April Rent Growth Report

Apartments.com, a CoStar Group online marketplace, recently released its April 2023 Rent Growth Report, offering an in-depth analysis of multi-family rent growth trends. The report shows that multi-family fundamentals showed signs of stabilization in April, with vacancy rates remaining steady at 6.7% and 34,000 units being absorbed. This signals a strong start to the second quarter.

The Facts

According to the report, national year-over-year asking rent growth slowed to 2.1% at the end of April, compared to 2.6% at the end of March. The national average rents rose from $1,650 to $1,656 or by 0.4%. Indianapolis had the highest year-over-year rent growth at 6.1%, with six Midwest markets holding six of the top 10 rent growth positions in April. However, year-over-year rent growth has slowed in many markets as demand for multi-family has weakened. Fast-growing Sun Belt markets, such as Las Vegas, Austin, and Phoenix, that experienced significant in-migration during the pandemic, are now seeing rents fall over the year.

Month-over-month data suggests the beginning of possible stabilization across the multi-family sector, with positive rent growth in 38 of the top 40 markets. Notably, Nashville and Raleigh saw month-over-month rent growth accelerate as a result of slight improvements in April vacancy rates.

What does this mean for investors?

The report's findings boost the likelihood that the sector's fundamentals will stop weakening, and the second quarter will finish stronger than a year ago, setting up the potential for the quarter overall to outperform expectations. However, there are a few potential risks to be mindful of, including:

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Commercial real estate professionals should keep these risks in mind when analyzing the multi-family market and making investment decisions.

What is Capstone’s approach?

In today’s market, our strategy is to get creative in restructuring deals. By utilizing data tools and communicating across our nationwide office presence to brainstorm ideas on market positioning, we are focused on finding creative ways to reshape deals. There is not a one size fits all approach, and now it the time to think outside the box. While other groups are an inch deep and a mile wide, we are an inch wide and a mile deep. It is important to work with a group who is niche focused in this type of environment, and our creativity stems from our extensive industry knowledge and our differentiator of being solely focused on the multi-housing sector.

Reach out to our brokerage team today to discuss your investment strategy!

Source: CoStar