Rent Growth, Rent Fall: A Tale of Two (Kinds of) Cities

Question: When it comes to rent, what does the following list represent?

1. Tacoma, WA
2. Boise, ID
3. Colorado Springs, CO
4. Wilmington, NC
5. Lexington, KY

Answer: These are the top five markets (out of all 125+ markets Offerd covers) to have experienced rent growth in the recent three-month period: June, July and August 2020.

Along the same lines, what do these cities represent?

1. Boise, ID
2. Mobile, AL
3. Colorado Springs, CO
4. Huntsville, AL
5. Lexington, KY

Closer this time? These are the top five markets for rent growth in the recent six-month period: March through August 2020.

A little context here: There are endless headlines about plummeting rent prices in the largest urban centers. For example, we’ve long heard about exorbitant costs in San Francisco—and the city’s newspaper reported just this week that rents have plummeted by as much as 31% since the advent of Covid-19.

As a matter of fact, we’re not showing that big of a fall for New York City and SF, although they do lead all large markets in drops (exceeded only by small market Midland-Odessa, TX). See here (from left to right, 3-6-12 month change in rents):

Let’s not generalize too much, but it’s clear that some urban centers strong in population and jobs growth pre-pandemic have been hit hard. Some are seeing a drop in rental prices; with others, sustained growth over the past few years has been interrupted.

But there’s another aspect of the growth lists that deserves attention. See the list up top: These are all tertiary markets. None of the highest flyers of the last decade—Austin, Dallas, Nashville, Seattle, Charlotte and Raleigh—are seeing upticks. Cities such as Colorado Springs, CO, and Boise, ID, which are close to larger and pricier markets, offer many of the benefits of their high flying counterparts.

So how much of this is related to Covid-19? We believe the pandemic has accelerated an ongoing transformation. The smaller cities are growing in part because they have a similar allure as their larger counterparts: good schools, medical facilities, employment opportunities in different fields, a technology hub, but with greater affordability and quality of life in several measures.

Offerd tracks these trends, markets and properties with access to 100,000-plus data points at the national, market, sub-market, and property-levels, and uses this data and intelligence to shape and execute targeted proactive sourcing campaigns specific to your acquisition strategy.