Finding affordable apartment rents is a challenge in big cities like Chicago, New York and Los Angeles. But in secondary markets, places like Nashville, Columbus and Minneapolis? Apartment rents aren’t quite as budget-busting. And that helps explain why the secondary cities across the Midwest have become draws for renters.
Nat Kunes, vice president of product at AppFolio, a software-as-a-service company that offers tools such as tenant screening and online rent collection, said that this shift toward smaller but still big cities is gaining momentum.
Renters find that their dollars stretch further in cities such as Louisville, Nashville and Indianapolis.
“The bigger cities are getting more expensive and crowded,” Kunes said. “These secondary cities are a lot more comfortable. A lot of companies are creating jobs in these cities, too. That leads people to move there. That combined with new apartment construction coming online is driving a migration out of the bigger cities and into secondary markets.”
This is good news for the Midwest, which is dotted with cities that aren’t quite as big as a New York or San Francisco. An influx of new apartment projects, and the renters they attract, are providing a financial boon to these secondary markets.
Nashville is a good example. This Tennessee city is benefitting from a wave of new renters and apartment construction. And Kunes said that he expects the city to only grow more popular among renters.
It helps that Nashville has a reputation as a fun place to live.
“There is a cool factor with Nashville,” Kunes said. “People do have a desire to live in that kind of city. Nashville has that great music scene. It has a great cultural aspect to it. People want to live there.”
More importantly, though, is the job growth. Nashville is creating new jobs. And that is the true draw for renters.
“You have to have jobs or people can’t move there,” Kunes said. “A lot of companies are opening shop in Nashville. That brings a new demographic of people to the area. When that dovetails with a lot of great new apartments coming online, you can see why renters are attracted to Nashville.
Kunes said that apartment rents have steadily risen in the Nashville market, making it a strong one for multifamily owners. He said that the average apartment rent here has grown 4.8 percent on a year-over-year basis.
Multifamily owners are getting creative, too, as a way to attract renters to their properties. Many will personalize the concessions they over. Instead of just providing a free months’ rent, for instance, they might offer tenants six months of free dog-walking services or six months of free yoga classes, Kunes said.
These more personalized concessions make renters feel wanted, Kunes said.
“It feels special to the tenants,” Kunes said. “As long as the concession is tailored to what is important to the renters, they will be more likely to consider your building.”
Kunes said these personalized concessions are especially inviting to newcomers moving to a city. They might not know where a good yoga studio is. They might know which dog walkers are highly recommended. When owners offer them these free services, they appreciate it.
“It’s a really nice benefit,” Kunes said. “They feel more at home.”