Apartment rents over the last year have risen quickly in some less-likely places. Queens, N.Y., in the shadow of Manhattan and poised to welcome Amazon's HQ2, scored the biggest average apartment rent increase, among big cities, according to a report from Yardi Matrix. Other top towns in the U.S. for rent growth include Las Vegas and Phoenix—two cities that took nearly a decade to recover from the housing crash.
Rents also grew in more expected places like Seattle and San Francisco, but at a slower clip. Despite challenges like finding suitable land and obtaining building permits, developers in recent years have managed to open thousands of new apartments in these “core" markets. Rents are still increasing in core markets, but the real growth seems to be in secondary markets.
Rents Rose in Nearly All Markets
Demand for apartments is still very strong overall. As of September 2018, rents rose in nearly all (93 percent) of the 252 cities and towns in the U.S. listed in the report from Yardi Matrix. Rents decreased in just 1 percent of cities and stayed at the same level in 6 percent of cities.
Rents typically grow most quickly in the spring and summer, slowing down again in the fall and winter months. This fall looks to be no exception—apartment rents averaged $1,412 in the U.S. in September 2018. That's down 1 percent compared to August, but up 3 percent over the last year, according to Yardi.
Rents are growing most quickly in places where they were not that high to begin with.
Queens Leads the National Pack
Among large U.S. cities, rents grew the most in the New York City borough of Queens over the 12 months that ended in September. (Yardi counts Queens, which has a population of more than 2 million people, as its own large city, even though it is part of New York City.)
Rents in Queens in September rose 8.4 percent to reach an average of $2,342. By comparison, the average rent in Manhattan was much higher at $4,119, but was just 2.1 percent higher than last year. Rents in Brooklyn averaged $2,801, up 4 percent over 2017.
Apartment rents in Phoenix, Ariz., grew 6.9 percent over the year that ended in September, giving Phoenix the second-biggest percentage increase in rents over that period among large cities. But the average apartment rent was still just $997—relatively affordable compared to other big towns.
Rents in Las Vegas also set a good pace, rising 6.1 percent over the year that ended in September and placing Vegas third among percentage increases in big cities. Similar to Phoenix, the average rent was on the lower side, at just $1,019.
Slower Growth in Pricier Markets
By contrast, average rents grew more slowly in more expensive places (New York City being the outlier in this case). In Seattle, once a leading city for rent growth, the average rent grew just 3.8 percent to reach $2,064 over the year that ended in September. In San Francisco, rents grew just 3.6 percent to reach $3,590.
This trend is likely to continue over the next year, as rents rise most quickly in cities and at individual properties where the rents are not already sky-high—and where property managers are not competing with large numbers of new luxury apartments, Yardi found.