Apartment Rents Inch Up for First Time in Six Months

March 2024’s Apartment List report shows a modest 0.2% rise in national median rent to $1,377 after a 6-month dip

Apartment Rents Inch Up for First Time in Six Months

March 2024's Apartment List report shows a modest 0.2% rise in national median rent to $1,377 after a 6-month dip

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Good morning. March 2024's Apartment List report shows a modest 0.2% rise in national median rent to $1,377 after a 6-month dip, yet annual growth is still down by 1%. In the Sun Belt, multifamily distress is piling up as major players like Arbor Realty Trust and Starwood Property Trust confront bigger hurdles.

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Market Snapshot

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*Data as of 3/01/2024 market close.


Apartment Rents Inch Up for First Time in Six Months, Yet Down Annually

The March 2024 report from Apartment List reveals a slight uptick in national median rent by 0.2% to $1,377, marking the end of a six-month decline. Despite this uplift, year-over-year growth remains in the red at -1%.

Seasonal patterns: The market's recent uptick aligns with expected seasonal behaviors, marking the end of an unusually prolonged and steep slow season that commenced in August 2023. The current state of the market indicates a slight dip in rental costs compared to last year, yet prices are significantly higher than they were three years ago, reflecting the market's resilience.

Vacancy and supply: The national vacancy index has risen to 6.6%, signaling an increase in available housing units. This year is anticipated to witness an unprecedented number of new apartment completions, following a record-breaking year in 2023 for apartment construction. This surge in new units is expected to offer renters a broader selection of options, particularly in the rapidly developing Sun Belt regions.

New supply, falling rents: Sun Belt metros, led by Austin with a 7% rent drop, show the biggest year-over-year declines, correlating high construction rates with better affordability. Cities like Jacksonville, Raleigh, Orlando, Nashville, and Phoenix also top the charts for both new housing permits in 2022 and significant rent reductions, highlighting construction's key role in price stabilization.

Midwest momentum: Midwest and Northeast metros lead in rent growth, with Grand Rapids, Milwaukee, Kansas City, Chicago, Hartford, Providence, and Washington DC in the top 10 for the fastest increases. Yet, growth remains modest, peaking at 4% annually, with no significant rises in the last six months.


Looking ahead: February's slight 0.2% uptick in rent marks a potential market shift, even as annual growth stays negative at -1.0%. Despite usual seasonal increases ahead, an influx of new constructions could temper future rises. An improved economic outlook may boost rental demand, but it's unlikely to surpass the effects of growing supply.


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  • Mountain mystery: A secretive buyer has been acquiring hundreds of acres in a small town, sparking concerns over housing affordability and speculation on their intentions.

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  • Austin's expansion: A major transportation project aims to bridge the gap between affluent and underserved neighborhoods, reflecting the city's rapid growth.


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  • The great compression: Rising prices are ushering in the era of tiny 400-square-foot subdivision homes.

  • SF housing bond: A ballot measure aims to tackle affordable housing and empty office issues, yet its impact remains uncertain as voting approaches.

🏭 Industrial

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  • Phoenix: Two Sigma acquires a 269,000-square-foot industrial campus in Gilbert, AZ, for $51.6 million from Germann Road Land Development, an American National Insurance affiliate.


  • Grocery gains: JLL says a brighter 2024 for grocery retail investments is on the horizon due to anchor tenant stability, attractive lease terms, and consistent cash flow.

  • Chrysler revival: Following a retail renovation, the Chrysler Building welcomes its first tenant, British coffee shop WatchHouse, signaling a new era of modern luxury for the historic landmark.

  • Brooklyn's recovery: Despite strong leasing, Brooklyn's retail market sees lingering challenges with lower rents and extended vacancies post-pandemic.


  • Podcast: Despite challenges in the commercial real estate's office sector, both risks and opportunities abound across different real estate markets.


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Opportunistic Funds Take Aim At Looming CRE Distress in North America

In the Sun Belt, a wave of multifamily distress is placing a spotlight on Arbor Realty Trust, but a closer examination reveals Starwood Property Trust faces more significant challenges.

Under pressure: Arbor Realty Trust, known for its extensive lending in the multifamily sector, has been critiqued by a short-seller as the "worst of the worst" due to a considerable portion of its loans nearing default. However, Arbor's position might not be as precarious as initially thought.

Leading the distress: According to a CRED IQ report, when evaluating the delinquency rates of loans among the top 21 commercial real estate collateralized loan obligations (CRE CLOs) issuers, Starwood Property Trust leads with a delinquency rate of approximately 13%. Greystone and Fortress Investment Group follow closely, contradicting the narrative surrounding Arbor.

Comparative delinquency: Despite the debate over rates, Arbor leads in terms of the absolute dollar amount of delinquent debt, with $782 million identified as at risk. High-profile foreclosure actions against borrowers like Jay Gajavelli and Jorge Abreu highlight the lender's aggressive stance on loan defaults. While Arbor's delinquency issues are notable, Starwood's lower overall debt volume contrasts sharply with its high delinquency rate, suggesting a more nuanced landscape of lender vulnerability within the multifamily market.


The bigger picture: Ready Capital emerges as another notable entity, ranking second in delinquencies by dollar volume, pausing interest payments due to escalating delinquencies. This highlights a broader trend of distress within the multifamily sector, particularly among properties associated with significant syndicators like GVA and Tides Equities.


Between 2020 and 2022, the Sacramento market in California experienced its three highest levels of industrial construction activity in the last 25 years.


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