5 Key Trends Shaping the Rental Housing Market in 2024

Plus: We could now be facing a shortage of office space? How is that even possible?

5 Key Trends Shaping the Rental Housing Market in 2024

Plus: We could now be facing a shortage of office space? How is that even possible?

Together with

Good morning. Challenges persist in the US rental housing industry due to economic uncertainty, rising costs, and regulations. Meanwhile, there may soon be a nationwide shortage of premium office space, particularly in top-tier commercial buildings.

Today’s issue is sponsored by Bullpen—hire CRE experts with the skills you need on flexible hourly contracts.

👋 First time reading? Sign up.

🎁 Want free merch? Share this.

Market Snapshot

S&P 500
Pct Chg:
Pct Chg:
10Y Treasury
Pct Chg:
Pct Chg:

*Data as of 11/27/2023 market close.


5 Key Trends Shaping the Rental Housing Market in 2024

As 2024 nears, the rental housing market grapples with challenges and opportunities in a fluctuating economic landscape, shaped by inflation and rising costs. Here are 5 key trends expected to influence the sector in the coming year.

  1. Market stabilization: The rental market in 2024 is expected to continue the stabilization trend seen in 2023, following a period of high demand. However, this stability will not be uniform across all regions. Local market conditions, influenced by factors such as pandemic-era policies and economic circumstances, will lead to varied trends in different areas. This regional divergence is a critical trend to watch as it will dictate market strategies for housing providers.

  2. Supply and demand: A significant trend in the rental market is the ongoing construction of new rental units, which is expected to balance and potentially lower rental rates. This influx addresses the longstanding issue of housing undersupply. However, a recent decline in construction permits suggests this increase in supply may not sustain, potentially leading to a quicker absorption of new units and a rise in demand. The future of supply dynamics remains a key factor in shaping the market.

  3. Mortgage rates: With homeownership becoming increasingly unaffordable due to high mortgage rates and soaring property prices, more people are turning to renting. This shift has reinforced the rental market’s strength, making it a more attractive and financially feasible option for many. The gap between the costs of owning and renting is a major trend that will likely maintain the high demand for renters.

  4. Economic uncertainties: Global economic challenges, including persistent inflation and geopolitical tensions, are impacting individuals' decisions regarding housing. Many are delaying home purchases, leading to increased demand for rental housing. This trend underscores the rental market's sensitivity to broader economic factors and highlights its role as a buffer in times of economic uncertainty.

  5. Operational costs: Rental housing providers face increased pressure from rising operational costs, including interest rates and insurance premiums. Adapting to these financial pressures through effective insurance management, investments in property resilience, and leveraging AI for operational efficiency is becoming increasingly crucial.


Looking ahead: The rental housing industry stands as a resilient and essential player in the commercial real estate world, despite facing a mix of challenges and uncertainties. Supported by a robust job market and increasing wages, the industry is well-equipped to handle short-term pressures that may squeeze profit margins. As 2024 approaches, the sector is not just prepared to tackle forthcoming challenges but is also strategically positioned to seize new opportunities, further cementing its vital contribution to the overall economy.


That feeling when you connect with the perfect person

Hiring is hard! Job posts, interviews, case studies, personality tests – there are countless ways to mess it up. Fortunately, we have a better way.

Bullpen provides access to top-tier, pre-vetted freelance talent when you need it. No job posts. No long interview process.

Match your headcount with your deal flow: Bullpen ensures a seamless link between your workload and headcount. No more paying for staff who won't have projects to work on, and say goodbye to the last-minute scrambling for the right help.

Full industry coverage: Bullpen supports every front and back-office commercial real estate role, from Acquisition, Development, and Asset Management to Transaction Management, Accounting, and Marketing/Design, we can support all of your HQ needs.


  • Commission conundrum: Find out more about the two lawsuits against NAR that challenged longstanding rules on real estate commissions, leading to a $1.8B judgment.

  • Super ad: In an effort to transform public perception of the housing market, Opendoor is launching a Super Bowl ad in 2024.

  • Reading tea leaves: Morningstar DBRS warns that CRE collateralized loan obligations (CRE CLOs) do not indicate a positive year-end outcome.

  • Alternative alliance: Alternative investment fundraising reached $57.8B YTD in October, led by non-traded business development companies, interval funds, and non-traded REITs.

  • Recession watch: The Fannie Mae (FNMA) ESR Group predicts US economic growth will keep slowing down, leading to a mild recession in 2024, with a return to growth in 2025.

  • Kooky crypto plan: Tech billionaire Mark Cuban expressed interest in integrating smart contracts and NFTs into a transformative crypto real estate project.

  • Recovery Renaissance: Senior housing's recovery outpaces pre-pandemic numbers with 103K units absorbed since spring 2021, according toMarcus & Millichap.

  • Openly problematic: Internal turmoil at OpenAI, the world's most important AI developer, threatens its newly signed sublease for 480 KSF of offices in San Francisco.

  • One company’s trash: Empty Bed Bath & Beyond stores are in high demand as retailers and other companies seek to expand into coveted real estate following the chain's bankruptcy.

  • Cutting expectations: Many investors are anticipating interest rate cuts from the Fed due to recent data, regardless of a potential recession.

  • Industrial goldmine: ASG Equities has hired Newmark to market a portfolio of four fully leased warehouses measuring 1 MSF in Secaucus, NJ, with a potential deal value of $400 PSF.

  • Takeover targets: KBW warns that Comerica, Zions, and First Horizon face takeover risk, while Huntington, Fifth Third, M&T, and Regions Financial are poised for M&A growth.

  • Real estate revival: October's biggest NY real estate loans included a $386M refinancing for the 70 Pine Street office building in FiDi. The five biggest loans added up to nearly $1B.

  • Credit scores soar: Fannie Mae's Positive Rent Payment program helped 23K renters establish better credit scores with an average improvement of 40 points.


Contrary to Downturn Predictions, U.S. Sees Shortage in Class A Office Real Estate

As the U.S. office real estate market braces for future challenges, an unexpected trend is emerging: a potential shortage in high-end office spaces. This comes amidst widespread predictions of a downturn, with up to one-third of office real estate possibly being eliminated.

First-class: According to CoStar, Class A commercial buildings are in high demand. This is highlighted by lease actions in premium markets that are already surpassing levels seen during the pre-Covid period of 2015-2019. The shift indicates a growing preference for top-tier office spaces, even as other segments witness a downturn.

By the numbers: Newer office buildings, aged 0-3 years, have attracted over 175 MSF of net new occupancy since 2020, averaging 12.7 MSF per quarter, compared to the 11.7 MSF quarterly average from 2011-2019. However, construction starts in 2023 have dipped to their lowest since 2011, with less than 30 MSF initiated. By early 2026, the inventory of such buildings is projected to fall below 150 MSF, and further to under 100 million by mid-2027, representing only about 1% of the total office inventory.

Diminishing deals: The market for iconic, older trophy buildings is slowly disappearing. These buildings are being sold at discounted prices, yet premium space leasing is predominantly concentrated in newer properties. Landlords are offering incentives like custom buildouts and rent-free periods to attract tenants. However, with the impending need for refinancing and the devaluation of property holdings, the landscape for such attractive terms is set to change.


A race to the top: Mirroring the retail sector's evolution under the influence of e-commerce — where generic retail spaces struggle but upscale, experiential venues prosper — the office real estate market is experiencing a comparable transition. While the general demand for office space may witness a decline, businesses are recalibrating their requirements, especially as leases expire. The emerging trend is a growing emphasis on acquiring space in the newest, premium office buildings that boast superior amenities. However, this shift raises a crucial question: Will the supply of such high-quality office spaces keep pace with the increasing demand?


📖 READ: The Wall Street Journal takes a look at what the owners of ‘zombie malls’ across the country are doing to keep their shopping centers alive even when their local governments are against them.

🎧 LISTEN: Find out why one former high school geography teacher decided to just get up, leave his job, and hike across Siberia—and how it changed his life—in this episode of The Weekly Take from CBRE.

❄️ MERCH: Our CRE Daily Winter Merch line is nearly sold out. Only 25 sweaters left—get yours before they're all gone!


Bankers have cautious view on CRE exposures — Q3 S&P survey

In the latest US Bank Outlook Survey by S&P Global Market Intelligence, bankers have shown increased optimism regarding loan growth. However, the credit quality of commercial real estate continues to be a major concern.

What did you think of today's newsletter?

Login or Subscribe to participate in polls.

View All
Foreign Investment in US CRE at Lowest Point Since 2011
June 14, 2024
U.S. Asking Rents Climb for Second Consecutive Month in May
June 13, 2024
Arbor Realty Trust’s Big Short Struggles to Deliver
June 12, 2024

Back to top