Key Apartment Markets Show Strong Demand in Q2

Progress can make a big difference in investors and developers’ mindsets even if it’s not back to what had occurred at a peak. Though apartment demand in the second quarter of this year in the U.S. didn’t compensate fully for the net move-outs of last year, some markets are showing strong resilience and fueling a sense of optimism, according to data RealPage Market Analytics recently released.

In this year’s second quarter, demand for apartments hit 83,450 units. Annual absorption was still in the negative numbers of -44,096 units. However, in about half of the country’s largest 50 apartment markets, second quarter demand rebounded to push them into positive annual demand. Nine markets also posted performances that accounted for more than 100% of their market’s annual demand. 

What were the brightest stars in this group for this period? Top on the list was Columbus, home of Ohio State University and the state’s capital. Its second quarter apartment absorption made up more than 3,000% of its market’s annual apartment demand volume. More than 1,400 units were absorbed in that quarter, its largest quarterly demand volume since the same period back in 2019, before the pandemic caused a reset of where people lived, where developers went and what they charged. The city is also posting strong rent growth when counterparts elsewhere are pulling back.

Two other Midwestern markets were noteworthy during this quarter, including Kansas City, Mo., and the Minneapolis area. In KC, home of great barbecue, numerous fountains and lots of jazz, second quarter demand was 322% of annual absorption. In Minneapolis, where lakes abound and it’s a cultural mecca with art and theater, it was a lower 160%. Regarding annual rent growth, KC saw a price increase of 5%, double the U.S. average for the second quarter. In Minneapolis, demand hasn’t yet translated to significant rent growth, the report found.

Atlanta also experienced strong apartment demand in the second quarter, absorbing more than 2,950 units. However, the demand hasn’t yet been sufficient to keep up with new apartments, which were at all-time highs. The attraction of those shiny new pennies meant rent cuts in the existing buildings, at least for now. 

Other Southern markets that fared well included Washington, D.C., Fort Worth, Texas, and West Palm Beach, Fla., where demand accounted for 135% to 290% of annual volumes. Of note is that Fort Worth overtook its larger, even better known nearby city of Dalla’s share of demand in that metroplex area.

In the West, strong demand existed in Seattle and Denver, accounting for 135% to 180% of annual absorption.  

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