The Southeast continues to present strong fundamentals, making the market attractive for multifamily investors both now and in the foreseeable future. The Southeast gained over 170,000 jobs year-over-year (YOY) through the second quarter, while new multifamily deliveries slowed in the first half of 2019. The number of units under construction also declined, suggesting deliveries in the Southeast will continue to wane over the next 12 months. Job growth and a slow-down in new deliveries are producing noticeable gains in rents and occupancy rates at this point in the cycle.
In the second quarter, average effective rents grew by 5.9% year over year in the region, with 15 Southeastern markets exhibiting YOY rent gains greater than the national average. Highest performers in terms of rent gains include Nashville, Piedmont Triad, and Atlanta. Panama City and Pensacola produced abnormally high rent gains and particularly low vacancies in the first half of 2019 due to the aftermath of Hurricane Michael in October 2018, which deemed more than half of all apartments in Panama City unlivable according to Panama City Community Development data.
Southeast vacancy continues to fall, with rates down 91 basis points year over year through the second quarter. Investment activity surged with $5.7 billion in deals transacted in second quarter of 2019, vastly outperforming expectations and signaling growing interest in the Southeast multifamily market. For more, check out our Five Fast Facts below and our latest Quarterly Market Report: