Where the Highest Apartment Rent Growth Is

The Northeast and Midwest continue to outperform the country in rent growth over the short term, led by New York City, according to the latest Yardi Matrix National Multifamily Report.

The Big Apple not only led major metros in rent growth over the last year at 5.4% but at 0.6% also was the top performer during February at 0.6%. New Jersey (3.8%), Columbus (3.6%), Kansas City (3.3%), and Chicago (3.1%) were other top performers.

Despite having among the highest rents in the country— the average rent is $4,829 in Manhattan, $3,593 in Brooklyn, and $2,346 in New Jersey—the rent-to-income ratio is relatively low in those markets.

Five of Matrix’s top 30 markets are down in rent growth by 3% or more, year over year, led by Austin, which posted the largest decline, at 6.2%. The influx of supply in that metro and across the Sun Belt is a primary factor.

Fewer Completions Translating to Strong Rent Growth

Markets with the most significant rent and occupancy declines are concentrated in areas that have had a high volume of deliveries such as Austin, Miami, and Charlotte.

“In contrast, metros with fewer completions are posting strong rent growth,” according to Yardi Matrix.

Of the eight major metros that added less than 2% to total stock over the 12 months, only Las Vegas recorded negative rent growth.

As for renewals, Boston had the highest rent growth (9.5%), followed by Miami (8.3%), and Kansas City (8%). Only two metros had negative renewal rent growth: Austin (-1.2%) and New York (-1%).

Lease renewal rates were highest in New Jersey (82.2%) and lowest in Los Angeles (45.3%).

Occupancy rates dipped nationally to 94.5% and are either down or flat year-over-year in all but San Francisco (0.1%). Three Matrix top 30 markets are down by 1% or more: Atlanta (-1.2%), Indianapolis (-1.2%) and Austin (-1.0%).

“Interestingly,” Austin also had the greatest decline in asking rent, while New York had the largest increase, according to the report.

The Sun Belt and Southwest have felt significantly cooled sentiment in recent months, according to Yardi Matrix, after both enjoying robust interest in recent years.

Delivery Pipeline Isn’t Slowing in Austin, Charlotte

Heavy delivery pipelines there have eroded rent growth. Markets such as Austin, Charlotte, Tampa, Phoenix, and Denver—which were at the top of the rent tables for several years—have slid to the bottom over the last year.

The delivery pipeline isn’t slowing in Austin, which has 64,000 units under construction, 21.8% of existing stock, that will come online over the next few years.

Similarly, Charlotte has 37,000 units under construction (17.4% of the stock), Miami has 27,900 units (17.3%), Salt Lake City has 21,000 (16.8%), Raleigh–Durham has 30,000 (16.6%) and Nashville has 28,000 (15.9%).

Nashville topped the U.S. among major metros in absorption as a percentage of stock at 3.8% (6,850 units), followed by Miami (3.6%, 13,010), Orlando (3.5%, 9,175), Phoenix (3.5%, 12,183) and Austin (3.5%, 10,000)

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