Secondary market rents are growing as rent growth is varying across markets as the divide between gateway and secondary metros continues to increase with the pandemic, according to the October report from Yardi Matrix.

“With each passing month, outmigration from large gateway markets to secondary and tertiary tech hubs is amplifying. At this point, the apparent winners are markets in close proximity to large gateways but with significantly lower costs of living,” the report says.

• Multifamily rents were flat for the third consecutive month in October, but the national numbers appear misleading, as the sector is experiencing an ever-increasing divergence between outperforming and underperforming markets. On a year-over-year basis, rents fell 0.6 percent nationwide.
• Secondary and tertiary markets are performing the best, as high costs and limited community amenities drive outmigration from gateway markets. The Inland Empire (6.0 percent), Sacramento (5.0 percent), Las Vegas (3.9 percent) and Phoenix (3.8 percent) lead our top 30 markets, with each market benefiting from migration out of the Bay Area and Los Angeles.
• Not surprisingly, New York (-10.0 percent), San Francisco (-8.2 percent), Washington, D.C. (-3.7 percent), Boston (-3.1 percent), Chicago (-2.9 percent) and Los Angeles (-2.8 percent) all fell at or near the bottom of our rankings.

For example, the average rent in Sacramento is 34 percent less than in San Francisco. The report says even tertiary markets with a strong tech presence, such as Boise, Idaho and Portland, Maine, are attracting people from expensive coastal markets.