Why job growth comes before the building
Most people shopping for an apartment deal start with the property. Nice photos, decent rent roll, a renovation story that sounds good. We start somewhere else: the market, and specifically the jobs in it.
Here's why. A building can look great on day one and still struggle if the people renting it lose their income, move away, or never show up in the first place. Rent growth, occupancy, and ultimately the value of the property all trace back to whether people have jobs and whether those jobs are growing. A great building in a market with a shrinking or fragile employment base is still a weak deal. We've said that before and it's worth repeating, because it's the first filter, not the last one.
What we actually look at
When we screen a market, job growth isn't a single number we glance at and move on. We look for a few things together:
- Population and job growth over time, not just a one-year snapshot. A market that's grown steadily for a decade tells a different story than one that spiked and stalled.
- Employment diversity. Many of the markets we look at lean on education, healthcare, and government. Those are stable, but stable isn't the same as growing. We want to see private-sector employers moving in or expanding on top of that steady base.
- Household income trends alongside home values. Rising incomes next to home prices renters can't easily reach is often a sign the rental market has staying power.
- The regulatory environment. A city or state with strong job growth but landlord-hostile rules can still be a hard place to operate. We factor that in too.
None of these by themselves tells the full story. A market can show decent job numbers but thin employer diversity, which means one bad quarter for one industry hits every renter at once. We'd rather see modest, broad-based growth than a hot number resting on a single employer.
What this looks like in practice
A market doesn't have to be red hot to pass our screen. We're not chasing the fastest-growing metro in the country. We're looking for a large enough population, a genuine mix of employers, and job growth that holds up even if one sector slows down. That's a lower bar on excitement and a higher bar on durability, and we think that trade is the right one for a long hold.
We also want to see this growth reflected in the building itself before we buy: relatively high occupancy already, rents set below what nearby competitors charge, and low market vacancy. If the jobs are there but the property isn't capturing any of that demand yet, that's often where the opportunity sits, assuming the numbers work on a worst-case basis too.
Where this fits in our underwriting
Market analysis is one of three things we have to be confident in before a deal reaches our investors: location, operator, and market. We evaluate hundreds of deals a year and close two or three. A lot of that attrition happens right here, at the job growth and employment mix stage, before we ever get deep into a specific building's numbers.
We're not trying to call the next boomtown. We're trying to find markets steady enough that our rent growth assumptions, which we always stress-test against a worst case, have a reasonable chance of holding up through a full hold period.
A few honest limits
Job growth data is backward-looking by nature. It tells you what happened, not what will happen. We treat it as one input, weighted alongside population trends, income, crime rate, and local regulation, not as a crystal ball. We've been wrong about markets before, and conservative underwriting is partly our answer to that: we'd rather be surprised by upside than caught by a downside we didn't plan for.
If you want to see how this plays out on actual properties we've acquired, our portfolio page walks through specific markets and what we found there.
Explore our portfolio or schedule a call with John if you'd like to talk through how we think about a specific market.