Rent Growth Continues Its Blistering Pace

After a historic year in which more than 600,000 net units were absorbed, 2022 has gotten off to a rockier start relative to recent years in terms of apartment demand. An evaluation of January multifamily performance is the topic of the upcoming monthly ALN newsletter, but in this space today we’ll spotlight one metric that did not cool off – rent growth.

National Rent Growth

Average effective rent rose by 0.8% in the month of January, a gain that was four times as large as from January 2021. The incredible rent growth experienced across the multifamily industry last year really did not start in earnest until the end of the first quarter. To open this year, 2021 momentum has continued. The monthly increase brought national average effective rent to about $1,570 per unit.

Average asking rent also rose by 0.7%, the small difference between the two averages an indication of continued aggressiveness on the part of operators. Lease concessions did play a role during the month as well. The availability of discounts for a new lease fell by a further 2% after a year of declines in 2021, and the average discount value also fell by around 2%.

Price Class Growth

As with last year as a whole, the first month of 2022 featured above-average rent growth across the four price classes. The largest gains were in the top two tiers – with the 1.1% jump in the 0Class A segment the largest overall. That brought the average Class A unit to about $2,185 per month. Class A properties also saw the largest decreases in both lease concession availability and average value – with each declining by around 4% during the month.

The Class B subset managed an average effective rent gain of 0.8% in January, which was significantly higher than the 0.1% gain in January of both 2020 and 2021. Here too, both lease concession metrics decreased, but by about 2% each compared to the 4% declines for Class A. The average Class B unit ended January leasing for approximately $1,785 per month.

The average effective rent gain of 0.6% for Class C properties was triple the growth from last January and brought the average unit to about $1,480 per month. This was the only subset of properties to not achieve a decline in both concession availability and average value, but only because the average discount value rose by just under 0.5%.

The 0.4% average effective rent gain for Class D properties in January was the lowest of the four price classes and also the most in line with recent years. This year’s gain just edged out the 0.3% monthly appreciation from January 2021 and fit within the narrow range of 0.2% to 0.4% growth that every January for the last five years has seen. The average Class D unit closed January at $1,165 per month.

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Market Highlights

Also similar to last year, the top of the list for market-level average effective rent growth was heavily populated by Florida markets. Fort Myers – Naples took the top spot with a monthly gain of 2.4% and was joined in the top five by Palm Beach (+2.2%) and Melbourne (+2.1%). Lubbock and Sioux Falls joined those Florida markets in the top five with each adding just over 2%. Among areas with at least 500 conventional properties above the 50-unit threshold, Tampa, Tucson, Orlando, and Miami led the way – with each adding between 1.3% and 1.6% to average effective rent in January.

On the other end of the spectrum, about a dozen markets suffered an average effective rent loss in January. Only Laredo, TX and Lake Charles, LA lost 1% or more and the 1.6% decline in Laredo was the largest in the country. Among larger markets it was areas like Pittsburgh, Minneapolis – St. Paul, and Sacramento that lagged relative to the rest of the county in January. Even so, all three hovered right around no movement in average rent.


Though apartment demand did soften considerably in January compared to the same period in recent years, effective rent growth still has not slowed from the blistering pace of 2021. National monthly average effective rent growth nearly touched 1% and Class A properties did cross that threshold.

There is a danger in drawing too many conclusions from a single data point. As will be addressed in more depth in the upcoming ALN newsletter for February, January certainly provided a data point for decreased demand. If that becomes a trend in the coming months, we may be on the tail end of rent growth that has so significantly outpaced typical gains.

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