10 Markets with More Than 4% Rent Growth in Last 12 Months
Another important factor to analyze when you’re evaluating potential target investment markets is historical rent growth, which is also tied to supply and demand.
A strong year-over-year rent growth indicates a strong multifamily market.
Additionally, one of the important assumptions set when underwriting an apartment deal is annual income growth. That is, how much will my revenue naturally increase each year? Generally, somewhere between 2% and 3% is a solid, conservative assumption, due to being close to the national and historical rent growth and inflation averages. Therefore, if you are investing in a target market with a true rental growth that is greater than 2% to 3%, you are able to automatically add value just by selecting the right market!
Each quarter, CBRE gathers the most recent multifamily data and releases it in their U.S. Multifamily Figures Report. The national year-over-year rent growth was 3.0%. But here are the 10 markets that saw a rent growth greater than 4.0%:
10. Jacksonville, FL
Y-o-Y Rent Growth: 4.1%
9. Raleigh, NC
Life Storage
Y-o-Y Rent Growth: 4.1%
8. Charlotte, NC
Greyhound
Y-o-Y Rent Growth: 4.2%
7. Tampa, FL
Parade
Y-o-Y Rent Growth: 4.3%
6. Austin, TX
GrandView Aviation
Y-o-Y Rent Growth: 4.7%
5. Riverside, CA
Y-o-Y Rent Growth: 4.8%
4. Sacramento, CA
Y-o-Y Rent Growth: 5.1%
3. Atlanta, GA
Y-o-Y Rent Growth: 5.4%
2. Phoenix, AZ
Y-o-Y Rent Growth: 8.0%
1. Las Vegas, NV
Booking.com
Y-o-Y Rent Growth: 8.0%
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Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.
