Jan 08

Smaller Cities Saw Biggest Rent Hikes in 2014

Smaller Cities Saw Biggest Rent Hikes in 2014

Smaller Cities Saw Biggest Rent Hikes in 2014. Image courtesy of dexchao / FreeDigitalPhotos.net

Smaller Cities Saw Biggest Rent Hikes in 2014. Image courtesy of dexchao / FreeDigitalPhotos.net

Surging rental costs continue to grip national headlines, but some of last year’s biggest leaps in rental costs were in small to midsized cities.

Nationwide, apartment rents increased 3.6 percent, on average, in 2014, pushing the average monthly lease rate to $1,124.38, according to Reis Inc., a real estate research firm. That marks the largest increase since Reis began tracking the market in 1980.

Most of the drive in rental costs has been due to a short supply of vacancies at a time when demand has been high. The vacancy rate in 2014 was 4.2 percent, the lowest point since 2000, Reis reports.

All 79 metros that Reis tracks posted rental increases last year, but some of the steepest increases occurred in smaller to midsized cities – a break from the traditional pattern of seeing the highest rent increases mostly centered in the largest metros.

For example, average rents surged 7.9 percent in Denver; 5.5 percent in Charleston, S.C.; and 4.8 percent in Raleigh, N.C., Reis says. On the other hand, typical big rent cost places like New York and Chicago saw much smaller rent increases last year, mostly because those markets have had lots of construction and have added more units to their inventory to meet demand, according to Reis’ report.

“The apartment-construction boom generally has added more supply in the largest cities, while secondary cities saw less supply growth,” says Ryan Severino, a senior economist at Reis. “That left renters in some secondary cities with strong job growth more susceptible to rent increases than their peers in tier 1 cities.”

The following markets saw the highest effective rent increases in the fourth quarter compared to a year earlier:

  • San Jose, Calif.: 9.2%
  • Denver: 7.9%
  • Oakland, Calif.: 7.5%
  • San Francisco: 7.3%
  • Seattle: 6.1%
  • Miami: 6%
  • Charleston, S.C.: 5.5%
  • Boston: 4.9%
  • Raleigh-Durham, N.C.: 4.8%
  • Dallas: 4.7%
  • Nashville, Tenn.: 4.7%
  • Portland, Ore.: 4.6%
  • Houston: 4.5%
  • Palm Beach, Fla.: 4.3%
  • Austin, Texas: 4.2%

Source: “Smaller Cities Led Way in Rent Increases in 2014,” The Wall Street Journal (Jan. 5, 2015)

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