Despite new job growth, Jacksonville multifamily prospects limited

Jacksonville added 5,900 new positions in 2011, posting 1 percent employment growth for the first positive change in some time.

The metro area has been lagging in terms of economic recovery, and the unemployment rate remains at about 10 percent, Hendricks & Partners notes. The city is experiencing significant growth in technology sector jobs, and may see similar progress in areas such as hospitality, professional, business services, education and health services in the near future. This economic expansion could prove beneficial for the housing market.

The multifamily sector may not benefit as much as might be expected from this momentum, however. Demand for apartments is expected to slow down in the next few years, despite projections suggesting the vacancy rate will fall from 8.8 to 8.5 percent. Hendricks & Partners notes no new multifamily units were added to the market during 2011 and only 288 are anticipated this year.

This trend is largely a result of the strength of the single-family home market in the city, which experienced declining inventory and increased sales last year. Rental property management firms and landlords in the area may not be able to push rents the way their colleagues in other markets can, as the high homeownership affordability rate and other factors set Jacksonville apart.