The facts are that while the population fell in 2020 and 2021, the outmigration trend has already reversed, the report said. Populations grew in 2022 and 2023 in downtown, downtown adjacent, and urban university locations but fell in urban commercial districts. Both violent and property crime dipped between 1H 2023 and 1H 2024. Foot traffic in 2023 recovered from a slump in 2021 though it has not reached 2019 levels. “In fact, resident foot traffic in Downtowns is up 12% compared to 2019, while most of the decline in CBD foot traffic stems from fewer employees commuting to offices,” the report stated.

The second myth is that renters clearly prefer suburban living.

The report says this view is the inevitable result of the much smaller inventory of apartments in CBDs compared to suburbs. It accepts that in three consecutive quarters in late 2020 and early 2021, there was a sharp increase in suburban apartment demand. However, in every succeeding quarter, it found greater demand for CBD apartments than for suburban units, as measured by the percentage change in occupied units. And it claimed developers are responding. “Since 2017, the CBD inventory has grown by nearly 60%—more than double the inventory growth rate of the suburbs,” it stated, especially in the most walkable parts of cities. It argued that overall vacancy matches historical averages and that most vacancy today is the result of new supply rather than a weak market.

The third myth is that suburban apartment fundamentals are much healthier than those in the CBD.

The report found, however, that once the pandemic ended, occupancy in cities rose quickly, and vacancy rates matched those in suburbs. “Effective rent growth in CBDs has outperformed over the last year,” it noted.

The fourth myth is that cities are too expensive to live in.

“Average apartment rents in CBDs are approaching $3,000 per month—a staggering figure that would comprise 45% of the monthly budget for a household earning the median income (roughly $80,000 annually). By contrast, average suburban rents of about $1,650 are much more affordable, representing about 25% of a monthly budget for that same household,” the report noted. However, it attributes this gap to the growing numbers of affluent renters with an average rent-to-income ratio of 21%, who can easily afford the higher rents of upscale urban apartments. “Rent premiums on CBDs have narrowed, making urban living more affordable...On a relative basis, renting in the CBD has never been a better deal compared to the suburbs,” the report stated, adding that the current narrow premium for these rents is unlikely to last.

The final myth is that capital markets will continue to favor suburban apartments.

This trend actually began changing in 2024. “In a declining market, CBD properties demonstrated greater resilience. Both CBD and suburban volumes were lower, but the CBD was only down about 20% compared to closer to 40% in the suburbs,” the report stated. In 2024, the spread between the higher cap rates for suburban properties and the median cap rate for CBDs widened but remained tight by historical standards.

“With improving fundamentals and many of these CBD apartments priced at relatively low levels—often below replacement costs—now appears to be an opportune time to invest in urban cores,” the report commented.

“Encouraging multifamily development in CBDs creates vibrant neighborhoods, boosts surrounding property values, and establishes healthier, more resilient city economies.”