January 17, 2023

Midwest Q3 Multifamily Market Insights: With supply growth modest, vacancies inch lower

Highlights:

Multifamily property performance across the Midwest region was healthy in the third quarter. While many higher-growth regions in the country posted weaker operating conditions and are facing the competitive threat of new supply, conditions in the Midwest are generally outperforming.
The average vacancy in the region inched down 10 basis points during the third quarter, reaching 4.4 percent. This followed a 30-basis point decline in the preceding quarter. Year over year, vacancy has dropped 40 basis points. Nearly every market surveyed has tightened during the past 12 months.
Asking rent growth in the Midwest totaled 8.8 percent over the past year, with markets including Omaha and Indianapolis posting double-digit percentage point increases. Many markets in the region continued to post healthy gains during the third quarter, outperforming the national average.
Investment activity in the major Midwest markets during the third quarter closely tracked levels recorded during the second quarter. Trends were mixed across markets, with some cities posting healthy increases in transaction volume, while others posted declines. The repeated rises in interest rates have impacted the investment markets throughout the region.