Key Takeaways – National
Class C rent growth continued to outperform Class A and Class B. Class C assets experienced a 3.5% year-over-year gain in Q1.
While favorable, Class C’s growth rate has moderated from 2018.
Class A rent growth (2.8%) slightly outpaced that of Class B (2.5%).
However, Class B vacancy is still lower than Class A: 4.6% vs. 5.1%. Class C continued to have the lowest vacancy at 3.9%.)
The average Class A rent was $612 higher than Class B. The Q1 difference is one of the largest in history. The peak was $623 reached in Q2 2018.
Key Takeaways – Metro
Rent increases were higher for Class A product than Class B in 36 markets (slightly more than half of the 66 metros tracked). This is notably different than six months ago when Class B rent growth was higher than Class A in about two-thirds of U.S. markets.
Las Vegas and Phoenix experienced the best Class A rental increases. The leaderboard included many tertiary markets including Dayton, Birmingham, Memphis, and Greensboro, suggesting possible investment strategy for these smaller metros.
For Class B assets, Tucson and Phoenix experienced the most rent growth. Another 11 markets had annual gains of over 5% and six markets were in the 4%-to-5% range.
Sacramento and Tucson were the metro leaders for Class C assets, followed by El Paso and Los Angeles. Orlando, Seattle, Long Island, Las Vegas and Nashville also had increases over 6%.