A new analysis says that remote work during the pandemic changed the asking prices for rent, and that higher education correlates with the ability to work from home, according to a new Yardi Matrix analysis.
Rent growth was much slower in many cases where renters were highly educated.
The detailed analysis shows “rent to be lower by 10.06 percentage points for a property where 100 percent of the over-25 age population held a bachelor’s degree, compared to a property where the over-25 age population contains no college graduates.”
The result is even lower, by 17.12 percentage points, the analysis says, for a property where 100 percent of the over-25 age population held a post-graduate degree.
The reason for weaker rent growth is tied to many tenants who sought new living arrangements during the pandemic. The general consensus is that suburban rents, where many remote workers moved, have outperformed urban rents.
The ability to move was not evenly distributed because pandemic-related remote work was overwhelmingly concentrated among the college-educated segment of the workforce.
Will remote work continue to affect prices for rent?
The analysis by Yardi Matrix says, “Multifamily properties where a large proportion of tenants held a bachelor’s or post-graduate degree exhibited much weaker rent growth during the pandemic compared to properties with a less highly educated tenant base.”
There are many different things that drive rent growth, and remote work was just one rent driver during the pandemic, the report says. It adds, “as the economy rapidly normalizes, the question for remote work is whether it will become a durable trend or fade out as life normalizes—and whether it will continue to affect multifamily rent growth as it did during the pandemic.
“Many (though not all) remote employees enjoy their newfound workplace flexibility, and many employers (also not all) are looking at solutions to accommodate them in the future.
“Undoubtedly, cities and offices will reopen. The social dynamism and collaboration opportunities they afford are too strong to ignore. However, if some proportion—even a small one—of pre-pandemic demand has permanently left these assets, the results presented here suggest rental-rate recovery may take longer than many are currently expecting.”
About Yardi Matrix:
Yardi Matrix researches and reports on multifamily, office and self-storage properties across the United States, serving the needs of a variety of industry professionals. Yardi Matrix Multifamily provides accurate data on 18+ million units, covering more than 90 percent of the U.S. population. Contact the company at (480) 663-1149.
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