News release

Multi-housing rent growth continues to climb

JLL Capital Markets experts say the average effective rent growth exceeds inflationary growth, which is a good sign for investors

June 28, 2022

Jenna Sharp

Property Management and Capital Markets
+1 214 438 6450

CHICAGO, June 28, 2022 – The momentum surrounding multi-housing rent growth has continued in 2022 and is currently outpacing inflationary growth, according to JLL Capital Markets. This trend reiterates the multi-housing sector’s defensiveness and sustained strength in fundamentals during uncertain economic periods.

The national average rent growth for Class A multi-housing properties has surpassed inflationary growth by 198 basis points from 2010 to the first quarter of 2022. In fact, in the first quarter of 2022, national multi-housing rents increased 15 percent year-over-year, as rising inflation translated to significantly higher rents.

“Multi-housing market fundamentals are exceptionally strong, and the relatively shorter nature of leases is a favorable attribute in an environment of higher inflation, which allows properties the ability to mark-to-market on an annual basis versus other asset types,” said Senior Managing Director Roberto Casas, co-head of JLL’s Capital Markets multi-housing platform.

Forecasts predict both inflation and rental growth will start moderating in the remainder of this year and continue through 2024, with both rates eventually reaching below 5 percent. That will impact investor underwriting assumptions.

“The convergence of several trends over the pandemic, namely home buyer affordability issues, rapidly rising wages, population migration trends and a supply and demand imbalance have resulted in a level of rent growth that is unsustainable,” said Geraldine Guichardo, JLL Head of Americas Living Research and Global Head of Research, Hotels. “Rate growth near 5 percent is more normalized.”

According to an Economic Insights report from JLL Chief Economist Ryan Severino, April data presented that on a year-over-year basis, core and headline consumer price index decelerated, supporting the idea of an overall slowdown in inflation.

“Slowing inflation should take some pressure off the sector, even though commercial real estate still boasts an imperfect inflation hedge,” Severino added.

JLL Capital Markets is a full-service global provider of capital solutions for real estate investors and occupiers. The firm's in-depth local market and global investor knowledge delivers the best-in-class solutions for clients — whether investment sales and advisory, debt advisory, equity advisory or a recapitalization. The firm has more than 3,000 Capital Markets specialists worldwide with offices in nearly 50 countries.

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About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $19.4 billion, operations in over 80 countries and a global workforce of more than 100,000 as of March 31, 2022. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.