High Supply Submarkets Log Deepest Rent Cuts in Class B and C Stock

Written By Dave Parish

Median Submarket Rent Growth by New Supply Expansion Rate, Q1 2024

“In fast-growing submarkets, Class B and C properties experienced the deepest apartment rent cuts at 3.2% and 4.7%. Areas with significant new supply saw the worst declines, while areas with minimal new supply saw higher rents.

Surprisingly, Class A properties, despite facing the most competition, enjoyed 2.6% higher rents, except in cases where new deliveries exceeded 10% of existing stock, which resulted in a 2% rent cut.”

Our Take

This dynamic helps to explain the “why” in developing new Multifamily product. In simple terms, new Class A properties demand higher rents, particularly in markets where the scarcity of supply continues to be a challenge. Schedule a call and let’s talk!

#multifamilydevelopment #multifamilyrealestate #multifamilyinvesting #privateequity

Source: CRE Daily and REALPAGE.com, May 13, 2024

Dave Parish
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