Over the last few years, smaller markets have garnered significantly more attention due to the emergence of hybrid work policies and evolving lifestyle demands, which provide people with increased options to choose how they prefer to live, work and play. Apartment inventory growth has been exploding in small markets nationwide, so it follows that investment volume has been increasing in these areas as well. Looking at investment dollar volume change more closely over the past year, however, we see that smaller markets are basically the only markets out of the 150 tracked by RealPage that registered investment growth over the past year. Of the 19 markets that achieved an investment dollar volume increase year-over-year, all but three were small markets. Midland/Odessa blew past every other market on the list to rank #1 for annual change – an astounding 2,672% increase year-over-year with nearly $125 million worth of apartment transactions. Located in the heart of one of the world’s most active energy regions, Midland/Odessa is characterized by a boom-and-bust economy dominated by oil and gas production. Salisbury, MD – just a little over 100 miles away from both Washington, DC and Baltimore – claims the #2 spot with a 609% increase year-over-year. A whopping $58.5 million of apartment deals transacted over the past year in Salisbury, a tremendous feat for a city with a population of just under 415,000 people. The next tier of markets saw investment dollar volume increase closer to the (still incredible) 100-200% range: Spokane, Madison, Buffalo, Shreveport, San Jose and Eugene, with San Jose appearing as the first of only three large markets that made the top 20. While some of these smaller markets are located within a relatively commutable distance from a larger metro, these cities are certainly sizable enough to offer their own unique appeal and urban amenities. The wide range of geographic, economic, and cultural diversity among these markets is quite varied. This suggests that investment theses are becoming more targeted beyond traditional or regional levels. The next six markets – New Haven, Omaha, Manchester, Lubbock, Little Rock and Springfield – achieved investment growth of closer to a very strong 10% to 40% year-over-year. Cincinnati appears at #15 as the second of three large markets that experienced an increase in investment dollar volume with a strong gain of 9.2% over the past year. Stockton, Wichita, Naples, Milwaukee and Salinas, CA round out the list, with Milwaukee appearing as the last of the three large markets that saw investment growth. Salinas posted a mild decline for the year, but that performance was relatively flat and more closely aligned with the top 20 performances than the increasingly steeper declines in annual investment volume over the remaining 130 RealPage markets.
