Apartment Sector Likely to Experience Continued Rent Growth, Albeit at a Slower Pace

Apartment rents are rising, but far below previous years’ levels.

Apartment rents are likely to keep rising, even if the economy continues to slow over the next year, according to industry experts.

“The occupancy outlook probably will allow rents to continue to grow, although at a pace a little under the increases recorded of late,” says Greg Willett, chief economist with RealPage Inc., a provider of property management software and services.

Developers continue to plan to open hundreds of thousands of new apartment units every year for the next few years. Overall, however, occupancy levels remain relatively high. An economic slowdown would cut into those occupancy rates, but not enough to dramatically impact rents. The exception would be new, luxury apartment projects, which might struggle to lease-up. The markets where new luxury development is concentrated may also struggle.

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