Companies like McDonald’s and GE have been moving their headquarters from the suburbs to trendy urban centers to try and attract “tech-savvy” millennial talent. But unfortunately for their employees, the companies can’t take all the cheap housing from the suburbs with them. And even as developers are in the middle of a luxury apartment boom in many downtown areas, the cost of housing remains the No. 1 factor separating 80% of millennial employees from living close to work.
According to RentCafe, fewer than 17% of over 2,000 renters recently surveyed said they lived close to their ideal location, leaving 83% to live in less-than-ideal locations as rents have climbed incessantly since the crisis. What’s worse, 60% of respondents said they would not be able to afford to pay substantially more than they are already paying.
Nationally, the average rent charged by buildings in the most desirable locations is $1,650 a month, which is 37% more than the national average rent of $1,211 charged in lower-rated locations, according to rent data and location ratings by Yardi Matrix.
That rent gap comes from comparing top-notch locations rated A+/A/A-/B+ and apartments in average and below-average locations rated B/B-/C/D. The map below shows the cities with some of the largest gaps between low-rated and top-rated locations. The six cities where this difference is higher than 50% are Chicago, St. Louis, Philadelphia, Houston, Brooklyn, NYC, and Memphis.
Meanwhile, Raleigh and Seattle are among the six cities where renters pay less than 10% more for a top location vs. the rest of the city (though, at least in Seattle’s case, this is due to the immense tech boom that has seen rents increase across the city).
The survey confirmed that younger workers prefer to live closer to work, while older Americans prioritize being closer to their friends and family. Many renters who said they’d pay $250 more a month to live in a better location said living near quality schools was their reason. In the most-coveted buildings, Americans hoping for a rent reduction might be disappointed – but at least rents in newer high-rise towers tend to increase more slowly, RentCafe found. However, with the rush to cities still underway, the development boom in centrally located areas has yet to run its course. In the 50 cities analyzed for this study, there are more than 100,000 units of housing that are under construction in the highest-rated areas alone.