Luxury Rentals Rising

We’ve already shown that new apartment construction in the US saw a 6-year period of strong development. But what kind of units entered the market during this time? According to our latest study, most of the new apartments delivered were luxury rentals.

In fact, while apartment construction overall slowed down, the high-end apartment construction segment comprised ever-larger chunks of the total large-scale developments completed each year, from 52% in 2012 to 79% in 2017. And it looks as if this year will go even higher: 87% of the buildings completed in the first half of 2018 were high-end.

Here are more key findings regarding luxury rentals:

• Out of the nation’s 30 largest cities, 16 are getting exclusively high-end new rentals in 2018, a significant increase compared to last year, when just 6 cities saw nothing but luxury apartments entering the market.
• Pricey San Francisco, LA, Denver, and Chicago are on 2018’s list along with more affordable markets like Jacksonville, Detroit, and Charlotte.
• At a metro level, 6 of the 30 most populous US metros completed only luxury apartments in the first half of 2018: Dallas – Fort Worth, Houston, Kansas City, Charlotte, and Cleveland. Last year, there were only two metro areas where this happened: St. Louis and Las Vegas.
• Zooming out, we noticed a strong swing towards luxury apartments in the Southwest and Mid-Atlantic as developers here built an impressive 88% and 87% respectively of apartments as high-end in 2017. At the other end of the spectrum were California and the Pacific Northwest with the lowest shares of high-end apartment construction, 64% and 69% respectively.
• Which cities have the largest shares of high-end rental stock to date? Charlotte ranks first as half of its apartment buildings are classified as luxury. Nationwide, the share of high-end residential properties with 50 units or more clocked in at 23% this year.

Check out the full study for interactive infographics.