Cleveland's apartment rental market is booming, according to recent research from Marcus & Millichap. The city's rental market is outperforming others across the United States due to a delicate balance of supply and demand. While Cleveland may not be the most popular real estate destination, it boasts the healthiest supply and demand equilibrium in the country, according to Charles Gagliano, a senior managing director at Marcus & Millichap.
Gagliano's analysis is based on three key metrics: year-over-year average effective rent growth, year-over-year vacancy rate changes, and completed rental units over the past five years. Cleveland ranks as the top metro area for apartment growth, with an average effective rent of $1,406, a 6.9% increase from the previous year. This is despite the lack of new construction, especially in the suburbs, which has led to high demand and limited space for expansion.
Suburbs like Lakewood and Shaker Heights are prime examples of areas with high demand and limited room for growth. While some projects, such as the Arcadia, RAYE apartments, and Lakewood Commons, are being developed, there isn't a consistent flow of new inventory. This has resulted in rising rents, but Cleveland still has one of the lowest rents among the top 10 metropolitan areas, higher than only St. Louis and Detroit.
What's surprising is that the rest of the country is lagging behind, with the U.S. average effective rent increase of just 1.5%. The bottom 10 metropolitan areas experienced rent declines, with Austin suffering a 5.5% decrease and Denver a 6.1% decrease. Cleveland also performs better than most other markets in rental vacancies, with a 2025 rate of 4.3%, below the U.S. average of 5.2%.
Low vacancies correlate with rising rents when there is little new construction in the region. However, Cleveland saw 6,900 new rental units in the last five years, which is not as impressive as other markets. The Dallas-Fort Worth metropolitan area added 151,800 new rental units during that period, New York added 125,600, and Phoenix, Houston, Austin, and Atlanta each added more than 80,000.
Interestingly, some markets with a high rate of new rental-unit construction, like Austin and Phoenix, are also experiencing the slowest rent increases. This could be due to the fact that other markets have so much new construction coming up and are unable to fill it at market prices. Gagliano attributes Cleveland's success to a basic analysis of supply and demand, highlighting the city's ability to manage this delicate balance.
