Apartments

Booming Rental Markets

Lesley Deutch photo

Lesley Deutch

June 14, 2012

The apartment market is strong. All of the large metropolitan areas in the US are seeing rent growth and declining vacancies, but location still matters. We recently completed our forecasts for 78 apartment markets across the country and we expect the following categories of markets to experience the strongest rental growth over the next five years:

Infill Markets With High Cost of Homeownership:

These markets are still expected to see the strongest rent appreciation over the next five years. These markets include New York City, Boston, San Francisco, and San Jose. Renting is still cheaper than owning in these cities, unless you are willing to commute a very long way.

Tech-Oriented Growth Markets:

We anticipate these markets will also experience strong rent increases over the next five years as employment growth drives up rent demand. Some of these markets include Austin, San Jose and Raleigh. They tend to attract a more migratory worker.

Young Markets

There are a number of markets such as Dallas, Austin, Charlotte, and Tampa where a relatively young population will drive rent demand over the next five years. Job growth in these markets will attract younger workers, who have a greater propensity to rent, but keep an eye on supply as we are already seeing a lot of construction.

Condo Conversion Markets

 A few markets across the country experienced a large number of condo conversions that captured much of the existing Class A apartment rental inventory. While many of these condo conversions have been purchased by investors, few have centralized property management and many contain foreclosures and distressed units that deter potential renters. Some of these markets include Fort Lauderdale, San Diego and Tampa. We expect stronger rent growth in these markets owing to the removal of existing stock from condo conversions.

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About The Author

Lesley Deutch photo
Lesley Deutch
Managing Principal
Lesley has more than 25 years of experience consulting with executives in the finance and real estate industries throughout North America. She works across a wide spectrum of industries including apartments, for-sale housing, high-rise development, urban projects, single-family rental, building products, and commercial developments.

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