Real estate investor Robert Hart pulled into the site of a 400-unit apartment community in a San Diego suburb last month, prepared to pay up for the recently completed project on a quiet residential street. A competitor from a publicly traded landlord was already there, he said. "It was on the one hand reassuring to know that we were both chasing the same opportunity," said Hart, president and chief executive of closely held TruAmerica Multifamily. "On the other hand, it reinforced my opinion that large institutional real estate investors will be chasing yield far beyond the urban core." After years of clamouring to buy the most centrally located rental buildings in major urban centres, US apartment investors are rediscovering the suburbs. Transactions for multifamily properties outside cities - often sprawling, garden-style complexes appealing more to families than urban-dwelling 20-somethings - are on the rise as an increase in construction slows rent gains in more central areas. "The urban supply was just continuing to ramp up pretty quickly," said Sean Breslin, chief operating officer of Virginia-based AvalonBay Communities, the second-largest publicly traded landlord in the US. "On a risk-adjusted basis, the suburban markets look more attractive." About 45 per cent of AvalonBay's under-construction developments are in suburban locations, while the pipeline of projects the firm has not yet started leans 75 per cent in that direction, Breslin said. Apartment owners including UDR and Essex Property Trust are also predicting growth outside major business districts. Blackstone Group, the largest private-equity investor in real estate, is building its own apartment company focused mostly on suburban areas where there hasn't been much construction, betting on a shortage of housing supply. The New York-based firm agreed in January to acquire 36 low-rise multifamily properties across the US for US$1.7 billion, according to people with knowledge of the transaction. Nationwide, purchases of apartment buildings outside the urban core climbed 8.2 per cent last year to a value of US$82.5 billion, according to New York-based property-research firm Real Capital Analytics. In Boston's metropolitan area, 95 per cent of all apartment-building sales in 2014 occurred outside the city centre, compared with 66 per cent the year before, the firm's data shows. In Seattle, the share was 85 per cent. The enchantment with the suburbs is a turnaround from just a few years ago, when buyers and developers sought safe investments in downtown rental housing, banking on demand from 18-to-34-year-olds who would be seeking to rent in urban cores once the job market recovered. Across all markets, the number of renter-occupied residences grew by two million last year, according to a January report from the US Census Bureau. "Millennials are largely attracted to city centres," said Douglas Herzbrun, global head of research at CBRE Global Investors. "Anywhere where you have a cluster of the kind of businesses that are growing today - creative and technology." Developers rushed to build multifamily buildings to capitalise on the demand, spurring a surge in supply that is now keeping a lid on rents. More than 77,000 apartment units were added across the country in the past three years, according to Axiometrics, a rental-data company. Rents in urban core markets climbed 3.5 per cent in 2014 from a year earlier. That compares with an increase of about 5 per cent in suburban areas, Axiometrics said. The company defines urban core as areas in and near the central business district of each metropolitan market. "It will be relatively more challenging for investors going forward in these core markets," said Ryan Severino, a senior economist at property-research firm Reis. "You look at the fact that rent growth in suburbs and central business districts isn't that different and you combine that with that there isn't as much development, then the suburbs are looking pretty good."