Apartment rents in urban core markets are beginning to drop as the impacts from the pandemic set in. Class-B and class-C rents were the first to struggle with rents and rent collections, but the trend has trickled up to larger buildings. New data from Real Page shows that rents have declined 1.7% in the top 50 markets in the US. This is the first time since 2010 that rents in these markets have decreased. By comparison, national rents have only dropped .2% during the same time.

Suburban rents are outperforming the urban core. During the pandemic, rents in the suburbs have actually increased, up .4%. This trend isn't necessarily new. Suburban rents have been surpassing urban rents for the last several years. Urban markets tend to be more expensive than the suburban markets, and younger renters often occupy apartments in these markets. As a result, urban markets have been more impacted by the economic destabilization caused by the pandemic.

The move to slash asking rents came after occupancy rates fell in the second quarter. Occupancy in the urban core has remained stable at or above 95% for the last business cycle. During the first half of the year, occupancy rates fell by more than 100 basis points. In the urban core, occupancy now nears 93%. Interestingly, occupancy rates also fell in suburban markets, although to a lesser degree. Still, suburban markets have yet to see the same decrease in asking rents.