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Top 3 Macro Forces Impacting Real Estate Investing

Just as nobody could foresee the pandemic that started in March of 2020, nobody could predict the many changes that happened in the country, nor their impact on a real estate deal’s performance. The macro force changes that occurred during the past year have had significant impact on a variety of real estate projects, including multifamily properties.

As a sponsor and investor in multifamily properties across the US, I’ve had an opportunity to see firsthand the impact of those macro force changes. What is most surprising to me is the magnitude of those macro forces, because their scope is impacting real estate performance in many areas of the country. I’ll share what I know to be the three main factors impacting real estate and take a closer look at each.

Macro Factor 1: Internal Migration to Secondary Markets

Internal migration relates to population shifts, and it’s what is driving demand for multifamily properties in a specific market. COVID has accelerated this migration for a variety of reasons. First, companies have shifted to a work-from-home model, which means that as employees work remotely, there’s no real need to have large conference rooms and office spaces, along with the associated large office rents.

Avoiding living in high-rent, congested cities is another COVID-related fallout from the pandemic, with New York leading the migration for this very reason. People are moving out of New York, which began before the pandemic hit the US, and they’re moving to cities with better climates and lower rents. For example, a studio apartment in New York City can cost up to $3500 per month, which is a high number at any time, but even worse during a pandemic. Two of the cities benefiting from the New York City migration are Atlanta, GA and Miami, FL.

While Atlanta doesn’t have the city vibe that one would find in Miami, it’s a more affordable city with a dynamic restaurant scene with many growing entertainment opportunities. But it’s not only people that are moving - it’s companies that are choosing to make the move as well. Many tech and other companies are choosing to move to secondary markets like Atlanta and Miami and other cities, as avoiding high rents helps to boost their bottom line.

New York is not the only city experiencing migration, although their numbers are soaring. Just as an example, in 2019 it was reported by online moving resource guide that 18,887 people moved out of New York City. In 2020, that number jumped to 110,978. That’s a staggering number of people leaving their apartments and homes to move to other states and cities.

California is another state that is experience internal migration. People are moving from California to Texas and Arizona to enjoy better weather and lower taxes. Dallas and Austin have experienced huge gains, with many large and small tech companies moving to Austin as it’s a business-friendly city and has a huge high-tech talent pool to draw from. This creates higher demand for multifamily properties, which helps landlords raise rents. One example of how the high demand impacts rents is our own property in Atlanta, where we were able to raise rents by 29%, despite the pandemic.

Macro Factor 2: Unemployment is Going Down

Unemployment has had a major impact on multifamily properties. While the vacancy rates never approached the numbers that were originally predicted for multifamily properties, the problems with rent collections and an inability to increase rents can have a huge negative impact on a property’s bottom line.

Despite high unemployment numbers throughout the country, many cities were able to add more jobs. Georgia and Texas are two examples, and Florida is another state that has had an increase in jobs. One explanation is that those states are open - everything from health clubs to restaurants to coffee shops are all open for business and are providing jobs.

If you have properties in those locations, as we do, you have much higher collection rates. Atlanta is one example - they’ve added many jobs that were lost due to the pandemic. A lot of credit goes to the fact that their businesses are open. That’s a direct contrast to California, which has gone through several mandated closures, and has a much higher percentage of tenants unable to stay current with their rent.

It’s important to note that you should always invest in a landlord-friendly state. I tell my investors that while investing in a strong real estate market is important, you also want to be able to have tools available that will help avoid a lengthy legal battle when trying to evict tenants who don’t pay their rent on time. Texas, Georgia, and Florida, where our properties are located, are all landlord-friendly states.

Fortunately for landlords, the new bill included $25 billion in rental assistance. This bill also allows landlords to apply for funds on behalf of tenants, so they can be paid for current and past due rent. This is welcomed news for landlords and will help to mitigate the damaging macro factor of unemployment.

Macro Factor #3: Development is a Mixed Bag

Prior to the pandemic, many new multifamily projects were in the pipeline. Based on Yardi Matrix reports, 1.5 million new units will be delivered in the US over the next 5 years. That’s a substantial number of new apartments coming on the market, with the top 2 markets being Austin, TX with 53,000 new units and Dallas, TX with 51,000. That shows where the high demand is, and the new projects will help meet that demand. Other cities in the top tier of new units coming on board include Seattle (46,000), Denver (45,000), Phoenix (42,000), Washington DC (39,000), Miami (38,000) and Houston (37,000).

In the United States, as the “baby boomers” age there are 10,000 people each day turning 65. Oftentimes, those people are considering selling their homes and downsizing, with many opting for apartment living rather than purchasing a new home. That’s helping to fuel the demand for multifamily properties. Younger people are also fueling the demand, as they don’t want to purchase a home, and many are willing to move around when an appropriate job offer comes along. The tech jobs available in many secondary markets enable those people to pay higher rents.

While many consider this positive news, it does present some problems for current property owners. I can tell you from my own experience that competing with brand-new properties is not easy, when your own property is 10 to 20 years old. Even with continuous maintenance and value-add upgrades, comparing an older property to a newer one is not easy. That means the more competition there is in the marketplace, the harder it will be to keep occupancy up and harder to charge the maximum rents.

There are ways to stay competitive and combat all of the new properties coming on board, but they may have a negative impact on the bottom line. You can offer rent concessions, offer flexible lease terms or early payment discounts, or by waiving or discounting the standard security deposit.


There are 3 main macro forces that can impact a real estate deal’s performance. The first is internal migration, where people move from one city to others. Two states that have felt this impact are New York and California. Many New Yorkers were considering moving prior to the COVID pandemic, due to high rents, but the pandemic accelerated the moves.

The New Yorker’s who are moving are heading to secondary markets, like Miami and Austin. The people leaving California are moving to Arizona and Texas, where they’re finding lower rents and excellent employment opportunities. Many large and small tech companies are also moving to secondary markets like Austin, where rents are lower, and the employment pool is strong. Many companies are considering smaller offices, as the pandemic has caused many employees to work remotely, which is predicted to continue after the pandemic is under control.

The second macro factor is unemployment, which has had a major impact on multifamily properties. Despite continuous high national unemployment numbers, many states have added jobs, including Texas, Georgia, and Florida. One reason attributed to that growth is that their businesses are open, and they’re all providing jobs. States that are open also have high rent collection numbers, unlike California, where many businesses were mandated to close due to the pandemic.

The third macro factor impacting a real estate deal’s performance is development. In the next five years, it’s projected that more than 1.5 million new apartments will come on the market, with Austin leading the way at 53,000 new units. This growth is fueled by aging baby boomers, and by Generation Z, who are willing to move around for employment and are not necessarily looking to purchase a home. It’s tough for older multifamily properties to compete with new complexes, and in order to be competitive, they are forced into using various types of rent concessions, which ultimately negatively impact the property’s bottom line.

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About the Author

Ellie is the founder of Blue Lake Capital, a real estate company specialized in multifamily investing throughout the United States. At Blue Lake Capital, Ellie helps investors grow their wealth and achieve double-digit returns by investing alongside her in exclusive multifamily deals they usually don't have access to.

Ellie is the host of REady2Scale , a podcast that highlights honest, insightful, and thought-provoking discussions on the multiple approaches for successful real estate investing.

She started her career as a commercial real estate lawyer, leading real estate transactions for one of Israel’s leading development companies. Later, as a property manager for Israel’s largest energy company, she oversaw properties worth over $100MM. Additionally, Ellie is an experienced entrepreneur who helped build and scale companies by improving their business operations.

Ellie holds a Masters in Law from Bar-Ilan University in Israel and an MBA from MIT Sloan School of Management.

You can read more about Blue Lake Capital at and learn more about Ellie at


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