The rise of high-end apartment buildings has continued unabated in all of the U.S. regions from 2015 to 2017, with Southwestern and Mid-Atlantic developers focusing on luxury the most, according to a new report from RentCafe.
While apartment construction overall slowed down, the high-end apartment construction segment comprised ever-larger chunks of the total large-scale developments completed each year, from 52% in 2012 to 79% in 2017. And it looks as if this year will go even higher: 87% of the buildings completed in the first half of 2018 were high-end.
Currently one of the most economically vibrant regions in the U.S., the Southwest has seen an explosion in real estate construction, with Texas metros among the nation’s leaders in apartment deliveries.
Riding the wave of high demand and population gains, area developers built an impressive 88% of apartment developments of high-end quality last year.
High-end apartments report key findings
- Out of the nation’s 30 largest cities, 16 are getting exclusively high-end new rentals in 2018, a significant increase compared to last year, when just 6 cities saw nothing but luxury apartments entering the market.
- Pricey San Francisco, LA, Denver, and Chicago are on 2018’s list along with more affordable markets like Jacksonville, Detroit, and Charlotte.
- At a metro level, 6 of the 30 most populous US metros completed only luxury apartments in the first half of 2018: Dallas – Fort Worth, Houston, Kansas City, Charlotte, and Cleveland. Last year, there were only two metro areas where this happened: St. Louis and Las Vegas.
- In the Southwest and Mid-Atlantic developers here built an impressive 88% and 87% respectively of apartments as high-end in 2017. At the other end of the spectrum were California and the Pacific Northwest with the lowest shares of high-end apartment construction, 64% and 69% respectively.
- Which cities have the largest shares of high-end rental stock to date? Charlotte ranks first as half of its apartment buildings are classified as luxury. Nationwide, the share of high-end residential properties with 50 units or more clocked in at 23% this year.
Metro St. Louis built nothing but high-end apartments
The most active metros in the high-end apartment segment last year were neither New York nor L.A.
Metro St. Louis has built nothing but high-end apartments in 2017. Supported by local tax breaks, the urban rehabilitation of St. Louis is driven by luxury developments in an attempt to attract new residents.
The luxury market is also thriving in Las Vegas metro — where 100% of the apartments built in 2017 were luxury — boosted by Californians moving to Vegas in greater numbers and the area’s great economic outlook.
This report was compiled by RentCafe.com, a nationwide apartment search website that enables renters to easily find apartments and houses for rent throughout the United States. The apartment construction data was provided by Yardi Matrix, a RENTCafé sister company specialized in apartment market intelligence, providing up-to-date information on large-scale multi-family properties of 50 units or more in over 130 U.S. markets. Based on Yardi Matrix’s definition and classification of the apartment market, high-end or luxury rental properties are those that fall into the discretionary (Class A+/A) and high mid-range (Class A-/B+) asset class categories.