Middle Market Growth

Positioned for Success

By Erica Rascón on Dec 30, 2014 in News

NAAHQ reports that apartment revenues in the nation’s top 100 largest metros currently exceed pre-recession levels by nearly 14 percent, with considerations for rising rents and the recovery in occupancy. While the usual top performers remain strong, suburban markets are showing a healthy recovery and bright future.

Middle-markets are giving their high-end counterparts stiff competition. While individual urban locations can boast the highest new construction rates, many cities’ suburbs combine to exceed the growth of urban cores.

Suburban middle-market communities, which are the vast majority of apartment inventory, and new luxury apartment communities present appealing options for a growing number of renters, particularly young singles and families. The strength of middle market performance is projected to continue well into 2015 since the factors contributing to their success are unlikely to change.

Metropolitan zip codes are still desirable to many but high rents have driven a large pool of renters to the more moderate prices of the suburbs. Secondly, homeownership isn’t a viable option for most of these renters, whose incomes do not support the rising interest rates, utilities, and maintenance costs of a single-family property. Lastly, vacancy rates are low for middle-market and top-tier communities in the suburbs, resulting in less horizontal movement for renters. With occupancy at 95.8 percent, owners can receive top-dollar rents for available units with very little room for competitive pricing within comparable properties.

But not all suburbs are flourishing equally. Renters who seek middle-market properties abandon the city limits with a few trade-offs in mind:

• Proximity to Universities Students and young singles provide a boost to many college towns, which are some of America’s fastest growing cities.
• Access to Public Transit Public transportation that connects suburbs to the major cities will reap the benefits of greater growth. Such conveniences are more like necessities for commuters and single young adults who enjoy city amenities and work hubs but are priced out of city apartments.
• More Square Footage per Dollar The Trulia Price Monitor reports that the change in median price per square foot was higher in urban neighborhoods than in suburban neighborhoods. Families who may be able to afford an apartment in the city often opt for more spacious living accommodations outside of the city, even if it means having a longer commute.
• Better School Systems According to Apartments.com, 12 percent of renters consider the quality of the school district to be a determining factor when selecting a home. Due to user demand, the top MLS sites are also equipped with resources on nearby school districts. Districts whose students perform well also perform well with renters.