Multifamily investing isn’t just about picking the hottest deal; it’s about understanding how rent-growth trends translate into the actual cash distributions you’ll receive as a passive investor. When rents are climbing, your preferred return and profit-share waterfalls can swell faster than anticipated; when markets soften, even modest dips can erode projected cash flows.
In New York City, average rents rose from about $4,639 in 2024 to $4,801 in mid-2025 and are forecast to reach $4,854 by 2026; that trajectory speaks to constrained supply, strong corporate and financial employment, and the premium tenants pay for stability. Kansas City and suburban New Jersey both saw roughly 3% growth in 2025, lifting rents to $1,333 and $2,512, respectively, and are expected to inch higher into 2026 as affordability pressures in nearby gateway markets push renters outward. Detroit’s turnaround continues too, with rents climbing from $1,293 to $1,329 and forecast to hit $1,344 next year. Even traditionally steady Washington, D.C., Chicago and Columbus offer compelling upside, each forecast between 2.1 - 2.2% growth in 2025 and modest gains in 2026.
7 Markets with Highest Rent-Growth Forecasts
|
Metro
|
Avg. Rent 2024
|
Avg. Rent 2025
|
Projected Rent 2026
|
|
New York
|
$4,639
|
$4,801
|
$4,854
|
|
Kansas City
|
$1,294
|
$1,333
|
$1,348
|
|
New Jersey
|
$2,439
|
$2,512
|
$2,540
|
|
Detroit
|
$1,293
|
$1,329
|
$1,344
|
|
Washington, D.C.
|
$2,197
|
$2,245
|
$2,270
|
|
Chicago
|
$1,976
|
$2,018
|
$2,040
|
|
Columbus
|
$1,330
|
$1,358
|
$1,373
|
Yet a rent pullback doesn’t always spell disaster. Austin’s 3.5%, decline in 2025 drove average rents down to $1,554 from $1,610; with a modest 1.1% rebound penciled in for 2026, the market is only projected to reach $1,571. Denver, Phoenix, Raleigh–Durham, Atlanta, Nashville and Orlando show similar patterns: high deliveries outpacing absorption but only gentle upside on the horizon. For a sponsor targeting these metros, success hinges on value-add execution: interior renovations that command rent premiums, operational efficiencies that bolster net operating income, or targeted rebranding that differentiates the asset.
7 Markets with Lowest Rent-Growth Forecasts
|
Metro
|
Avg. Rent 2024
|
Avg. Rent 2025
|
Projected Rent 2026
|
|
Austin
|
$1,610
|
$1,554
|
$1,571
|
|
Denver
|
$1,923
|
$1,886
|
$1,907
|
|
Phoenix
|
$1,575
|
$1,548
|
$1,565
|
|
Raleigh–Durham
|
$1,583
|
$1,561
|
$1,578
|
|
Atlanta
|
$1,668
|
$1,648
|
$1,666
|
|
Nashville
|
$1,675
|
$1,658
|
$1,676
|
|
Orlando
|
$1,790
|
$1,772
|
$1,791
|
As an LP, your role isn’t to underwrite those cash flows yourself but to choose sponsors whose strategies align with each market’s cycle. In markets like New York or Kansas City, look for core-plus operators who underwrite conservatively, lean on low leverage, and hold assets long enough to capture sustained rent appreciation. In softer markets such as Austin or Phoenix, find opportunistic sponsors with a proven track record of executing value-add plays and the financial flexibility to navigate extended lease-up periods.
Diversification remains your friend: pairing high-growth metros with strategic stakes in softer markets can smooth your overall distribution profile. If your equity dollars are evenly split between a 3%-plus grower and a 3.5% decliner, the net effect may resemble a stable 0.7% annual lift, potentially more predictable than chasing only top-market bets.
Finally, request regular sponsor updates that compare actual rent growth and occupancy against Yardi or CoStar benchmarks. Markets can shift quickly; having quarterly snapshots of same-store performance and comparison to forecasted trends gives you visibility into whether your sponsor is outperforming baseline assumptions or simply riding the market wave.
By viewing rent-growth through three lenses, the 2024 actuals, 2025 forecasts and 2026 projections, you’ll gain the context needed to select sponsors wisely, calibrate your portfolio’s geographic mix, and set realistic expectations for the distributions that matter most. That’s how passive investors turn data into confidence, no matter where the cycle goes next.
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About Ellie Perlman
Ellie Perlman is the founder and CEO of Blue Lake Capital, a woman owned multifamily real estate investment firm focused on partnering with family offices and accredited investors to build and preserve generational wealth. Since its founding in 2017, Blue Lake has successfully acquired and operated multifamily assets across high-growth U.S. markets, completing $1B+ in transactions.
At Blue Lake Capital, Ellie and her team work exclusively with family offices and accredited investors, offering carefully curated investment opportunities that emphasize long-term wealth creation, stability, and risk-adjusted returns. A defining aspect of Blue Lake’s investment strategy is its integration of advanced AI-driven analytics and data science into the entire lifecycle of acquisitions and asset management. By leveraging cutting-edge technology, the firm executes data-driven forecasting on market trends, asset performance, and tenant behavior, ensuring strategic decision-making and optimized returns.
In addition to leading Blue Lake Capital, Ellie is the original founder and host of "REady2Scale - Real Estate Investing" podcast, which provides insights into multifamily real estate, alternative investments, and finance.
Ellie began her career as a commercial real estate attorney, structuring and negotiating complex transactions for one of Israel’s leading development firms. She later transitioned into property management, overseeing over $100M in assets for Israel’s largest energy company.
Ellie holds a Master’s in Law from Bar-Ilan University in Israel and an MBA from MIT Sloan School of Management.
You can learn more about Blue Lake Capital and Ellie Perlman at www.bluelake-capital.com.
*The content provided on this website, including all downloadable resources, is for informational purposes only and should not be interpreted as financial advice. Furthermore, this material does not constitute an offer to sell or a solicitation of an offer to buy any securities.
