Independent Multifamily Landlords Saw Impressive Rent Growth In Gateway Markets
On-time collection rates in gateway markets surged by 211 bps last month.
Independent, non-institutional landlords in gateway cities outperformed units elsewhere in January, after reeling from some of the COVID-19 pandemic’s worst effects since the onset of the crisis.
A review of independent landlord rental performance by RentRedi and Chandan Economics reveals that the on-time collection rates in gateway markets including New York, Los Angeles, San Francisco, Washington, DC, Houston, Dallas, Chicago, and Boston surged by 211 bps last month, increasing to 81.4%. Conversely, units outside of
gateway markets saw their on-time collection rates fall by 23 bps to 79.9%.
The spread between gateway and non-gateway cities also widened to 193, the highest mark in five months, the report notes.
Another wrinkle: the much-lauded Sun Belt has actually underperformed when it came to on-time collections over the past three months. Renters in Sun Belt cities paid on time in 79.3% of units owned by independent landlords as opposed to 80.6% in units outside of Sun Belt.
“While there is deserved attention paid to the region’s continued macroeconomic boom, especially as it attracts residents from more expensive coastal markets, these data may indicate a potential cost of success,” the report says. “According to a recent report by Yardi Matrix, in Sun Belt markets experiencing high levels of rent growth, price increases are experienced by both lifestyle (by-choice-renters) and renters-by-necessity. The latter group is more likely to be existing residents that may be incapable of absorbing additional rental costs in a market where the equilibrium price is rising rapidly.”
On the flip side, large institutional investors remain bullish on the region.
“Landing a bargain in quality multifamily these days is nearly impossible. Assets in midsize markets like Charlotte and San Antonio are trading for a premium, but this hasn’t dampened investor enthusiasm for apartments—especially across the Sun Belt states,” Karlin Conklin, principal, IMG, told GlobeSt in an earlier interview.