We now expect a small fall in rents next year in a handful of metros as affordability constraints and falling employment take their toll on demand. At the same time, a wave of completions in some of the markets with the fastest rent growth will push up vacancy and help to close the gap with the rest of the pack. This means we expect rents in the South to only narrowly outpace the rest, led by Dallas and Miami. Weaker rent prospects in the West leave these markets looking most overvalued and so they are likely to see the largest yield rises. Meanwhile we think some of the six major markets also face a substantial pricing correction, particularly San Francisco. Indeed, we expect San Francisco, San Jose, Portland and D.C. to be among the worst performers over the next five years. By contrast, Atlanta, Dallas, Miami and Austin look most likely to see the strongest returns.
In view of the wider interest we are sending this US Apartment Outlook to clients of our US Housing Market and US Commercial Property Services.
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