These Were 2022’s Most Competitive Rental Markets – Multifamily Real Estate News
Multifamily rental markets across the U.S. have seen record levels of activity this year, the latest RentCafe year-end report shows. In fact, renting is at its highest level in half a century, with around 44 million people living in rental units.
RentCafe’s analysis of the 135 largest U.S. rental markets took into consideration five major metrics that affect competitivity: average number of days an apartment remained vacant, occupancy, number of prospective renters competing for an apartment, percentage of renters who renewed their leases and the share of apartments completed this year. Based on these metrics, each metro was given a Rental Competitivity Index (RCI) value.
On average, secondary metros and regions adjacent to main metros scored higher on the list, with few exceptions—such as Miami or San Diego. As remote work became the norm during the past two years, residents looked to relocate to more affordable, less dense cities that orbit the gateway markets.
Miami – hottest rental market
Between 2020 and 2021, Florida’s population increased by 220,890 residents, according to the U.S. Census Bureau, boosting demand for multifamily rentals to record levels. The state’s multifamily supply expanded by 34,000 new units, which was not enough to fulfill the needs of new residents.
Miami-Dade County was by far the most competitive rental market of 2022, boasting an RCI of 118.0. Demand was high throughout the entire year, bringing occupancy to 97.5 percent. On average, apartments in Miami remained vacant for 25 days, while a whopping 32 prospective renters competed for a single unit. The market’s existing inventory expanded by 2.8 percent, although development slowed down somewhat in the second half of the year, cooling off after a record year for deliveries in 2021.
Florida had a good year overall, with several areas besides Miami-Dade scoring high on the competitivity index. Orlando had an RCI of 109.3, followed by North Central Florida at 105.4, Southwest Florida at 93.4 and Broward County at 82.2.
Midwestern rental markets gain popularity
Grand Rapids, Mich., was the second most competitive rental market in 2022, according to RentCafe’s ranking, topped only by Miami. The city attracted residents from Chicago and Detroit, bringing its occupancy rate to 96.9 percent—160 basis points higher than the national average. Grand Rapids had a lease renewal rate of 69.4 percent, as multifamily construction trends have yet to catch up with demand—the existing stock expanded by only 0.8 percent in 2022.
On average, apartments in Grand Rapids remained vacant for 28 days before becoming occupied, while there were roughly 18 prospective renters competing for each apartment. The city scored an RCI of 112.6.
Milwaukee, Wis., also scored high, at 102.6 RCI, clocking in on the sixth spot for rental market competitivity across the U.S. Many residents chose to relocate here rather than in the Chicago or Indianapolis rental markets. The influx of new renters brought occupancy to 96.4 percent, with an average of 19 prospective renters for each apartment.
Other Midwestern regions that benefitted from migration trends and placed among the top 20 most competitive rental markets were Suburban Chicago (RCI of 79.3), Omaha, Neb. (96.1) and Lansing–Ann Arbor, Mich. (77.3).
Almost two-thirds of renters renewed leases
A second highlight among the top rental markets this year was the preference to renew in favor of seeking new units. With a nationwide average of 14 renters competing for a single apartment, almost two-thirds of renters (62.7 percent) opted to renew their lease in 2022. Inflation, interest rate hikes, together with rising costs of homeownership, have resulted in people opting to stay put.
The highest lease renewal rates were in Central Jersey, where 85.3 percent of renters chose to stay in the same apartments. New rentals were difficult to find for people seeking more affordable alternatives to Manhattan—which scored an RCI of 54.6, below the national average—as Central Jersey expanded its stock of available apartments by 0.9 percent in 2022. Central Jersey and North Jersey both scored high on the competitivity index, at 96.8 and 107.5 respectively.
Suburban Philadelphia had the second-highest lease renewal rate, at 78.2 percent, followed by Harrisburg, Pa., and Miami-Dade County, both at 75.0 percent. Both Suburban Philadelphia and Harrisburg will have to play catch-up in terms of meeting demand, as supply expanded by 0.3 and 0.0 percent this year.
Overall construction activity fluctuated between 2.8 percent (Miami-Dade County) expansion of existing inventory and markets where no new apartments were constructed (Harrisburg, Pa.), among the top 20 rental markets.
Among Northeastern markets, North Jersey recorded the most development activity, as the existing stock expanded by 2.1 percent in 2022—60 basis points higher than the national rate of 1.5 percent. Occupancy reached 97.2 percent, second only to Miami.
