January Rent Growth Nears Normal but Remains Slightly Below Average
After months of seasonal declines, U.S. apartment rents ticked up in January, though growth still lagged long-term norms.
Jordan B.
February 10, 2025
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Good morning. After months of seasonal declines, U.S. apartment rents ticked up in January, though growth still lagged long-term norms.
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Market Snapshot
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*Data as of 02/07/2024 market close.
Apartment Market
January Rent Growth Stabilizes but Remains Below Historical Norms
After months of seasonal declines, apartment rents in January saw a modest uptick, hinting at stabilization—but growth remains below long-term trends.
By the numbers: According to RealPage, market-rate apartment rents increased by 0.16% in January 2025, slightly below the historical January average of 0.24% from 2015 to 2024. While this gap is minor, it suggests that rent trends are gradually returning to normal.
Regional performance: The Midwest (0.31%) and Northeast (0.24%) exceeded their 10-year January averages, while the West (0.11%) and supply-heavy South (0.12%) underperformed. On an annual basis, rent growth was highest in the Midwest (2.9%) and Northeast (2.7%), while the South remained the only region with negative annual rent growth (-0.8%).
Winners and losers: Midwest markets like Detroit, Chicago, and Kansas City led annual rent growth, posting gains between 3.5% and 4%. Meanwhile, Austin continued to see the deepest rent cuts, with a 7.2% decline over the past year, followed by San Antonio at -4.4%.
Occupancy holds strong: In a positive shift from typical seasonal patterns, U.S. apartment occupancy rose slightly in January, reaching 94.9%, aligning closely with historical norms.
➥ THE TAKEAWAY
The big picture: While the worst of the rent cuts appear to be over, 2025 rent growth remains subdued. Low-supply markets like the Midwest are seeing the strongest gains, while oversupplied Sun Belt cities continue to struggle. Expect a gradual return to normal, but not a rapid rebound.
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✍️ Editor’s Picks
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Boosting property value: Property owners can increase their commercial property’s value by utilizing cost segregation to accelerate depreciation, boost cash flow, and enhance NOI—improving financial efficiency and market appeal. (sponsored)
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Tax shakeup: Trump is reviving his push to eliminate the carried interest tax break, a move that could reshape private equity and commercial real estate.
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Steady pricing: The Green Street Commercial Property Price Index held flat in January, up 4.5% year-over-year but still 18% below its 2022 peak, with office, lodging, and self-storage lagging behind.
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Back in trouble: New Jersey’s American Dream Mall missed an interest payment on $287M in municipal bonds, adding to financial woes tied to its $1.1B debt load.
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Personal guarantee: As real estate distress mounts, lenders are aggressively enforcing personal guarantees, with high-profile developers facing lawsuits over millions in unpaid loans and defaulted properties.
🏘️ MULTIFAMILY
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Rent freeze: LA rejected a citywide rent freeze but moved forward with eviction protections and anti-price gouging measures to aid displaced residents.
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Texas boom: A new report predicts Texas will surpass California in population by 2045, driven by migration, job growth, and housing affordability.
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Loan growth: Despite record-high vacancies and supply-demand gaps, Freddie Mac expects multifamily loan originations to hit $370B–$380B in 2025.
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Hot market: Indianapolis' multifamily market is thriving, with vacancies dropping to 2.6% amid population growth, though rent growth has slowed as new supply expands by 3.7%.
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More housing: MA Gov. Healey wants to build 222K new homes over the next decade to address soaring housing costs and prevent a mass worker exodus.
🏭 Industrial
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Tariff turmoil: Industrial activity remains strong despite looming tariffs, with freight volumes rising, e-commerce expanding, and demand for logistics space growing.
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Chicago surge: Westmount Realty Capital has acquired a nine-property, 390K SF industrial portfolio in Chicago, where vacancy rates remain low at 5.5% amid strong logistics demand.
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Richmond deal: Lingerfelt has sold Port 801, a fully leased industrial and logistics facility near Richmond, VA, marking one of the first major industrial transactions in a market where investment sales dipped last year.
🏬 RETAIL
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Luxury slowdown: High-end retailers are seeing a decline in foot traffic as aspirational shoppers pull back, forcing brands to rely more on their core wealthy clientele.
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Pullback: Amazon has scrapped plans for an Amazon Fresh store in Farmingville nearly two years after completing construction, as it continues to rethink its grocery strategy.
🏢 OFFICE
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Expansion: Amazon is adding 112K SF at Five Manhattan West through a WeWork sublease, growing its footprint in the building to 472K SF amid ongoing office portfolio adjustments.
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Houston rebound: Office investment sales in Houston could triple in dollar volume this year, with lender-driven deals rising to 50-60% of transactions and average sale prices recovering from a low of $86 per SF in 2024.
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Paying a premium: Midtown Manhattan ranks as the world's third most expensive office market at $206.67 per SF, rising 9% in Q4 2024 amid strong demand and returning office attendance.
🏨 HOSPITALITY
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Cracking down: A new Miami Beach ordinance requires a majority vote for new hotels, aiming to slow down construction and encourage residential growth.
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