Apartment rents are expected to increase by 4.5% nationwide for the Lifestyle segment*, Class A and B+, according to the 2015 Rent Forecast & Outlook report published by Pierce-Eislen. Technology-heavy Western markets will be the leaders of the pack, with San Francisco apartment rental market expected to score a 9% Y-o-Y growth rate.
San Francisco will continue to lead the way in 2015 with the highest rent increases among the 34 major U.S. cities analyzed in the study. On an annual basis, San Francisco renters in the Lifestyle segment will pay on average $3,432 more in 2015 compared to the previous year.
This strong annual rental increase is fueled by the continued employment growth in the city over the past four years. Although San Francisco has a high percentage of new rentals in the pipeline, these units may only meet demand from the previous housing shortages.
San Francisco remains the strongest rental market
Significant rental increases have also been observed in other major rental markets. For example, the rental amounts for Denver, The Bay Area, Seattle, Portland and Atlanta apartments have increased considerably compared to 2014. On the other hand, Washington, D.C., and Northern Virginia are expected to record no rent increases this year for the Lifestyle segment.
Compared to 2012, San Francisco rents will grow by 35% in 2015, which is more than twice the national growth rate of 15% for the same period of time. The annual average rent increase, as compared to 2012, will be $10,848, as you can see in the map below.
*Please note that the data only refers to the “Lifestyle renters”, which are defined by Pierce-Eislen here.