As we look toward 2025, many major metro areas are feeling the pressure of oversupply in the apartment market, leading to downward trends in rents and rising vacancies. But here’s the good news: You don’t have to invest in those challenging markets.

Instead, why not focus on cities with strong fundamentals and growth potential? Whether you’re a seasoned investor, a real estate professional, or just curious about the market, this list highlights ten cities where multifamily investment makes sense right now.

This list, compiled by Crexi and PwC, focuses on metros where multifamily properties are showing signs of strong demand, reasonable pricing, and promising returns. Let’s dive into the top ten cities and what makes them stand out:

1. Chicago, IL

With nearly 2.7 million residents, Chicago is a dynamic city with a diverse economy spanning education, healthcare, and finance. Despite recent rent increases, Chicago remains far more affordable than New York or San Francisco, with a median one-bedroom rent of $2,212. Investors are drawn to competitive sales comps of $188 per square foot, cap rates of 7.1%, and strong job growth that supports rental demand.

2. San Diego, CA

San Diego combines a high demand for rental properties with limited apartment supply, maintaining strong occupancy and rent growth. Key industries like defense, tourism, and technology create a stable economic base. The median rent for a one-bedroom is $2,448, and properties boast sales comps of $553 per square foot with a 4.5% cap rate.

3. Columbus, OH

Ohio’s capital city is growing fast, fueled by industries like education, healthcare, and technology. Median rents are around $1,200, making Columbus attractive to renters and investors alike. With ongoing infrastructure improvements and a steady student population from Ohio State University, the city offers promising long-term value.

4. Nashville, TN

Known for its music scene, Nashville has become an economic powerhouse, with over 2 million residents and a business-friendly climate. Urban development and infrastructure projects are improving desirability, while the median rent of $1,630 offers room for growth. Sales comps are $338 per square foot with cap rates of 5.2%.

5. Raleigh, NC

A major tech hub, Raleigh benefits from its proximity to three major universities and thriving industries in technology and life sciences. Median rents of $1,200 and low unemployment (2.6%) create a stable environment for multifamily investment.

6. Boston, MA

As a global hub for biotech, healthcare, and education, Boston is one of the strongest multifamily markets despite higher entry costs. While the median rent for a one-bedroom is $3,731, high occupancy rates and recent investments in new multifamily projects make this a smart long-term play.

7. Dallas, TX

Dallas continues to boom, with a growing population and a business-friendly environment. The city’s affordability (median one-bedroom rent of $2,162) and robust job market make it a top choice for investors seeking consistent returns.

8. San Jose, CA

Fueled by the tech industry and artificial intelligence growth, San Jose has a low vacancy rate (3.5%) and median rents of $2,630. The city offers strong rental demand, making it an attractive market for multifamily properties despite higher per-square-foot prices.

9. Philadelphia, PA

Philadelphia’s expanding economy, driven by education and healthcare, makes it a popular choice for multifamily investors. The median rent of $1,928, low vacancy rates, and ongoing infrastructure improvements highlight its growth potential.

10. Minneapolis/St. Paul, MN

The Twin Cities offer stable rent yields, with a median one-bedroom rent of $1,762, and steady economic growth in healthcare and technology. Investors are drawn to competitive pricing and strong long-term prospects.

The Bottom Line

These ten cities each offer unique opportunities for multifamily investors. Whether you’re looking for cash flow, appreciation, or a balance of both, these markets provide a solid foundation for investment.

Curious to learn more about multifamily opportunities or explore new markets? Check out my website at www.danielkaufmanre.com or email me directly at daniel@kaufmanredev.com.

Let’s connect and strategize for a successful 2025!

– Daniel Kaufman