Secondary and tertiary markets are outperforming in the multifamily sector, as high costs and limited amenities drive renters away from gateway markets. While the national average rents were flat in the latest Yardi® Matrix National Multifamily Report, it’s important to look at individual cities for the full picture. On a year-over-year basis, rents fell 0.6% nationwide.
For example, California’s Inland Empire (6.0%), Sacramento (5.0%), Las Vegas (3.9%) and Phoenix (3.8%) lead the report’s top 30 markets, with each market benefiting from renters leaving the Bay Area and Los Angeles in search of more space and lower rents.
“The average rent in the Inland Empire ($1,669) is 23% less than the average rent in Los Angeles, and the average rent in Sacramento ($1,609) is 34% less than the average rent in San Francisco. As many workers, especially those in creative and knowledge-based industries, enjoy increased flexibility to work remotely, many individuals are weighing the costs and limitations of gateway markets versus the benefits of smaller cities and are choosing to relocate,” states the report.
Nationally, New York (-10.0%), San Francisco (-8.2%), Washington, D.C. (-3.7%), Boston (-3.1%), Chicago (-2.9%) and Los Angeles (-2.8%) all fell at or near the bottom of the rankings.
“Primary markets will not suffer forever, but their recovery will depend on how much newly relocated individuals enjoy their adopted homes and cities and whether they choose to stay,” states the report.
Get the full national analysis in the October multifamily report, including details on the success of tertiary markets, from industry data leader Yardi Matrix. You can also access the recent multifamily outlook webinar materials to gain insight.
Yardi Matrix offers the industry’s most comprehensive market intelligence tool for investment professionals, equity investors, lenders and property managers who underwrite and manage investments in commercial real estate. Yardi Matrix covers multifamily, industrial, office and self storage property types. Email [email protected], call 480-663-1149 or visit yardimatrix.com to learn more.