Rents Rise Fastest in Class-B Submarkets
February 21, 2017 | by Bendix Anderson | National Real Estate Investor
Apartment rents are growing most quickly in working-class, suburban submarkets that apartment developers have avoided.
“With a handful of exceptions, the neighborhoods posting the strongest rent growth don’t have much ongoing construction,” says Greg Willett, chief economist for Real Page and MPF Research. “These are suburban areas.” They are also often working-class areas with older, less-expensive housing.
In contrast, rents are growing much more slowly in the urban, core markets where the rents are already high. “The heavily-supplied, urban cores have seen the weakest rent growth,” says John Affleck, international economist for CoStar Group. “The high-income tenants in these areas can consider home ownership, and can play off the amply new product one against the other for the best deals.”
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