Rent Growth Outlook: What Goes Up...Comes Down

by Donald Davidoff | Jan 30, 2017 12:00:00 AM

It’s happened. Axiometrics has reported that, for the first time since July 2010, year-over-year (YOY) rent growth is below the historical average. At 2.1% for December, we are not below the long-term benchmark of 2.2%. If that doesn’t mark the end of an almost 8-year bull run, I don’t know what does. The strange thing to me is the relatively calm reaction from the industry. Having just come back from the NMHC Annual meeting (the industry’s largest gathering of senior executives in our industry), I’m surprised at the level of optimism. There’s some discussion on concerns about the future, but I perceive less than back in the fall when that tired metaphor, “what inning are we in?” dominated conversation. In fact, what I saw was a record 5200 delegates, many in the “blue blazer and white shirt” uniform of the deal guys (and while there were a few “deal women” it was still mostly guys). NMHC didn’t draw a record attendance because of a big increase in operators attending, instead the obvious driver was the health of the banker, broker, buyer, seller, developer dimension of our business. I’m usually an optimist, always noting that this industry follows more of a “what goes down must bounce back up” rule than a “what goes up must come down” attitude, but I’m genuinely nervous. Part of it may just be because no one else seems to be (that’s often a sign of market exuberance), but it’s also data driven: