Rent growth slows to near-normal pace in Birmingham
BIRMINGHAM, Ala. (WBRC) –In this economy, it’s not often you hear the word ‘encouraging,’ but Bill Kitchens with CoStar said things are improving for renters.
“The big theme that we are seeing right now in Birmingham, and markets across the country, is we are seeing the pace of rent growth starting to cool,” explained Kitchens.
CoStar is a commercial real estate data provider, tracking the prices of industrial, commercial, retail and residential real estate. At the end of 2021, rent growth in Birmingham reached the double-digits.
“That’s the highest that we’ve recorded,” Kitchens said.
By the end of October 2022, rent growth was down to 4.4%. Kitchens explained rent growth is still up from the first of the year, but it’s climbing at a slower rate. At the end of this year, Kitchens expects rent growth to drop to 2-3%, which is normal.
“We are trying to reach a steady state,” he said. “Part of this softening of the rent growth side. One, a repeat of 2021 was unlikely and what we’re seeing in 2022 is a little softer demand for multifamily units, especially compared to what we saw in 2021. And we’re also seeing heavier construction in Birmingham That’s going to bring rent growth back to earth.”
More units mean more competition.
Kitchens forecasts landlords will be more willing to negotiate with potential renters.
“I think many of these newer properties may offer concessions than they probably wouldn’t have offered maybe a year ago when demand was so high,” he said. “That’s another approach that might provide some relief for renters.”
Copyright 2022 WBRC. All rights reserved.