top of page
  • Writer's pictureRealFacts Editorial Team

Rent Growth is Solid Among Small New York Markets


NY housing

The real estate landscape in the U.S. has seen some intriguing shifts over the past year, with small markets taking center stage in rent growth and occupancy rates. Among the nation’s 150 core apartment markets, 22 secondary or tertiary markets recorded rent growth exceeding 3.5% by May 2024, a stark contrast to the national average of just 0.2%. Notably, three of the top-performing markets were in New York: Syracuse, Buffalo, and Rochester.


Map of numbers

These small New York markets, all located along the IH-90 corridor in the northwest portion of the state, have shown remarkable resilience and growth. Situated within a 150-mile stretch, these cities are strategically positioned between major urban centers like New York City, Pittsburgh, and Cleveland. Despite their relatively small size, they have demonstrated significant rent growth and high occupancy rates, reflecting their robust rental demand and limited supply.


Syracuse: Leading the Charge


Graph of Syracuse rent growth

Syracuse, the 96th largest apartment market in the U.S., recorded an impressive 6.7% rent growth as of May 2024, ranking second nationally. This is a notable increase from its pre-pandemic annual average of 2.4%. Occupancy rates in Syracuse have also been stellar, with a May reading of 97.4%, leading the nation alongside Champaign-Urbana, IL. This occupancy rate is significantly higher than both the national average of 94.2% and Syracuse’s pre-pandemic average of 96.6%.


Buffalo: A Strong Contender


Graph of buffalo records annual rent growth

Buffalo, holding the 69th spot among the largest apartment markets, posted a 5.4% increase in effective asking rents over the past year, the fifth highest in the nation. This growth far exceeds Buffalo’s pre-pandemic average of 2.3%. The market’s occupancy rate stood at 96% in May, placing it among the top 25 nationally and showing a solid improvement from its pre-pandemic average of 95.2%.


Rochester: Consistent and Growing


Graph of Rochester Rent Growth

Rochester, the 66th largest apartment market, saw a 4.9% rise in effective asking rents in the year-end May 2024, ranking eighth nationally. This increase is well above its five-year pre-pandemic average of 2.3%. With an occupancy rate of 96.8% in May, Rochester continues to demonstrate strong rental demand, maintaining its position in the top 10 nationally. This recent rate is significantly above its pre-pandemic average of 95.4%.


Limited Development, High Demand


One of the driving factors behind the strong rent growth and high occupancy rates in these markets is the limited development of new housing units. Over the past five years, Buffalo’s existing apartment inventory increased by only 3.5%, Rochester’s by 2%, and Syracuse’s by a mere 0.5%. This is in stark contrast to the national average increase of 10.3% in the same period. In the year-ending Q1 2024, each of these markets recorded inventory growth of less than 0.5%, ranking them in the bottom 15 among the nation’s largest markets.


Looking ahead, minimal inventory expansion is expected in Rochester, with a projected growth of just 0.3% by Q1 2025. Buffalo and Syracuse are anticipated to see slightly higher growth rates of 2.1% and 1.1%, respectively, but these still fall below the national average growth rate of 3.5%.


The remarkable rent growth and high occupancy rates in Syracuse, Buffalo, and Rochester highlight the potential of small markets in the current real estate landscape. Limited development, combined with strong demand, has positioned these cities as leaders in rent growth, offering valuable insights for investors. As these markets continue to thrive, they underscore the importance of strategic investment in secondary and tertiary markets, particularly in areas with constrained supply and robust demand.


Summary


The small markets of Syracuse, Buffalo, and Rochester in upstate New York have emerged as leaders in rent growth and occupancy rates, significantly outperforming the national average. Limited new housing development combined with robust rental demand has driven these markets to the top, with Syracuse recording a 6.7% rent growth, Buffalo 5.4%, and Rochester 4.9% as of May 2024. This trend underscores the investment potential in secondary and tertiary markets with constrained supply and high demand.

Comments


bottom of page