Bidding wars for rental units? 2021′s rental market is also on fire.

This article first appeared on the Business Journals’ website.

It’s not uncommon to hear about bidding wars for homes in today’s housing market. But “leasing wars” for rental units are popping up in some cities as demand for multifamily housing remains high.

Matt Scott, broker associate at residential real estate services firm Baird & Warner’s office in Naperville, Illinois, said in the eight years he’s been in the business, he hasn’t seen anything like the current environment.

Nine months ago, Scott said he was advising clients to make slightly below-asking rate offers. Not anymore. Rental rates in suburban Chicago areas have ticked up between 12% and 30% year over year, he added. Up to 20 families have expressed interest for a single rental.

“Competition is fierce,” Scott said.

New developments in areas not historically seen as hot apartment markets are also seeing lease-up velocity well beyond owners’ expectations.

Diana Pittro, executive vice president of RMK Management Corp., said a 236-unit apartment property it leases and manages in St. Francis, Wisconsin, finished in April. The property, 42 Hundred on the Lake, is currently 72% occupied and 82% leased.

Pittro said about only about half of the rental concessions it had budgeted for have been used, and the property’s pro forma is about three months ahead of where it was projected to be.

Demand is coming from former homeowners who want to rent an upscale home by Lake Michigan, as well as people who had been living in downtown Milwaukee, about 5 miles away, but sought more space, Pittro said.

Navi Sandhu, vice president of finance and development at Fifield Cos., said the firm will be breaking ground soon on an apartment project in the Ojus neighborhood of Aventura, Florida. Since closing on the land in April, Fifield has been tracking rent growth at five comparable properties within 3 miles of where it’ll develop. Those properties have seen, on average, a 20% spike in rents in the past five months.

Sandhu said similar rent-growth stories are playing out in other markets Fifield develops in: Phoenix, Dallas and Denver, to a somewhat lesser extent.

“This is certainly more extreme than we typically see,” Sandhu said. But, she continued, construction costs are up anywhere 5% to 20%.

Pittro and others say demand seems to be equally high for urban and suburban apartments.

Ben Creamer, co-founder and managing broker at Downtown Apartment Co., said he’s seeing stiff competition for units in downtown Chicago, where he’s based. It’s a stark contrast to 2020, when Creamer said he had never seen pricing as low as it had been since DAC launched in 2009.

Studios in Class A buildings were available for $1,100 per month late last year, Creamer said. Today, those same units are fetching around $2,000.

“There’s a big demand to be close to various restaurants, parks, etc., (and) even if people aren’t in the office quite yet, there’s a plan for when they’re going, and being…