In the second quarter of this year, rental rates for luxury apartments grew at 4.7 percent, while rents on middle market apartments grew by a robust 5.8 percent, data firm Rentcafé reports. Even so, renting a unit at a luxury multifamily complex can cost an additional $5200 per year on average, or 39 percent more per month, according to the company. But in which cities is there the greatest disparity between luxury and non-luxury rents? The 11 top cities might just surprise you.
"For the past three years, luxury rents were rising faster than non-luxury rents. But since the third quarter of 2015, we are seeing luxury rents grow at a slower rate than middle income rents,” says Nadia Balint, Rentcafé analyst.
In Evanston, Ill., a town 12 miles north of Chicago, non-luxury (middle-income) rents average $1,237 per month, while luxury rentals go for an average of $2,370 per month, a 92 percent difference.
"In Detroit over the past three-four years, luxury rent has been rising, while non- luxury rents have remained stagnant,” Balint says. Still, the difference between the categories is a surprising 92 percent. Luxury apartment rentals in the city average $1,512 a month, while middle-income apartments average $789 monthly.
West New York, with its proximity to midtown and lower Manhattan, is a notoriously high-priced market. The average non-luxury rental apartment here costs $1,436 per month, but a luxury building can set a renter back $2,370, also a 92 percent difference.
A monthly rate of $778 is the average cost for middle-income rentals in this city, while luxury rents average $1,533, a 100 percent bump.
In Toledo, middle-income rentals average $596 per month, while a luxury rental can cost $1,152 per month, a difference of 93 percent.
No surprise to see sky-high rents in Oakland, Calif.
"With a 40-minute commute to downtown San Francisco, Oakland has seen spillover demand for luxury units,” Balint says. The average monthly rental rate for non-luxury apartments is $1,749, while living in a luxury Oakland apartment costs an average of $3,513 per month, or 101 percent more.
“West Columbia has the characteristics of a small emerging market with a limited supply of high-end housing options: it currently offers only two (older) large-scale high-end apartment buildings,” Balint says. “However, demand for more upscale apartments is on the increase due to its proximity to downtown Columbia, to the main campus of University of South Carolina, combined with a solid economy supported by large healthcare employers like Palmetto Health and BCBS of SC.”
In this city, middle-income apartment rents cost approximately $661 monthly, while luxury rents average $1,351 per month. The disparity comes to 104 percent.
"Ft Lauderdale is a unique market in the Sunbelt, with a warmer climate and lots of demand for luxury apartments. Retirees moving there increasingly want to live in luxury buildings," says Balint. And while middle-income units average $993 per month, luxury rentals average $2,030 per month: a 104 percent difference.
Non-luxury rent in Cleveland averages $804, while luxury rent carries a per month price tag of about $1,699. That is a 111 percent disparity.
According to Balint, “The demand for high-end rentals in downtown Cleveland is soaring as the downtown population is way up from 10 or 20 years ago. People moving downtown are looking for upscale apartments, and the demand is driving prices up. Developers are working to meet these expectations with three large-scale apartment buildings completed last year in downtown Cleveland and five being under construction, as of right now.”
"In South Bend, Indiana, we have seen a demand spike in recent years for luxury apartments, coming from thousands of out-of-state students at Notre Dame and IU,” Balint says.
A middle-income apartment here goes for about $705 per month, while the price to live in a luxury multifamily unit averages $1,506 per month, marking a 114 percent difference.
The average non-luxury rental rate in Rochester is $879 per month, but living in a luxury apartment building rent can cost an average $2,004, for a whopping 128 percent premium! This is the highest disparity in any U.S. city, according to Rentcafé analytics.
What’s the going rate on luxe nowadays? Apartment renters and investors alike should be apprised, especially with multifamily demand back at healthy levels.
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