A recent report from Trepp looks at how multifamily net operating income (NOI) grew between 2021 and 2022 and how NOI growth varied across the country. It did so by examining a sub-set of the loans in Freddie Mac pools and looking at the top 25 states by outstanding multifamily loan balances.
Leaders and trailers
The rankings of the 25 states with the highest outstanding loan balances by NOI growth between 2021 and 2022 are shown in the following table.
| State | YoY NOI growth | MF Loan balance (millions) |
| Tenn. | 14.5% | $1,927 . |
| Fla. | 14.4% | $13,061 . |
| Ariz. | 13.7% | $4,388 . |
| Mass. | 11.8% | $1,842 . |
| Ga. | 11.2% | $5,855 . |
| Wash. | 11.2% | $4,808 . |
| N.C. | 11.1% | $4,047 . |
| Tex. | 11.0% | $17,209 . |
| N.J. | 11.0% | $4,229 . |
| Nev. | 11.0% | $3,252 . |
| Ind. | 10.7% | $1,481 . |
| S.C. | 10.4% | $1,282 . |
| Ohio | 10.3% | $3,573 . |
| N.Y. | 10.2% | $6,410 . |
| Mo. | 9.4% | $1,634 . |
| Ill. | 9.0% | $3,200 . |
| Cal. | 8.3% | $20,776 . |
| Va. | 7.5% | $5,950 . |
| Conn. | 7.4% | $1,911 . |
| Pa. | 7.0% | $4,392 . |
| Color. | 6.9% | $6,101 . |
| Ore. | 5.9% | $2,436 . |
| Mich. | 5.5% | $1,861 . |
| Md. | 2.0% | $5,862 . |
| Minn. | -1.4% | $1,380 . |
The report went on to profile states with the highest and lowest NOI growth rates: Tennessee and Minnesota.
Tennessee was cited for having high economic growth and low costs, which led to in-migration, which led to more economic growth in a virtuous cycle.
Most of the factors cited as obstacles to NOI growth in Minnesota; COVID, rising interest rates, ample new delivery, were also seen in other states. Even the rising crime seen in Minneapolis in the wake of the George Floyd riots also occurred in other regions. The report notes that rent growth in the Minneapolis-St. Paul metro area was only 2.9 percent in the period covered and cites low occupancy rates as a cause. However, it does not mention the impact that passing rent control measures in Minneapolis and in St. Paul in 2021 had on rent growth and NOI growth.
Considering the other 25 states with lower outstanding loan balances, the highest overall NOI growth was seen in Wyoming, with a reading of 29.3 percent. Other states with double-digit NOI growth were Hawaii (28.4 percent), Utah (14.2 percent), New Mexico (13.9 percent), South Dakota (12.7 percent), Nevada (11.0 percent) and Oklahoma (10.3 percent). The report did not specify the size of the outstanding loan balances for these states so these results could be based on very thin data sets.
The full Trepp report is available here.
