Shafiq Hirani CCIMReal Estate Advisor, REMAX Distinctive · Real Estate Advisor at RE/MAX Distinctive Commercial | Washington, DC | Your Guide To Profitable Real Estate Ventures

Gateway Cities Rents SOAR, Sun Belt FREEFALLS: What's Next? #shorts

18 Jul 2026 · 2 min

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1:51

In this market commentary, the speaker contrasts recent U.S. apartment rent trends between supply‑constrained gateway cities and over‑built Sun Belt markets. Gateway cities such as New York (5.6% annual rent growth), San Francisco (4.7%), and Chicago (2.6%) are seeing strong rent increases driven by limited new supply, robust job recoveries, and high entry barriers, positioning owners in these markets favorably. Conversely, Sun Belt cities—including Austin (‑4%), Denver (‑3.1%), Phoenix (‑2.7%), and Charlotte—are experiencing rent declines because they added large shares of new apartment stock during the boom (e.g., Austin added 5.8% of its total stock in one year). The speaker emphasizes that this is a supply‑driven, localized correction rather than a national rent crisis, and predicts the correction will ease as the pipeline of new units dries up by 2027. For owners of small multifamily portfolios (5‑50 units), the hardest‑hit assets are large, new Class A “lifestyle” buildings, which posted flat or negative rent growth, while smaller, workforce‑oriented “renter‑by‑necessity” properties still managed modest rent gains (~0.5%). The overall message is that market dynamics are diverging sharply by geography and asset type, with implications for investment strategy.

Chapters

In gateway cities, rents are growing strongly. New York led the country with 5.6% annual rent growth. San Francisco followed at 4.7%. Chicago came in at 2.6%. These are markets with limited new supply, strong job recoveries, and high barriers to entry. If you own in a gateway or supply-constrained market, this report actually shows your building is in a strong position. In Sunbelt markets, rents are falling. Austin rents dropped 4% year over year. Denver fell 3.1%. Phoenix fell 2.7%. Why? Because those markets added enormous amounts of new supply during the boom. Austin added 5.8% of its total apartment stock in a single year. Phoenix added 4.8%. Charlotte added 6.1%. That flood of new units is what crushed rent growth, not a demand problem. So the first thing to understand, this is not a national rent crisis. This is a supply-driven correction in specific markets that overbuilt, and that correction will work itself out as the supply pipeline empties, which the data says will happen by 2027. Here is where it gets interesting for the owners I work with, the ones with 5 to 50 units. First, the properties being hit hardest are large, new Class A buildings, the ones with the pools and the coworking spaces that were built during the boom. These are what the industry calls lifestyle assets, and nationally they posted flat or negative rent growth. But renter-by-necessity properties, meaning the smaller workforce-oriented buildings where people rent because they need to, actually grew rents at 0.5%. That is not a big number, but it is positive, and it is a different direction from the headline.