Just as apartment market performances by metro vary quite a bit from the U.S. average, neighborhood-level results don’t necessarily reflect what’s happening in a given metro as a whole.
Here are 10 submarkets now posting very healthy rent growth (well above the U.S. average), despite metro-level results that aren’t so hot (well below the U.S. average).
The list suggests that if you’re looking for hidden gem neighborhood-level investment opportunities among the country’s 50 largest apartment metros, head to Houston. Metro-level results there certainly are lousy, reflecting that new supply is pouring into the marketplace at the same time that the energy-influenced economy has stalled. But, select neighborhoods aren’t getting many completions. And, there are submarkets where the job base has limited energy ties or is focused on the downstream segment of the energy sector. (Downstream energy industries like gasoline refining or petrochemical manufacturing transform crude oil into end-user products and tend to be profitable when oil prices are low.)
Among the 35 individual submarkets that we’ve defined as distinct areas in metro Houston, five of them post current annual rent growth of roughly 6% to 8%. Several more log solid increases in the range of 4% to 5%.
Chicago, Pittsburgh, Baltimore, Philadelphia and Memphis are other metros where rent growth performances in select neighborhoods well surpass the U.S. norm, despite metro-level results running under the 3% mark.
In addition, a handful of spots in Indianapolis, San Antonio, Washington, DC and St. Louis also are significantly outperforming the mediocre metro-level rent growth stats posted in parent locales.
It’s tough to find stand-out performers on the submarket level in a few metros with comparatively weak overall results. Most notably, there aren’t individual neighborhoods now meaningfully out-achieving the weak metro-level rent growth posted in Milwaukee (1.8% on average) and Virginia Beach (2.0%).