Averages can paint a misleading picture in real estate if investors don’t look beneath the surface. That was the message in a recent CBRE analysis, which pointed to a single number it says investors should pay closer attention to: the dispersion of projected rent growth across markets.
According to CBRE, relying on a single average rent growth figure obscures the reality that submarkets often perform very differently. To truly mirror the performance of a broad market, an investor would likely need exposure to dozens of properties across multiple submarkets within a single city. Factors such as neighborhood, property type, building conditions and pricing can drive sharp differences in returns. Get these choices right, and an investor can significantly improve portfolio performance. Get them wrong, and the result could be an underperforming strategy.
To underscore the point, CBRE created a box-and-whisker plot for U.S. markets with at least 15 submarkets, charting projected rent growth from 2025 to 2034. Each box reflected the middle range of growth between the 25th and 75th percentile, with whiskers showing the full spread of submarket performance.
Markets with narrow ranges in projected outcomes appeared on the left side of the chart, making them more predictable and easier for investors to navigate. Fort Worth retail had the smallest dispersion, where growth projections clustered tightly between 15% and 17%. Orange County multifamily showed a similarly narrow band, ranging from about 25% to 29%.
At the other end, the Manhattan office sector stood out with submarket growth projections stretching from as low as 4% to as high as 47%. CBRE attributed this wide dispersion to the market’s complexity, including differences in building quality, tenant mix and amenities. Boston office followed that pattern, with a broad swing from -18% at the low end to 25% at the high end. The contrasts reflect the different dynamics between traditional suburban corridors, like Route 128 and urban hubs that rely heavily on professional services and technology tenants.
Many markets fell between these extremes. Los Angeles industrial, for instance, ranged from about 9% to 25%. Atlanta multifamily showed a narrower mid-range of projections, falling between roughly 23% and 30%.
For investors, the implications are clear. As CBRE noted, markets with high rent growth dispersion demand ownership of multiple properties to capture returns that align with overall market performance. Conversely, investors may choose to focus on lower-dispersion markets, where capital can be more precisely targeted and outcomes may be more predictable.
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