More Promising Midwest Multifamily News

The Midwest region of the United States continues to show encouraging signs within the 2023-24 time period, with an outperform rating relative to national averages in both rent growth, retention and occupancy rates.  Multifamily Midwest occupancy is up 50 basis points (ie: .5%) above the U.S. average, while year-over-year rent growth has demonstrated a 280 basis point (ie: 2.8%) rise.  The Midwest is also tracking up for average retention rate by 240 basis points (ie: 2.4%) and attractively down for average new apartment construction by 220 basis points (ie: 2.2%) compared to national averages.  While not as susceptible to volatile market swings, this current combination of lowered supply relative to a decreased demand makes the Midwest an attractive option for multifamily investors. 

Part of the problem for areas outside the Midwest in areas such as the Sun Belt has been fueled by an oversupply of inventory, leading to declining rents, adding to current distress which has yet to show signs of abating.  At present, over 50% of new apartment completions scheduled for 2024 are located in the South, while none of the “slower and steadier” markets of the Midwest are rated in the top 10 for supply deliveries.  Due to strong current performance, the Midwest continues to attract increased interest from investors.  Larger markets such as Columbus, Indianapolis, Kansas City and parts of Chicago are doing well enough to warrant further attention from potential buyers.  Additionally, smaller areas such as Grand Rapids, Madison, Des Moines and Sioux Falls are beginning to emerge as potential targets.

 In summary, the Midwest’s strong current performance provides an appealing option for multifamily investors seeking a lower level of risk for acquiring properties that will perform more reliably over time in today’s uncertain economy.