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.)
Read our complete research report, Unlocking rent growth: High-potential apartment submarkets.
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A correlation measures the strength and direction of a linear relationship between two financial assets or variables.
Standard deviation is used to measure the dispersion of dataset values relative to the mean. It is calculated as the square root of the variance.
The capitalization rate, or cap rate, in commercial real estate, is an estimate of the rate of return on an investment property reached by dividing its net operating income by its current market value.
Critical occupancy submarkets refers to submarkets that are experiencing significantly lower-than-average occupancy rates, indicating potential distress or underperformance within that specific geographic area or property type subset
All data as of July 2025 unless otherwise stated.
Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. Forward-looking statements are not guarantees of future results. They involve risks, uncertainties and assumptions, there can be no assurance that actual results will not differ materially from expectations.
The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested. Property and land can be difficult to sell, so investors may not be able to sell such investments when they want to. The value of property is generally a matter of an independent valuer’s opinion and may not be realised.
Generally, real estate assets are illiquid in nature. Although certain kinds of investments are expected to generate current income, the return of capital and the realization of gains, if any, from an investment will often occur upon the partial or complete disposition of such investment.
Investing in real estate typically involves a moderate to high degree of risk. The possibility of partial or total loss of capital will exist.
Investing in commercial real estate assets involves certain risks, including but not limited to: tenants' inability to pay rent; increases in interest rates and lack of availability of financing; tenant turnover and vacancies; and changes in supply of or demand for similar property types in a given market.
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