In college football the Southeastern Conference, or SEC, and the Big Ten Conference dominate on the gridiron. But when it comes to where multifamily rent is increasing the most, there’s another competition playing out.
This year’s champion? The SEC, with a winning formula for generating higher apartment rents consisting of the member schools' smaller-sized markets with limited rental apartment inventory and surging demand.
Leading the charge in generating higher apartment rents is Ole Miss, the University of Mississippi, which posted a jaw-dropping 9.1% annual average rent increase for apartments in Oxford, Mississippi. Oxford’s tight housing market, paired with steady demand from students, faculty and local residents, has driven rents in the college town to new heights.
Another SEC power, Auburn University in Auburn, Alabama, follows with a 5.7% average annual rent increase, resulting from similar market dynamics including a constrained apartment inventory and limited new construction. Coupled with an enrollment of nearly 32,000 students, these factors combine to create a perfect storm for increasing apartment rents.
Meanwhile, the Big Ten's University of Illinois also posted a solid rent increase performance at 4.6%, showcasing the steady demand for apartments in Champaign-Urbana. However, the SEC's University of Missouri located in Columbia, Missouri, isn’t far behind with an average annual increase of 4.5%, illustrating how Columbia’s tight supply of apartments is a hallmark of the SEC’s market dominance in terms of rent increases.
The universities of Alabama in Tuscaloosa, with an average increase of 4.4%, and Kentucky in Lexington with a 4.3% average increase continue the SEC’s streak, all consisting of smaller markets and minimal apartment construction that keeps supply tight and rents rising.
On the Big Ten side, Michigan State's East Lansing delivered a more modest 3.3% average increase in apartment rents, while Bloomington, home of the University of Indiana, saw a 2.9% average rent increase, both delivering stable, but less dramatic rent growth. These are larger markets with a more balanced housing supply, which help to avoid the kind of rent spikes seen in smaller SEC towns.
Texas A&M in College Station and the University of Arkansas in Fayetteville, both SEC members, round out the field of university towns with average increases of 2.6% and 2.5%, respectively. Their recent performance demonstrates how oversupply in slightly larger markets can temper rent growth even in the South.
The SEC ultimately prevails in terms of apartment rent growth because smaller towns like Oxford, Auburn and Columbia rely heavily on the universities, with less diverse economies but highly stable demand from students, faculty and staff. This demand, couple with limited apartment inventory and little new construction, creates intense competition for housing. In contrast, Big Ten markets, while also seeing strong demand for units, are often in larger cities where more diverse economies and higher construction activity help to maintain a balance between supply and demand.
The SEC’s unique mix of small markets, limited inventory and strong population growth gives it the edge in multifamily rent growth. This year, the SEC takes the trophy, proving that when it comes to real estate, smaller markets can deliver big wins.