During my appearance on WBAL 1090 AM Tuesday morning host Bryan Nehman asked why Baltimore attracts strong rental investment if its population is declining.

The answer provided was less than clear and concise. So, let’s try to add clarity on why a firm, such as a subsidiary of Pittsburgh-based real estate investment trust Omicelo LLC, would stake $8 million in an 81-unit rental townhome portfolio in East Baltimore.

The Baltimore metro area is expected to add a significant amount of jobs in 2018, according to commercial real estate services firm Marcus & Millichap’s most recent multifamily market report. Those jobs are anticipated to largely come from the “eds and meds” fields clustered in the city that attract younger, college-educated employees and provide income levels to support rents.

“Employers in Baltimore are expected to hire more than twice as many people this year than they did in 2017, with an emphasis on adding more doctors, nurses and educators to the metro,” according to the report.

That finding is in keeping with expectations from experts like Spencer Levy, a senior economic adviser at CBRE, who believes Baltimore is positioned to benefit from an “eds and meds” job boom. An added benefit of growing in those sectors is their relative immunity to outsourcing and technology disruptors.

“It’s hard to fax in a physical therapy session from China,” Levy said late last year.

Combined with a widening gap between rent and mortgages, driven by steep increase in area home prices, and it’s plain why investors are interested in Baltimore rental properties.

The city is also starting to attract investment, according to Marcus & Millichap, from investors in major metros, such as New York, Los Angeles, and San Francisco. That’s in line with what Brad Byrnes, a former investment banker now with his family’s real estate firm Byrnes & Associates Inc., said earlier this month about interest in Charm City.

“When you have an opportunity to sit down with (investors) and get beyond the initial impressions and tell the whole story, it’s mind-boggling,” Byrnes said.

Investors are being drawn to Baltimore rental properties, according to Marcus & Millichap, because of relatively lower entry costs and higher initial yields.

Units in the Baltimore area trade for $100,000 to $200,000 less than a unit in larger cities, with capital rates (net operating income divided by current market value) 200 basis points higher.

Underscoring the potential in the Baltimore rental market is decreasing vacancies despite a large amount of recently delivered supply.

“Developers are primarily targeting areas in and around downtown Baltimore. Strong demand on the east side of the city has driven the vacancy rate there down 110

basis points over the past four quarters as a record 1,230 new units came online,” according to the Marcus & Millichap.

Baltimore has struggled with population decline. The city’s population fell from 620,951 in 2010 to 611,648 last year, according to the U.S. Census Bureau. That’s down from nearly 1 million residents in the 1950s.

But there’s evidence that greater housing voucher mobility has resulted in low-income residents leaving the city while Baltimore is attracting more educated residents.

A survey by website Rent Café released in May found the share of residents with at least a bachelor’s degree increased by 55 percent, while the rate of residents living in poverty increased by 1 percent.