Apartment rents remain resilient despite ongoing surge of new space

Healthy demand underpins multifamily rent strength, though another weak growth year looms

Despite a strong wave of deliveries applying downward pressure, persistently robust demand is keeping multifamily rents hardy, with asking rents unchanged month over month in January.

According to Yardi Matrix, the average asking rent for the month was $1,710, flat from December and up 0.5% year over year. It’s a tepid annual gain, but one that remains nonetheless notable given the recent surge of new apartment space in many areas, an influx attributed in large part to multifamily’s resilience even in the choppy commercial real estate environment of the past few years.

With more deliveries set to hit the market soon, Yardi anticipates another weak rent growth year in 2024. The analytics company is forecasting 540,000 deliveries this year, which would be a new record high if realized. Completions are expected to peak in 2024, though the pipeline remains busy with another 460,000 deliveries predicted in 2025.

The ongoing surge of supply, however, isn’t geographically consistent. Expanding secondary markets in the West and Sun Belt, like Austin, Miami, Charlotte, Denver, Nashville and Phoenix, are seeing the largest number of deliveries, as are fast-growing tertiary cities in the same regions, like Huntsville, Alabama; Port St. Lucie, Florida; Colorado Springs, Colorado; and Boise, Idaho. Even with absorption sturdy in such markets, their rent growth projects most weakly while tenants lease up the newly added space. Charlotte, Nashville, Phoenix and Austin all saw year-over-year decreases in rent, with Denver and Miami logging gains below the national 0.5% figure.

Meanwhile, rents in large hubs in the Northeast and Midwest are seeing the strongest gains. New York (up 5.5% annually); New Jersey (4.4%); Columbus, Ohio (4.2%); Kansas City, Missouri (3.4%); and Indianapolis (3.0%) posted the largest annual increases in January, while Columbus (up 0.8% from December), Indianapolis (0.6%) and Minneapolis-St. Paul (0.5%) saw the largest upticks month over month.


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