It’s common knowledge that the multifamily market remains a hot one across the Midwest and the nation. But sometimes it helps to look at the numbers to see just how strong this commercial sector is.
Yardi recently released its July Matrix survey, and found that in the 101 markets the company covers monthly apartment rents rose to an average of $1,155 in July. That happens to be the highest this figure has ever been.
Of course, there is a debate — it’s just simmering now — starting over whether developers are bringing too many new apartment units to the nation’s largest metropolitan areas. Developers know that consumers — especially those coveted younger ones — want to live in the hearts of urban areas. So they haven’t been shy about pumping these areas with modern new apartment towers.
When, the more cautious are asking, will cities have too many new apartments and, because of this, too many vacancies?
A look at the numbers from Yardi, though, should bring some relief to even the most cautious of real estate observers: It doesn’t look like the supply of new apartment units will be outpacing the demand for them any time soon.
The most recent Yardi survey, for instance, found that on a year-over-year basis, average apartment rents jumped by 6.5 percent in July, according to Yardi. That’s a big jump, just ask anyone looking to rent in an urban area today.
Yardi singled out Minneapolis/St. Paul as one of the stronger apartment markets in the Midwest. According to the survey, average apartment rents here jumped 4 percent from July of last year to the same month this year.
But the Twin Cities were far from the only market seeing strong apartment rental growth in the July survey. Yardi reported that rents increased by less than 4 percent year-over-year in only five of the metropolitan areas that Yardi studies. Only three of the 101 metro areas saw rent growths of less than 2.8 percent during this same time.
What’s this mean? Only that developers have yet to saturate most markets with too much multifamily product. That is the fear, that Midwest cities will see too many new apartments too quickly. So far, though, the demand for new apartment units has not surpassed the supply of these units in most major Midwest markets.
There will come a time when cities across the Midwest no longer need new apartment units. But as the Yardi survey illustrates, that time hasn’t arrived yet.