By Lisa Sturtevant, PhD
Chief Economist, Virginia REALTORS®
The rental market came roaring back in the second year of the pandemic, with rapidly declining vacancy rates and fast-growing rents. In 2021, Virginia’s rental market set records in terms of occupancy and rent growth. In addition, the number of new apartments under construction was higher than it has been in two decades.
Where are the hottest rental markets in Virginia?
While no city in Virginia made the CNBC “top 25 highest rent list”, there are many local markets around the state where rents are forecasted to grow at double-digit rates in 2022. Many urban neighborhoods will experience strong rental demand in the coming year, but suburban rental markets in Virginia are poised for some of the tightest conditions and fastest rent increases in the year ahead.
#1. Western Henrico County
Western Henrico County’s apartment market is in high-growth mode. The local area is projected to see rent growth of more than 17% in 2022. The vacancy rate is about 4.5%, lower than its long-term average. While Western Henrico County is one of the Richmond region’s biggest apartment markets, it has historically had a relatively smaller share of the region’s high-amenity apartments. That pattern is changing, however, as new, high-end apartment construction in the area is increasing and higher-income renters are moving into the county.
A Richmond area market also takes the #2 spot in the top rental markets to watch in 2022. In response to rising demand, there has been a surge of new construction in Midlothian, with building activity at record levels. Even with the delivery of a significant number of new apartment units, rents in the local market are expected to rise by nearly 17% in 2022. (Rent growth in Midlothian has historically hovered around 2.5% annually.)
#3. Mclean/Great Falls
Perhaps a surprising entry into the top five list is the Mclean/Great Falls market in Northern Virginia. A very small market, home to under 300 apartment units total, the area benefits from renters who are willing to pay a premium to live in Mclean/Great Falls. The average rent in the area is expected to increase by more than 16% this year, with vacancy rates extremely low, at less than 4%.
#4. York County
Suburban rental demand is on the rise in the Hampton Roads region, as well, and particularly in York County. The average rent in the county is expected to rise by more than 16% in 2022. The vacancy rate in York County plummeted during the pandemic, reflecting that strong suburban demand, and is now under 3%. New construction activity currently appears to be on pause in York County, which will continue to fuel low vacancy rates and strong rent growth.
#5. Roanoke County
Rounding out the top five is the Roanoke County apartment market, where average rents are expected to increase by nearly 16% in 2022. During the pandemic, demand for rental housing in the county has surged and the vacancy rate has fallen to 3%. There have been no new apartment deliveries in the county for years, which is a key reason why rents are expected to rise so quickly.
Virginia’s rental market is poised for significant growth in 2022. Strong demand, fueled by demographic factors and rising home prices, will lead to rising occupancy rates and rents, with property managers less willing to offer concessions to tenants. New construction activity has increased, and the delivery of new units will be welcome. However, in many markets—both suburban and urban—demand will continue to outpace supply.
Expected Rent Growth of 10%+ in 2022
Virginia Rental Markets
|Market||Projected Annual Rent Growth|
|Western Henrico County||17.4%|
|James City County||15.7%|
|Isle of Wight||15.7%|
|King William County||13.2%|
|Outlying Fairfax County||13.2%|
|Old Town/Potomac Yard||11.4%|
|Prince George County||10.7%|
Source: CoStar, Virginia REALTORS®