Some Small Lower Midwest Markets Doing Well
While the Lower Midwest markets tend to follow the standard regional patterns of slow and steady growth, there are some small markets that buck that trend.
Most Lower Midwest markets are seeing improved performance recently, due to the confluence of pandemic-related factors that have benefitted apartment markets nationwide. Despite the improvement, however, most markets such as Kansas City and St. Louis continue to trail national averages. However, there are several markets in the region that are significantly outperforming.
Sizable demand for new apartments pushed the occupancy rate in Fayetteville-Springdale-Rogers to 98.2% in September, which was well ahead of the national average. Occupancy in Fayetteville-Springdale-Rogers climbed a considerable 210 basis points (bps) in the past year, making this market a leader for this measure in the Lower Midwest region.
Average effective asking rents climbed 8.4% in Fayetteville-Springdale-Rogers in the year-ending September. While that growth lags the national norm, it was still well ahead of what this market typically sees. In the past five years, annual rent growth has averaged closer to 2.7%. Among product class, rent growth levels were elevated across the board in the past year, but the luxury Class A product saw prices surge 14.6%.
Demand for apartments consistently outpaces supply in Springfield, an environment that keeps occupancy here relatively strong. In the past year, however, occupancy in this already tight market hiked up 80 bps, pushed occupancy to 98.3% in September. This was one of the strongest occupancy showings nationwide and well ahead of the market’s five-year average of 97.1%.
Effective rents climbed 10.1% annually in Springfield, the highest year-over-year increase on record for this market, despite being a few ticks behind the national average. This recent price increase was almost twice as much as the national average for Springfield, which was closer to 3.7%.
A well-diversified economy rooted in the state government and the University of Nebraska keep demand strong in Lincoln. New supply has been elevated here recently, but the market has absorbed it relatively well. As of September, occupancy here was at 97.3%, up 130 bps in the past year.
Lincoln is the most expensive among the small markets in the Lower Midwest region, with rents hitting close to $980. However, effective asking rents climbed 4.6% over the past year, one of the lowest readings among the Lower Midwest markets. However, that was still well ahead of this market’s five-year average of 2.4%.
For more information on apartment markets in the Lower Midwest, including forecasts and coverage for major metros, watch the webcast Market Intelligence: Lower Midwest Region Update.