KANSAS CITY, MISSOURI (September 6, 2022) – Jeff Lamott, managing director of Northmarq’s Kansas City investment sales office, shared his insights on what’s fueling the Midwest multifamily market’s performance and predictions for the remaining year in a recently published story by Multi-Housing News.
The U.S. multifamily market has seen record-breaking rent growth so far this year, backed by correspondingly high demand. The currently volatile state of the economy—with rising inflation and escalating interest rates—will most likely start to take its toll on the sector’s high-paced expansion soon.
But the Midwest multifamily market poses some distinct advantages compared to other U.S. regions. The lack of excess supply has kept vacancy rates stable in all the Midwest’s major cities, according to a recent Northmarq report. And despite the slow start in 2022, experts expect an acceleration of construction starts in the second half of the year.
MHN: How did the Midwest multifamily market fare in the first half of 2022?
Lamott: New deliveries got off to a slow start in the first half of the year in the Midwest, due to prolonged challenges in supply chains and shortage of skilled trades to complete projects. Year-over-year, rent growth reached about 12 percent in the Midwest, with an average of 2.5 percent growth in the first quarter.
Sale prices on a per-unit basis hit all-time highs with the continued low interest rates, fueled by record-high capital competing for Midwest multifamily investments. Strong competition from private equity and national syndicators looking to deploy capital in the Midwest was white hot due to getting priced out of the coastal and gateway markets.