Nationwide Apartment Rents Extend Slide as Policy Shifts
By Philippa Maister | GlobeST | June 20, 2025
Nationwide, rents for 0–2-bedroom apartments in May continued to decline for the 22nd consecutive month, and the Trump administration’s restrictions on international student admissions and other policies could intensify the slippage, according to Realtor.com’s May rental report.
The slump affected properties of all sizes. Studio rents dropped 1.9% year-over-year, one-bedrooms 2.3% and two-bedrooms 1.7%. Nationwide, rent is 3.1% ($54) below its 2022 peak.
The exception occurred in the 50 largest metros, where median rent rose by $5 from its April level to $1,705, but $54 below its peak in August 2022.
The worst rent trends since May 2019 have occurred in San Francisco (-3.2%), Minneapolis (+3.9%), Oklahoma City (+7.7%), Seattle (+7.9%), Denver (+8.9%) and San Jose (+8.9%).
The uptick in median rent was below the level of national inflation over the past six years, meaning shelter inflation is likely to be lower in the months ahead. Over the past six years, there have been only nine metros where rent growth has outpaced overall inflation: Pittsburgh, Tampa, Miami, Indianapolis, Kansas City, Sacramento, New York, Jacksonville and St. Louis.
However, the report cautioned that the 50% tariffs on imported steel and aluminum imposed by the President could drive up rents in several cities that have recently seen the most rapid growth in permitted multifamily construction, which makes them especially vulnerable to rising construction costs. They include Milwaukee, Oklahoma City, Cleveland, Memphis and Columbus. All but Columbus experienced year-over-year rent drops.
“These rising material costs are expected to place additional upward pressure on rents, as developers may slow construction or pass higher expenses on to tenants,” the report noted, though it might take time for the added costs to be reflected in rents.
The Trump administration’s visa restrictions on international students are expected to affect markets with high concentrations of foreign learners. These areas include San Jose, Miami, Boston, Seattle, and Orlando. A drop-off in foreign student arrivals could reduce rental demand, increase vacancy rates and put downward pressure on rents. In all the cities named, except San Jose, signs of falling rents have already appeared, the report said.
In addition, it noted, “A decline in international student enrollment could weaken the global and even domestic talent pipeline feeding into high-growth industries and potentially soften rental demand in these markets.”
The effect of the firing of federal workers in cities with high concentrations of civil servants is harder to gauge. In May, rents rose 1.3% year-over-year in Washington, DC and 0.3% in Baltimore, but fell sharply in San Diego, Virginia Beach and Oklahoma City, all of which have significant numbers of federal employees.
“These divergent trends highlight several factors—including conflicting forces of federal job reductions and return-to-office mandates—affecting the rental market in these areas,” the report stated.
Los Angeles Aims to Put Housing on Vacant Lots
By Jack Rogers | April 10, 2025 | GlobeST
The Inland Empire’s industrial market is exhibiting a healthier balance between supply and demand, with strong leasing activity across all size ranges and positive net absorption totaling nearly 3.6M square feet across the IE East and IE West submarkets in the three months of the year.
These strong fundamentals pushed the overall vacancy rate down to 6.6% in Q1 2025, the first decline in the category since the third quarter of 2022, CBRE reported.
The tidal wave of new construction in the two-county Inland Empire, which peaked in 2022 when nearly 40M square feet of industrial space was under development, continued to dwindle in the first quarter.
Construction deliveries outpaced starts for the fourth consecutive quarter, with 2.7M square feet of completed space entering the market while only 549K square feet broke ground. About 23% of the 9.5M square feet under construction at the end of Q1 was preleased.
New leasing activity in the Inland Empire totaled 11.7M square feet, with 5.5M square feet in the IE East and 6.3M in the IE West. Available sublease space ticked down to 16M square feet, from 16.6M square feet in Q4 2024.
The Inland Empire’s industrial market is exhibiting a healthier balance between supply and demand, with strong leasing activity across all size ranges and positive net absorption totaling nearly 3.6M square feet across the IE East and IE West submarkets in the three months of the year.
These strong fundamentals pushed the overall vacancy rate down to 6.6% in Q1 2025, the first decline in the category since the third quarter of 2022, CBRE reported.
The tidal wave of new construction in the two-county Inland Empire, which peaked in 2022 when nearly 40M square feet of industrial space was under development, continued to dwindle in the first quarter.
Construction deliveries outpaced starts for the fourth consecutive quarter, with 2.7M square feet of completed space entering the market while only 549K square feet broke ground. About 23% of the 9.5M square feet under construction at the end of Q1 was preleased.
New leasing activity in the Inland Empire totaled 11.7M square feet, with 5.5M square feet in the IE East and 6.3M in the IE West. Available sublease space ticked down to 16M square feet, from 16.6M square feet in Q4 2024.
Average taking lease rates fell for the seventh consecutive quarter as the 689M square foot Inland Empire industrial market re-balances from the pandemic warehouse boom. Lease rates dropped to $1.12 NNN per square foot per month in the first quarter, a 17.6% drop in a year-over-year comparison with Q1 2024.
The trend of large users becoming owners was central to the largest industrial deal of the year thus far in the Inland Empire, retail giant Burlington’s $257M purchase this month from BlackRock of an 890,000-square-foot distribution center in Riverside.
Burlington, which has occupied the warehouse at 21600 Cactus Avenue since 2019, now owns three of its 12 distribution centers as part of a strategic shift to own rather than lease its national logistics infrastructure.
A significant portion of the industrial leasing activity in the first quarter in the Inland Empire was driven by Asian-based logistics suppliers who stocked up on goods in anticipation of U.S. tariffs on goods coming from Asia.
A major part of Southern California’s economy is based on importing goods from Southeast Asia. Chinese goods account for 39% of the imports at the Port of L.A. and 62% of the imports at the Port of Long Beach; between the two ports, a total of 186,000 people work in international trade, according to CBS News.
“The single most important part of the economy, in terms of employment (and) economic activity, in the L.A. area is logistics, basically the imports, exports, shipment of goods,” Kevin Klowden, an economist with the Milken Institute in Santa Monica, told the Los Angeles Times.
Logistics employs 265,000 people in the two-county Inland Empire, according to CBS data.
Retail and Office Vacancies Rise in Downtown LA
By Anthony Russo | May 20, 2025 | GlobeST
As 2025 begins, Downtown Los Angeles is seeing a mix of encouraging and disappointing trends across its commercial real estate market. According to a new report from the DTLA Alliance, which examined first-quarter performance in retail, hotel, office, and residential sectors, the city's core is experiencing varied results across these key asset classes.
What stood out the most was the retail sector's 250 basis point spike in the vacancy rate to 9.5 percent compared to the previous three months. DTLA attributed much of this trend to the shuttering of a Macy's store at The Blog shopping center. Meanwhile, office continues to struggle to lure employees back to in-person work since habits changed during the pandemic, as vacancy went from 28.8 percent to 31.1 percent.
"Lingering uncertainty about return-to-work was felt across the region, with vacancy rates reaching a historic high in 2024 and remaining at that level for Q1 2025," DLTA further explained.
Vacancy moved in a positive direction across the residential and hotel segments, with occupancy improving by 70 basis points and a full percentage point, respectively.
Many other categories showed little change. This is particularly the case with rents, as residential declined by two cents per square foot to $3.38, office went down by one cent to $3.81, while retail rents remained flat at $3.22. Average Daily Rates for hotels year-to-date through the first quarter improved to $221.68 compared with $217.53 at the end of last year. From a RevPAR perspective, the number was $154.21 in the first quarter, up from the $149.24 posted at the end of 2024.
Only retail and office showed net absorption figures. Office experienced an impressive 180, producing a positive 617,905 square feet compared with -601,085 square feet posted last quarter. However, the narrative for retail was different, as negative net absorption widened to -129,861 square feet, up from -90,032 square feet.
Office leasing rose to 429,566 square feet compared with 396,729 square feet in the fourth quarter. Dentons secured the largest deal, with its 62,383-square-foot renewal at 601 S. Figueroa St. It was followed by West Monroe and Burke, Williams & Sorenson, which both secured deals for over 24,000 square feet in Downtown LA.
