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Local School Ratings Will Drive Suburban Apartment Demand

Suburban Apartment Demand

Digested from CoStar

As the population of those aged 30 to 44 will increase by about 3.5 million, school ratings will soon become a big factor in rental decisions.

Millennials are growing up.

In the next five years, the population of those aged 20 to 29 will decrease by about one million, while those aged 30 to 44 will increase by about 3.5 million, according to CoStar’s Shara Dahl.

That could have huge ramifications for apartment owners and managers, particularly those in the suburbs.

“For investors looking to target apartment submarkets that are attractive to young adult households aging into their peak earning years and highest family creation rates, school quality may be a bellwether for more resilient renter demand,” Dahl writes.

Quoting CoStar Portfolio Strategy Consultant Justin Tochtermann, Dahl writes that apartment investors may need to focus on the household growth in submarkets with good school ratings even though strong ratings do not mean that the residents living there are inordinately more likely to have children.

“All told, submarkets with higher-than-average school ratings have a more affluent, faster-growing base. Demographically, these areas have large proportions of high-earning households and marginally higher numbers of households with children, and stand to benefit as Millennials age into their peak earning years and highest family creation rates,” said Tochertmann. “Investors looking to capture superior renter demand should take note.”

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