Tertiary Apartment Markets Set to Outperform Coastal Markets

Tertiary markets are the place to be for rent growth over the next five years, according to a new report from Markerr, while coastal markets are projected to underperform.

Allentown, PA, and Wichita, KS, are rated tops at 4.2% each followed by Bridgeport, CT and Greenville, SC, at 3.9%, and Syracuse and Albany at 3.8%.

Seattle (0.6%), San Antonio (0.6%), and Salt Lake City (0.5) pull up the rear among Markerr’s top 100 markets, each expected to grow rent by a scant amount.

Year over year, among the top 100 MSAs, multi-family rent growth was -2.5% in March 2024, marking 11 consecutive negative months.

The Rustbelt markets performed the best YoY in March, with -1.4% YoY growth, and Sunbelt markets experienced the worst at -4.2%.

Four of the top five markets facing the largest rent cuts in March 2024 were in Florida, including Cape Coral (-10.8%), North Port (-6.4%), Jacksonville (-5.9%) and Deltona (-5.9%). Austin rounded out the top five, coming in second at -7.1%.

Looking nationwide, Markerr forecasts the top 100 markets to grow by 2.5% YoY and by 2.3% for the 5-year compound annual growth rate (CAGR).

RealPage reported last week that strengthening job growth data from Q4 2023, shifts in GDP forecasts and retail sales, and the imminent action of the Federal Reserve had it updating its effective rent growth forecasts for major markets, including 12% of the top 50 to rise by 3% or higher this year.

Most major markets are forecasted to experience growth between 2% and 2.9%, and 38% of markets are predicted to see rent growth from 1% to 1.9%.

Those forecast to grow by 3% or higher were Anaheim, CA, Chicago; Columbus, OH; Detroit; Indianapolis; and San Francisco.