Rental property owners often aim to fill units quickly, but in many urban areas, the challenge lies not in finding tenants but in keeping pace with soaring demand. A recent study by RentCafé reveals that landlords face unprecedented competition as renters vie for available apartments. Developers struggle to address this situation due to rapid occupancy rates.
In regions like Miami, the competition has intensified dramatically, particularly following downturns in home sales that have redirected potential homeowners toward rentals.
Miami has emerged as the top rental market, closely followed by Chicago, though the reasons for high demand differ significantly between these cities.
Table of Contents:
The impact of economic factors on rental demand
The ongoing rise in mortgage rates has significantly curtailed new home purchases, resulting in an increased reliance on rental properties. This trend is pronounced in expensive markets like Miami, where a warm climate, absence of state income tax, and abundant amenities attract a diverse array of renters. According to RentCafé, Florida has become the most sought-after state for apartment seekers.
Rapid occupancy in Miami
Miami’s appeal extends beyond its environment; it has become a hub for businesses and affluent individuals. Remarkably, apartments are leased within an average of just 32 days, with approximately 19 prospective tenants vying for each available unit. This extreme demand has resulted in a staggering 71.8% of renters opting to renew their leases, boosting occupancy rates to an impressive 96.5%.
Chicago’s rental market dynamics
Conversely, the rental landscape in Chicago exhibits different characteristics. The city’s historical approach to zoning has limited options for renters, particularly in suburban areas like Aurora and Naperville, which are predominantly single-family home zones. As a result, around 60% of tenants have chosen to renew their leases, contributing to a solid occupancy rate of 95.4%. On average, each apartment garners interest from 16 potential renters, with units being filled in about 29 days.
Lease renewals and their significance
The trend of lease renewals plays a critical role in sustaining demand across the rental market. National renewal rates have climbed to 62.7%, up from the previous year’s 62%. Retaining reliable tenants can be a cost-effective strategy for landlords, as turnover incurs high expenses related to cleaning, marketing, and potential lost rental income. According to the Zegos 2025 Resident Experience Management Report, multifamily properties have achieved an average resident retention rate of 63%, the highest recorded since 2021.
Challenges in other urban areas
In the Twin Cities of Minneapolis and St. Paul, a housing shortage has been exacerbated by stringent zoning laws and community resistance to new developments, often referred to as NIMBYism (Not In My Backyard). Minneapolis ranks as the lowest among 128 Midwest cities in new housing construction, leading to a surge in rental prices that have risen nearly $200 per month since 2019. In many cases, rent for non-subsidized apartments now exceeds the mortgage for an average single-family home.
Similarly, Milwaukee has gained a reputation as one of America’s most competitive rental markets due to limited new supply. Chad Venne, a real estate program director, attributes the city’s rising rental demand to sluggish development.
Emerging trends in New York City
The rental market in New York City has also witnessed a surge in demand at the start of 2025. Brooklyn, in particular, has seen a year-over-year increase of 1.4% in rental prices as workers return to office settings. Many companies now expect employees to be present in the office two to three days weekly, driving interest back to the borough.
According to Redfin, the neighborhood of Prospect Heights and Clinton Hill in Brooklyn has emerged as a hot spot, reflecting significant growth year over year. Other cities, like Rochester, New York, are attracting displaced renters and remote workers, with rents increasing by 14% amid a housing shortage predicted to require 24,000 new apartments by 2040.
Opportunities in tertiary markets
In regions like Miami, the competition has intensified dramatically, particularly following downturns in home sales that have redirected potential homeowners toward rentals. Miami has emerged as the top rental market, closely followed by Chicago, though the reasons for high demand differ significantly between these cities.0
In regions like Miami, the competition has intensified dramatically, particularly following downturns in home sales that have redirected potential homeowners toward rentals. Miami has emerged as the top rental market, closely followed by Chicago, though the reasons for high demand differ significantly between these cities.1
