Anxiety surrounding operations and economic fundamentals is all too common among apartment owners today. Immigration policy debates have dominated the headlines, and many investors worry that restricted immigration flows will choke off rental demand. However, this focus may be overlooking a far more important driver of demand at play in the apartment market.
Recent analysis reveals that GDP growth, not immigration levels, maintains the strongest correlation with U.S. apartment absorption. The data is unequivocal: GDP growth shows a 0.64 correlation with multifamily housing absorption, while lawful immigration correlates at just 0.22 and non-lawful immigration at 0.17. Simply put, when the economy expands, apartment demand follows. Immigration, despite the heated rhetoric, plays a far smaller role than most assume.
This matters because commercial real estate indicators underlying economic demand are increasingly positive. While annual net immigration accounts for only 0.36% of the U.S. population, the real story lies in commercial real estate fundamentals that point toward sustained GDP growth.
Reading the Economy's Pulse
JLL's proprietary commercial leasing data, which captures real-time market activity rather than lagging third-party statistics, paints an encouraging picture. Office leasing activity reached 55.1 million square feet in the fourth quarter last year, the highest level since before COVID-19 and up 98% from the bottom. Companies don't sign long-term office commitments when they're pessimistic about the economic growth outlook.
Industrial leasing momentum is building as well, with third-party logistics providers leading demand at the start of 2026. Quarterly activity approached 250 million square feet, up 8.4% year over year. Meanwhile, grocery-anchored retail vacancy hit an all-time low of 3.5% at the beginning of 2026. These aren't the metrics of an economy bracing for contraction. They're the footprints of expansion.
Increasing commercial activity matters for apartment investors because it signals job creation, wage growth, and business confidence. When companies lease more space, they hire more people. When they hire more people, those employees need apartments.
The Demand Waiting in the Wings
Delayed household formation could amplify the next cycle. The share of 18- to 24-year-olds living at home reached 58% in recent years, while 16% of 25- to 34-year-olds remain with parents. Both of those statistics are historically elevated levels. Unemployment among those younger than 25 sits at 10.4%, compared with an overall rate of 4.4%, which is a 600-basis-point spread—well above the long-term average spread of 391 basis points.
These young adults haven't abandoned the aspiration of independence. They're waiting for the right economic moment. The median renter age climbed to 42 in 2024, compared with 28 in 1984. Yes, Americans are staying renters 14 years longer than a few generations ago. As GDP growth strengthens and youth unemployment normalizes, this pent-up demand will begin releasing into the market.
Where Rents Have Room to Run
The question for investors becomes: Where will this demand materialize as rent growth? The answer lies in markets where income growth has outpaced rent growth from 2020 to 2025, and rent-to-income levels support healthy growth. Nationally, average effective rents grew over 29% during this period, while income growth nearly matched at over 28%. However, these aggregate figures mask significant regional variation.
Markets where income gains have exceeded rent growth have built capacity to absorb higher rents without straining affordability. As economic expansion continues and delayed renters enter the market, these locations offer the clearest path to organic rent growth. Seventeen major U.S. markets meet this criteria, including artificial intelligence (AI)-leading San Francisco and San Jose, California, as well as Sun Belt standouts Austin, Texas; Phoenix; and Las Vegas.
Conventional wisdom has historically fixated on immigration as a primary driver of apartment demand. The data today tells a different story. GDP growth has always been the primary engine, and that engine is showing signs of acceleration. Investors who position themselves in markets with rent-to-income headroom, backed by commercial leasing momentum and a reservoir of young adults ready to form households, will be best positioned to benefit from the cycle ahead.
The question isn't whether demand will materialize. It's whether you're positioned in the right markets when it does.