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Rent in Fastest-Growing Cities Generally In Line With Their Metros

Texas places 5 Suburbs in Top 10

By Dave Sorter | Monday, July 3, 2017

 

The U.S. Census' list of fastest-growing cities by percentage released in May comprised primarily suburbs in high-growth metro areas. The mass of people flocking to these cities will be happy to know that in most cases, the average apartment rent falls in line with that of the market in which they are located.

In fact, the average effective rent in three of the top 10 on the Census' list is lower than the metro average. Two of those cities are less expensive to rent in than their attendant submarkets, according to Axiometrics apartment market research.

That list includes the fastest-growing city, Conroe, TX, where the population increased by 7.8% between July 1, 2015 and July 1, 2016 to 82,286. Located about 40 miles north of Houston, the seat of Montgomery County has come back after being overshadowed for 30 years by nearby The Woodlands, one of the nation’s first and most successful developer-planned cities.

Conroe, which is benefitting from the sprawling new Exxon campus in Montgomery County, recorded an average apartment effective rent level of $996 in May 2017, the apartment market data. That rate was $69 less than the Houston market average and $88 less than the average for the Far Northwest/Montgomery County submarket, where the higher-rent apartments are in The Woodlands.

 


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The biggest bargain in May was No. 10 Murfreesboro, Tenn., the county seat of Rutherford County located about 30 miles southwest of Nashville, which grew by 4.7% to a population of 131,947. With an average May rent level of $1,002, a Murfreesboro apartment was $154 per month less expensive than the average Nashville metro unit, and $30 less than the Murfreesboro/Smyrna submarket.

That benefits the workers at Nissan’s Smyrna plant and Middle Tennessee State University, Murfreesboro’s economic drivers. The city’s inexpensive rents compared to Nashville also could attract renters who work in Nashville but don’t mind the extra commute as a trade-off for cheaper rent.

 

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No. 5 Georgetown, TX also represents a bargain over its parent market, the Austin metro, the primary city of which is 30 miles away. Georgetown, the seat of Williamson County, had an average rent of $1,119 in May, some $90 less than the average for the Austin metro – but $16 more expensive than its submarket, which also includes Round Rock, apartment research found.

Georgetown is popular because of its location on Interstate 35 with easy access to Austin’s core and its proximity to Round Rock, which has become a technology center, thanks to Dell and others. Georgetown’s population grew by 5.5% from July 2015-July 2016, reaching 67,140.

 

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You’ll notice a Texas twang to the list so far. Actually, fully half of the top 10 fastest-growing cities are in the Lone Star State, all of them thriving suburbs. Texas also sports the two cities in the top 10 with the highest rent premiums over their parent markets.

No. 9 New Braunfels is known for its German culture, including the annual Wurstfest, and tubing down the Guadalupe River. But it’s not only the schnitzel that’s tightening belts: The average May rent of $1,133 was some $200 more than the average for the overall San Antonio metro and $5 more than the Comal County submarket average. The city is 32 miles northeast of San Antonio and 48 miles southwest of Austin, so it draws residents from both areas.

New Braunfels’ 4.7% population increase from July 2015-July 2016 brought its total to 73,959. Apartment investors must like it, since the city’s 2.6% annual effective rent growth as of May was the highest among the 10 fastest-growing cities.

 

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Renters also paid more to live in booming Frisco, which in the past 30 years has grown from a rural small town to a city of 163,656, spurred in part by its 6.2% growth from July 2015-July 2016, second highest in the nation.

Frisco is home to many new office parks and houses the headquarters of three of Dallas’ five major sports franchises – the NFL’s Dallas Cowboys, the NHL’s Dallas Stars and MLS’ FC Dallas – but its growth has been spurred primarily by the development of Northwest Plano, home of Toyota’s new U.S. headquarters as well as FedEx and other companies.

But apartment rent averaged $1,263 in Frisco in May – the most of any of the top 10 on the fast-growth list and $122 more than the Dallas metro as a whole. Frisco apartments also cost $50 per month more than the average unit within the Plano/Allen/McKinney submarket in which it resides.

Speaking of McKinney, it ranked as the third-fastest-growing city on the Census list and, with Frisco, makes Collin County the only one among the top 15 with two of the nation’s biggest population movers. McKinney, Collin County’s historic seat, has changed from a city steeped in its past to a city of 172,298 people, 5.9% more than in July 2015.

McKinney, like adjacent Frisco (the McKinney school district includes part of eastern Frisco) has benefitted from the rapid growth in Collin County – not only West Plano, but also the office and retail hubs of East Plano, Allen and Fairview. Even State Farm’s Cityview development, 15 miles down U.S. 75 from McKinney in Richardson, supplies residents to McKinney.

McKinney residents also pay more than the average Dallas-area renter; its $1,175 average rent in May was $34 more than Dallas’. But, these renters pay less than in Frisco and $38 less than the overall Plano/Allen/McKinney submarket.

 

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The rest of the top 10 comprises:

  • 4 Greenville, SC, population 67,453, where the $941 average rent was $24 more than its metro average.
  • 6 Bend, OR, a 91,122-population city with an average rent of $1,123.
  • 7 Buckeye, AZ, a remote southwest suburb of Phoenix with 64,629 people and very few apartments.
  • 8 Bonita Springs, FL, part of the Cape Coral/Fort Myers area, with few apartment properties despite a population of 54,198.

Some of the fastest-growing cities are bargains compared to their bigger markets, and some are more expensive. But the common ground is that all have something attractive to offer to all the new residents coming in.

Dave Sorter

Dave Sorter

Journalist

Dave Sorter is an award-winning journalist who spent 30 years as a newspaper reporter and editor before joining Axiometrics. He oversees all Axio blogs and newsletters and serves as senior editor of all Axio publications.

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