America's Rental Market at the Start of 2024

Miami Tops US Rental Market to Start 2024; Midwest Continues to Make Moves

At the start of 2024, Miami held strong as the top rental destination, with the Midwest continuing to rise as a major contender. RentCafe's recent analysis uncovers key trends, showcasing the shifting competitive rental landscape.

Rental landscape: The national Rental Competitiveness Index (RCI) stands at 73.4, reflecting a moderately competitive market. Despite an increase in vacancy duration to 41 days on average, Miami kicks off the year as the leader in rental market competitiveness, driven by its robust economy and lifestyle appeal. The Midwest, shedding its "Rust Belt" image, is seeing a resurgence thanks to its affordability and booming tech and manufacturing sectors, particularly in Milwaukee, which ranks as the nation’s second-hottest renting spot.

Miami reigns supreme: Miami leads the nation as the hottest rental market at the beginning of 2024, scoring 91.9 on the Rental Competitiveness Index. The city's vibrant economy continues to attract professionals, resulting in 14 renters competing for each vacant apartment. With just 3.5% of units available, Miami enjoys high demand and swift occupancy within 36 days.

Midwestern momentum: The Midwest region has emerged as the most competitive for renting in 2024, securing seven spots among the nation’s top 20 hottest rental markets. The shift is driven by affordability and economic growth. In cities like Milwaukee, there’s high demand for rental assets, pushing occupancy rates to 95.1%. Lease renewal rates are at 72.3%, with nine applicants vying for each available unit. This trend signifies the region's appeal for renters aiming to save for homeownership goals.

College town hotspots: Fayetteville, AR, leads as the hottest small rental market, with its appeal significantly bolstered by the University of Arkansas's record-breaking enrollment. The city exemplifies the intense competition found in smaller markets, where demand from students and faculty, coupled with limited supply, creates a competitive renting environment. Other notable mentions include Lafayette, IN, and Lehigh Valley, PA, which face similar challenges and opportunities.

➥ THE TAKEAWAY 

Looking ahead: Apartment rents are at their lowest since March 2022, with a notable supply increase leading to a national median rent decrease for one and two-bedroom units. Despite the overall market loosening, certain areas, especially Miami and Milwaukee, face heightened competition. This is further exacerbated in college towns and regions with booming economies, where the supply of new rentals is not keeping up with demand, leading to heightened competition and occupancy rates.

Transformative Tax Strategies

Macy's to Close 150 Stores, Focus on Luxury Brands

Macy's (M) has unveiled a new strategy to close 150 stores across the nation over the next three years in a bid to revitalize its flagging retail business.

Quick overview: The first phase of 50 store closures is set to be completed by the end of the fiscal year, with the remaining 100 closures expected by the end of 2026. Notably, Macy's plans to monetize $600M–$750M worth of assets by 2026, potentially involving property sales.

Strategic closures: Macy's decision to shutter 150 stores signifies a significant shift for the legendary retailer, accounting for 25% of its square footage while contributing only 10% of sales. By reducing store count to about 350 post-closures, Macy's is positioning itself for greater efficiency and profitability.

Luxury in focus: In a strategic pivot, Macy's is directing its attention to its luxury brands, Bloomingdale’s and Bluemercury, with plans to open 15 new Bloomingdale's locations and 30 more Bluemercury stores within the next three years. On top of that, 30 existing Bluemercury stores are slated for remodeling.

➥ THE TAKEAWAY

Financial outlook: Despite slumping sales and financial challenges, Macy's remains attractive due to its valuable real assets. With analysts highlighting the potential value of Macy's real estate holdings, the retailer's move towards revitalizing its business model and optimizing its portfolio underscores a forward-looking approach to weathering industry headwinds and driving future success.

Many commercial mortgages initially set to mature in 2023 have been rescheduled to expire between 2024 and 2028, leading to an increase in commercial mortgage debt maturities from $659B at EOY 2022 to $929B by EOY 2023. 

This shift in maturities also exhibits significant variation across different investors and property types. 

A mere 3% ($28B) of the multifamily and healthcare mortgages held or guaranteed by agencies such as Fannie Mae, Freddie Mac, FHA, and Ginnie Mae are set to mature in 2024. Life insurance companies will witness 8% ($59B) of their outstanding mortgage balances maturing in the same year. Depository institutions face a 25% ($441B) maturity rate, while the figures are even higher for CMBS, CLOs, or other ABS at 31% ($234B). A substantial 36% ($168B) of mortgages held by credit companies and other lenders will also mature in 2024.

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