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New Apartment Developments Still Offer Options

Rent Spread Varies in Busy Submarkets

By Bill Kitchens | Tuesday, June 20, 2017


Most of the news during latest apartment development cycle has focused on the luxury, high-end product that comprises most of the new supply. Meanwhile, households below the top income levels are essentially locked out of the choice of selecting an apartment community that fits their lifestyle.

We aim to dispel this common misconception through examining effective rents, unit size, and location of apartment community – highlighting rent stratification across urban core apartment submarkets with heavy development. While greater concentrations of luxury product have generally fallen within the urban core, there are still apartment properties constructed in the last two to three years that have lower price points, according to Axiometrics apartment market data.


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Dallas remains one of the most active markets for new development; within Dallas, new product built since 2015 at the highest price point is centered in the Oak Lawn submarket. Situated just north of downtown Dallas and Uptown, Oak Lawn is well known for high-end retail, dining destinations and a vibrant nightlife. Arterial roads provide quick access to U.S. 75 and the Dallas North Tollway, and DART light-rail stations are nearby.

The newest product is commanding rents of roughly $3,350 ($3.20 per square foot), the apartment market surveys show. Even within the Oak Lawn submarket, effective rents vary by roughly $2,000 – a wide gap that indicates there are still options even in the highest-priced submarket.

Meanwhile, options remain immediately outside the urban core along primary transportation arteries moving north along U.S. 75 as well as west of the Dallas North Tollway near Love Field. Moving away from Dallas proper, we see a tradeoff between effective rents that are similar to the urban core, but with units a larger footprint – translating to lower rent per square foot.

For example, in the fast-growing Plano/Allen/McKinney submarket, effective rents range from close to $1,520 to $1,170 – a more narrow range, but at levels that give more options to households. These units generally have a larger footprint on average, tailored to larger households with families. Further, Plano/Allen/McKinney is a magnet for corporate expansion and relocation – notable relocations include Toyota North America, Liberty Mutual and a new JPMorgan Chase campus. Apartment communities in this area are strategically framed near the Dallas North Tollway, State Highway 121, and U.S. 75. Single-family product has a greater presence, but are embedded along surface streets with tougher access to highways, generally.

Despite the headlines, the data reveal choice in selecting new communities along a greater range of price points.

Washington, DC

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Along a similar vein, Washington, DC has been on a development spree with a larger share of new urban core apartments, according to apartment market research.

Most notable is the Capitol Hill/Southwest submarket – home to the Navy Yard, where recent revitalization efforts have transformed the area to a destination that boasts a six-mile waterfront district with compelling geographic features.

Effective rents for new developments with that submarket reached $3,100 per month for units with views over the Anacostia River, apartment market data shows. There is a heavy concentration of government offices and offices for government contractors. The area is home to the Chief of Naval Operations as well as other federal agencies. As such, development for office space has increased in tandem with apartments.

Capitol Hill/Southwest is highly accessible through the Metrorail. Two major interstates – I-395 and I-695, which connects to I-295 – run through the submarket, connecting the area to the rest of DC, northern Virginia and Maryland.

Meanwhile, development is widespread across the district with greater concentrations in Rosslyn/Ballston, Downtown/Logan Circle and Howard University/Mt. Pleasant/Brightwood submarkets. Among these submarkets, median rent levels land closer to $2,000. The biggest downside in DC is the narrow spread between effective rents at the high and low ends of the market.


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Crane are still noticeable in Seattle, which is one of the most active markets for apartment construction. Within Seattle, new apartment properties are largely focused in the Downtown/Capitol Hill/Queen Anne submarket. Generally, most developments are located in Pine Street and Pike Street from Pike Place Market towards Hilltop.

Downtown Seattle is home to several corporate headquarters, including Amazon, Starbucks and Nordstrom – making the center of Seattle destination for workers.

Effective rents in the Downtown area reach almost $3,600 per month. Denser overall, space is a premium as many apartment developments average 10 stories. Overall, the urban core is easy to navigate using public transportation. Seattle residents recently voted to approve $53 billion to expand the Sound Transit light rail lines and extension to bus-rapid transit lines to better connect the Seattle-Tacoma region. For car traffic, Interstate 5 is a key thoroughfare, and I-90 south of downtown runs east across Lake Washington towards Belleview and links to Redmond via I-405 and Highway 502.

Immediately north of Lake Union, new apartment development extends along I-5 toward the University of Washington in the North Seattle/Northgate submarket. This development follows the light rail lines where ridership has increased dramatically. Effective rents for new apartments near the University District, land closer to $1,100 for roughly 300 square feet – again space is a premium and not necessarily ideal. For units larger than 500 square feet, rents for newer apartments are roughly $1,600 per unit.

With a greater premium on space, the tradeoff between location, size of unit, and price is more significant in Seattle. That said, with heavy investment in transportation infrastructure, there is greater opportunity for new development across a wider range of effective rents that are connected to key employers and destinations for retail and entertainment.

Honorable Mention


Within Houston, new development is most pronounced in the Montrose/River Oaks submarket along the Memorial area – immediately west of downtown and moving west towards the Energy Corridor along Interstate 10. The area offers an impressive greenspace in Memorial Park as well as a greenbelt along Buffalo Bayou. Access to downtown is along surface streets as well as close proximity to I-610 and the Katy Freeway. Retail has a significant presence at The Galleria and along Westheimer Road.

In this submarket, effective rents reach $4,275 for large units above 2,300 square feet – a footprint that rivals many single-family homes. On the other end of the spectrum, effective rents land closer to $1,125 per unit in the same submarket. Branching out west along Katy Freeway, effective rents register closer to $1,000 toward Katy approaching Grand Parkway.


Apartment development remains aggressive in Atlanta -- specifically, north of downtown in Midtown and Buckhead inside The Perimeter, and then north along State Route 400.

Effective rents for properties built since 2015 are as high as $3,268 for a 1,500-square-foot unit in Buckhead. This is home to a concentrated business district, Georgia Tech, as well as easy access to MARTA rail stations.

Moving north toward Sandy Springs/Dunwoody and Roswell/Alpharetta, effective rents fall closer to $1,400 per unit, with an average footprint of about 1,000 square feet.

Recently, many firms have relocating operations closer inside The Perimeter, including NCR, Honeywell and GE’s North American IT headquarters to Midtown; meanwhile, Mercedes Benz recently broke ground on a new U.S. headquarters in Sandy Springs.

Los Angeles

LA possesses different structural drivers than other markets mentioned, and investors still see opportunity for developing new apartment communities.

The largest shares of new multifamily development fall inside Westlake/Downtown/Silver Lake submarket, with effective rents approaching $2,700. Meanwhile, on the other end of the spectrum, effective rents for new apartments average roughly $2,100.

Westlake/Downtown/Silver Lake contains local offices of major professional services firms, as well as major Fortune 500 companies such as engineering and construction firm Aecom, commercial real estate group CBRE and Reliance Steel & Aluminum. Other submarkets for active development are Central LA, Hollywood/Los Feliz, and Marina Del Rey/Venice/Westchester.




Bill Kitchens

Bill Kitchens

Market Analyst

Bill Kitchens is a Market Analyst with RealPage. Prior to joining RealPage, he spent two years with a management consulting firm specializing in executive search, board consulting and leadership strategy services. He holds a bachelors and masters in economics from the University of Texas at Dallas.

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