Suburban Multifamily Outperformance Was More Subtle Than Realized

The flight to the suburbs narrative that stemmed from high migration patterns across a handful of markets last year may not tell the whole story when it comes to suburban multifamily performance, according to a new report from RCLCO.

The report—and accompanying interactive mapping tool—defines a suburb according to a place-type framework that organizes neighborhoods based on density and prevailing housing types at the census tract level, rather than just jurisdictional boundaries. For example, it notes that significant parts of places like Plano, Texas, Reston, Virginia, and Bellevue, Washington are all very urban despite being in “suburban” counties—while some neighborhoods inside big city boundaries are really suburban in character.

The big takeaways? While suburban apartments outperformed urban ones in 2020, suburban markets were impacted by COVID-19—just not as much as urban counterparts. The RCLCO report notes that suburban apartments experienced approximately 2% rent growth in 2020, compared to 3.5% the year before. And while suburban markets were more broadly stable than urban ones in the US last year, there’s a great deal of differentiation across cities. Metros like Atlanta, Tampa, Dallas and Charlotte are all high-migration markets where newcomers chose both urban and suburban locations, “belying the flight to the suburbs story,” the report states. 

Typically, high rent and high density urban submarkets saw the steepest rent declines, and the urban neighborhoods with the greatest occupancy drop-offs were the ones where residents were renters by choice with ample disposable income to buy if they wanted. And urban and suburban markets “largely moved in parallel” within a given metro: coastal cities like Boston and Seattle saw both urban and suburban declines, while legacy cities like Detroit and St. Louis and low cost-of-living markets like Phoenix, Atlanta, and Dallas saw rent increases in both urban and suburban areas.