This paper empirically analyzes the relation between local liquidity in rental housing markets and urban agglomeration e�ects. Using listed rent o�ers from online market platforms, I study the cross-sectional variation of rental market liquidity. Local liquidity is negatively related to the distance to nearby located urban Agglomeration centers, manifesting in a decreasing liquidity gradient. I show that Agglomeration externalities expose local rental markets to a systematic liquidity risk. Furthermore, more thinly traded rental markets o�er lower capitalization rates for investors.