Real estate Where apartment rents may accelerate soonest

Rent growth in several apartment markets has the potential to increase significantly over the next one to two years. That’s because of a pending imbalance between supply and demand. US apartment construction starts for the year ending Q2-2025 fell to their lowest level since 2012, while tenant demand reached a record high.¹

We researched the drivers of apartment rent growth, and used the results to project which submarkets across 53 metro areas we believe have the highest potential for outsized rent increases and therefore stronger return potential. Here are our key takeaways. (Read our complete research report, Unlocking rent growth: Projecting high-potential apartment submarkets.)

Key takeaways

• Occupancy rates and job growth were the factors most strongly correlated with rent growth Other factors showed lower average correlations and less consistent correlations (i.e., higher standard deviations).²
  
• Occupancy threshold matters: We believe submarkets with projected occupancy rates above 96% in the next year are more likely to see accelerated rent growth the soonest.  
  
• Concentration matters: Submarkets in metros where most neighborhoods are also poised for strong performance potential have improved prospects for rent growth — 260 submarkets of the 723 examined fit this criterion.
• Balance occupancy with investment value: Even in high-occupancy areas, not all opportunities are equal. Job growth and cap rates can reveal important investment tradeoffs.
• Regional patterns: The Northeast and Midwest have higher percentages of critical occupancy submarkets.

Read our complete research report, Unlocking rent growth: High-potential apartment submarkets.