance and insurance, which bodes well for the city’s long-term outlook.

“Single family is still lagging in historical annual new construction, giving multifamily continued strong demand,” said Cunningham. “Investors are bullish on Phoenix as the city is experiencing healthy, diversified job growth and a metered level of new supply.”

Click here to download JLL’s U.S. Multifamily Investment Outlook


JLL Capital Markets, Multifamily experts

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