With its luxurious waterfront neighborhoods, many Hampton Roads residents may think surely Virginia Beach has the region’s highest rents.

But nearby Chesapeake actually has the highest average rent of anywhere in Hampton Roads – and has for at least the last six months, according to data from nonprofit City Work.

“Chesapeake in the last couple of months, really since the beginning of the year, has really seen affordability pretty much evaporate,” said Alex Fella, the director of City Work and an anthropology professor at Christopher Newport University. 

In October, the most recent month for which City Work has published data, the average rent in Chesapeake was $2,160. Neighboring Virginia Beach was just over $2,000. The next most expensive was suburban Suffolk, with a steep dropoff further down the list of the seven cities.

Why is Chesapeake, this sprawling city where suburbs have steadily encroached on farmland in the last several decades, the most expensive city in the region?

Fella said “cities are complex organisms” and it’s surely a confluence of several variables.

But there’s one factor in particular that Fella follows.

“You're seeing two or three, maybe four neighborhoods in Chesapeake that have apartment buildings that are seeing their rents really increase due to either acquisition by financial firms or construction that was completed by financial firms,” Fella said.

Traditional landlords have given way to large conglomerates and hedge funds that are interested in owning properties as an investment vehicle. The phenomenon - known as financialization - has been associated with rising rents nationwide.

Fella also pointed out that rental prices aren’t dropping considerably in areas with a lot of new apartments going up, like Chesapeake’s Greenbrier area, which flies in the face of supply-and-demand theories of housing pricing.

In part, that’s because the most profitable thing for developers to construct is high-rent apartments and condos.

“Most developers of multifamily aren’t building Class C, Class B apartment complexes anymore. They're building Class-A, luxury multifamily,” Fella said.

Fella said Virginia Beach has the most expensive single apartment complex - the Pearl at Marina Shores. But the city’s rental prices are averaged out by also having more affordable housing available than Chesapeake.

He noted about two-thirds of housing in Chesapeake is single-family homes compared to about half of the housing in Virginia Beach.

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