A defining feature of 2022 multifamily performance was stubbornly high rent growth through much of the year despite lackluster apartment demand. This was due in part to rising costs faced by owners and operators of multifamily properties, but also to factors such as the fact that the demand boom in 2021 meant that occupancies remained quite high through much of 2022 even without robust net absorption.
Thanks to the rent growth of 2021, there was also a wide margin between the rent for a new resident compared to the rent being paid by a resident on an expiring annual lease. Efforts to close this gap helped to maintain rent growth momentum last year. In 2023, much of the remaining momentum has finally petered out of rent growth.
Average effective rent growth for new leases nationally in the first half of the year came in at just less than 2%. The gains of 2021 and 2022 were, of course, unsustainable and that rent growth has left little meat on the bone for gains this year. Low apartment demand has persisted, and combined with a very active new construction pipeline, has conspired to bring national average occupancy to below its pre-pandemic level.
However, not all markets have struggled to realize rent gains. The Sunbelt and Mountain West were the two regions at the leading edge of both the apartment demand and rent growth fronts over the last couple of years. The markets with the most robust rent growth this year have been those in the Midwest.
So, without further delay, here are the top five markets nationally in average effective rent growth for new leases in the first half of the year. For good measure, the same list has been included from amongst only the largest markets. For more detailed information on each of the market listed, ALN offers complimentary Market Review reports.
Top 5 Markets
| Market | Average Effective Rent (New Leases) | Percent Change |
|---|---|---|
| TX - Midland-Odessa | $1,322 | 8.6% |
| IL - Springfield | $996 | 6.8% |
| VA - Roanoke | $1,187 | 6.0% |
| WI - Madison | $1,451 | 5.8% |
| TX - Abilene | $951 | 5.6% |
Top 5 Markets – ALN Tier One Markets
| Market | Average Effective Rent (New Leases) | Percent Change |
|---|---|---|
| IL - Chicago | $1,925 | 4.4% |
| OH - Cincinnati/Dayton | $1,242 | 4.1% |
| MO - Kansas City | $1,268 | 3.7% |
| MA - Boston | $2,718 | 3.4% |
| IN - Indianapolis | $1,219 | 3.4% |
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