📊 Investors Hit Pause in 4Q23 per Burns + CRE Daily Fear and Greed Index. See the full report here.

US Rent Growth Remains Flat in February, Occupancy Levels Steady

February 2024 witnessed a small uptick in U.S. apartment rents, echoing a period of stagnant rent growth despite steady occupancy levels.

US Rent Growth Remains Flat in February, Occupancy Levels Steady

February 2024 witnessed a small uptick in U.S. apartment rents, echoing a period of stagnant rent growth despite steady occupancy levels.

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Good morning. February 2024 witnessed a small uptick in U.S. apartment rents, echoing a period of stagnant rent growth despite steady occupancy levels. Meanwhile, CBRE's H2 2023 survey suggests a changing investor sentiment, with cap rates potentially reaching their peak.

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*Data as of 3/07/2024 market close.


U.S. Rents Show Minimal Growth in February 2024

U.S. apartment rents enjoyed a marginal increase, with asking rents for professionally managed apartments rising by only 0.2% on a same-store basis in February 2024, according to data from RealPage. 

Setting the scene: This sluggish growth has been ongoing for 11 months, notably lower than the historical average of 0.6% monthly rent increase dating back to 2010. Although the February uptick of 0.2% was the largest monthly surge since June 2023, the momentum remains subdued, hinting at more muted rent growth in the foreseeable future.

Stable occupancy: Apartment occupancy remained steady at 94.1% in February, marking the third consecutive month at this rate. This stability could indicate that apartment occupancy is approaching a point of consolidation. However, the record-high construction activity in the apartment sector poses a challenge to occupancy levels in 2024, with nearly 962K units under construction nationwide by the end of 2023 and ~672K units expected to be completed this year.

Impact on rent: Markets with extensive new supply, such as Austin, Jacksonville, Nashville, Orlando, Phoenix, Salt Lake City, and Raleigh/Durham, have seen significant rent drops as of February. Austin, in particular, posted annual rent cuts of -6.7% due to an influx of new apartment units.

Leading the way: Markets with modest rental construction, like the Midwest and Northeast, saw notable rent increases, with rents rising +2.8% and +2.7%, beating the national trend. San Francisco, West Palm Beach, and Virginia Beach stood out by showing occupancy gains, especially in San Francisco and Virginia Beach, where both rents and occupancy improved in February.


It’s all about supply: Rental housing economist Jay Parson says the doomsday forecasters underestimated the strength of apartment demand in 2023-24, and he’s not wrong. Despite predictions of major declines, apartment demand remained strong. This demand, coupled with a supply increase—reaching near 50-year highs—resulted in stable vacancy rates, even during the traditionally slow winter leasing period. While spreading demand across more properties, the surplus in supply exerted downward pressure on rent growth despite occupancy gains in some areas. The silver lining? Things are not as bad as they seem.


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✍️ Editor’s Picks

  • Tech titans: Nvidia (NVDA) CEO Huang spent $55M on real estate, now worth $69B with homes in California and Hawaii.

  • Level up: Enrollment for the Wharton Online Real Estate Certificate Program is now open. Use code CREDAILY to receive $300 off tuition. (sponsored)

  • City clamps down: NYC files a lawsuit against a Miami hotel operator for converting 67 apartments in Manhattan & Brooklyn to illegal short-term rentals.

  • Carbon disclosure: The SEC approved rules requiring large companies to report Scope 1 and 2 emissions, excluding Scope 3, affecting CRE.

  • Legislation vs. preservation: A proposed Florida bill would allow easier demolition of coastal buildings for redevelopment, pitting developers against preservationists.

  • Heavenly office space: St. Bartholomew’s Church in Manhattan plans to sell 250KSF of air rights to Citadel and partners for $78M. Are we the only ones who see the irony here?


  • Affordable housing triumph: LA Mayor Karen Bass' directive has led to the approval of over 9K affordable housing units, reducing approval time to 45 days.

  • Broadband revolt: The FCC aims to allow apartment residents to freely choose broadband services, banning contracts forcing specific providers on them.

  • Boosting affordable housing: Measure A in San Francisco aims to raise $300M for affordable housing, funding up to 1.5K homes.

🏭 Industrial

  • Prologis pioneering: Prologis (PLD) plans to build a 430KSF warehouse on a 29-acre site in Oakland, acquired for $34.3M in 2021.

  • Powering up: AWS (AMZN) acquired a 1.2K-acre data hub in PA, supported by 2.5 gigawatt nuclear power. The land will be key for generative AI training.

  • DFW delights: Stonelake Capital Partners acquired a nearly 200KSF distribution center in Dallas’ CentrePort Business Park. Litex Industries is the sole tenant.


  • Shopping success: A 97% occupied, 294.6KSF shopping center in Concord anchored by a Super-Target was acquired for $49.2M.

  • Activist activity: Unibail-Rodamco-Westfield, rocked by activist investors, plans to sell a U.S. business it bought for $16B by 2023, remaining a major player in the mall market.

  • Aisle do, Aldi! Aldi plans a $9B expansion with 800 new stores by the end of 2028, acquiring and converting former Winn-Dixie locations.


  • Cautiously optimistic: Franklin BSP Realty Trust (FBRT-E) CEO Rich Byrne advises caution in office real estate, emphasizing having the patience to wait for opportunities amidst challenges.

  • Boosting the Bay: AI's impact in the Bay area cannot be understated with Anthropic and OpenAI recently signing leases for 716KSF.


CBRE's Cap Rate Survey Reveals Yields Could Be Nearing Their Peak

The H2 2023 Cap Rate Survey (CRS) by CBRE indicates tighter lending standards and distress expected, but yields could be nearing their peak.

Digging into the data: Collected from over 250 industry professionals, this dataset of 3,600 cap rate estimates across more than 50 U.S. markets offers a critical look at investor sentiment during a period marked by investment caution and pricing dislocation. H2 2023 saw cap rates rise from 6.4% to 7%, propelled by bond market fluctuations with yields peaking at 5% then retracting to below 4%, indicating widespread cap rate growth across property sectors.

Zoom in: Stabilized cap rate estimates for properties in 2H23 show expansion, especially in commodity office assets. Class C urban properties saw a notable increase of over 100 bps, while suburban yields generally rose by less than 50 bps. Multifamily and neighborhood retail pricing remained relatively stable.


Expectations and projections: Survey respondents across property types largely expect no significant change in cap rates over the next six months. In the office sector, a higher share predicts further devaluations due to uncertainty. Expectations for cap rate increases in 1H24 decreased, possibly reflecting a more accommodative Fed policy and declining bond yields.


Freddie Mac’s (FMCC) serious multifamily delinquency rate, which measures the number of loans 90+ days late or in foreclosure, has spiked to a new all-time high this year above 0.40%, surpassing its late 2012 peak near 0.30% over 12 years ago.

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