The average monthly rent for multifamily communities in the United States rose $3 to an all-time high of $1,409 in July, according to a recent report by Yardi Matrix. The increase is thanks in part to strong second-quarter economic growth and healthy demand. Year-over-year, rents are up 2.8 percent.
Yardi is a California-based software company serving the commercial real estate industry. The company’s Yardi Matrix data branch researches and compiles data through a combination of original research studies and references to secondary sources. Numbers are representative of 127 U.S. markets, though the 30 largest metros are highlighted specifically.
Average rents have risen $41, or 3 percent, year-to-date. This is in line with growth figures during the same period in recent years. This statistic is encouraging, according to Yardi, because it exemplifies the fact that the expansion of multifamily has not run out of steam, despite headwinds of increased supply and affordability issues.
Rent increases are healthy across the board, led by growing secondary markets. At the top of the list is Orlando, which saw year-over-year rent increase of 6.9 percent, followed by Las Vegas, which saw a growth of 5.8 percent.
Chart courtesy of Yardi Matrix.
On the West Coast, the Inland Empire saw an increase of 5.5 percent and Phoenix saw rents grow by 4.9 percent. Technology centers — including San Jose, Seattle, San Francisco, Boston and Portland — have also been among the leaders in rent gains over the past three months.
Occupancy rates have followed the rent trends, rising 20 basis points to 95.3 percent among stabilized properties year-to-date. Dallas, Charlotte, Nashville and Denver have improved their occupancy rates despite an abundance of new supply.
Economic conditions remain favorable for the multifamily industry, according to the report. This is especially true in secondary markets that are leading the nation in employment growth. Domestic migratory patterns are also energizing demand in key markets in Florida and the Southwest.
Many households received an income boost through the 2017 tax reform package, which has allowed higher rents to become more affordable. The report notes, however, that economic headwinds are mounting in the form of tariffs and a lower bound to the unemployment rate. Yardi anticipates continued steady growth for the apartment sector, but supply and macroeconomic challenges will likely limit growth.
To view the complete report, click here.
— Katie Sloan