High Supply Submarkets Log Deepest Rent Cuts in Class B and C Stock

In fast-growing submarkets, apartment rent cuts are the deepest amid Class B and C product. It’s not surprising to see that price declines were the worst in the year-ending 1st quarter in areas where the most new apartment supply delivered. Or that rents increased in submarkets with minimal new supply. But what might be surprising is the distribution of those cuts across the product spectrum. It was not the Class A stock – receiving the most competition from new supply – that saw the steepest rate cuts in the past year. In fact, Class A prices increased for the most part across the spectrum, except for extreme cases, in submarkets where deliveries amount to more than 10% of existing stock. But even in those cases, rent cuts in the year-ending 1st quarter were moderate at 2%, according to data from RealPage Market Analytics. Meanwhile, price declines were steeper in Class B (-3.2%) and C product (-4.7%). Alternatively, in submarkets where new supply was minimal, accounting for less than 1% of existing stock, Class A product saw notable rent growth of 2.6%. The other product classes in these lower-supply submarkets also logged price increases, but at more moderate rates.