by Dan Rafter
Employers added more than 147,000 jobs from July through September in the Indianapolis market. That’s good news for apartment owners and developers: These jobs are drawing new people to the region, and these new residents need housing.
Often? That housing comes in the form of rental apartments.
This is one of the main reasons for the continuing strength of the multifamily market in Indianapolis, according to the latest research from Marcus & Millichap. The company’s fourth quarter market report said that tenants in the fourth quarter absorbed the largest supply of new apartments in Indianapolis in two years. This has kept the vacancy level in this sector at its lowest level since 2000.
And here’s the best news of all: Indianapolis is far from the only Midwest city enjoying low vacancy rates and higher rents in the apartment sector. Marcus & Millichap recently released data on Midwest markets from Milwaukee to Minneapolis, and the one common element? All of these cities are enjoying a booming apartment market.
In Indianapolis, the multi-tenant vacancy rate will end 2016 at 5.4 percent, according to Marcus & Millichap. That’s down 150 basis points from the same quarter in 2015. Rents here climbed 4.5 percent in 2016 to an average of $821 a month. That sets a new local high, according to Marcus & Millichap.
Builders were busy here, too. Marcus & Millichap reported that developers were on track to bring 2,780 new apartment rentals into service in 2016, with downtown Indianapolis and Carmel, Indiana, scheduled to receive the biggest portion of the new aparment units.
That’s just one market doing well. What about Milwaukee? Marcus & Millichap reported that the average effective apartment rent in this market rose 4.1 percent in 2016 to $1,005 a month. That makes the fifth consecutive year for apartment rent growth in the Milwaukee market.
In Minneapolis/St. Paul, the apartment vacancy rate fell 70 basis points in 2016 to 2.2 percent. That is one of the lowest apartment vacancy rates among major U.S. metropolitan areas. At the same time, the average effective rent is expected to soar 5.7 percent by the end of the year for an average of $1,161 a month, Marcus & Millichap said.
Marcus & Millichap reported that apartment vacancy rates fell 10 basis points in 2016 in Detroit to 2.6 percent. This happened as net absorption reached nearly 2,650 units in the Detroit marketplace this year. Marcus & Millichap says that effective apartment rents will have jumped 5.7 percent to an average of $910 a month during the year in the Detroit market. That is the highest growth rate in Detroit-area apartment rents since 2012.
What about in the biggest Midwest market? Marcus & Millichap reported that the apartment vacancy rate in the Chicago market fell 10 basis points this year, reaching 3.7 percent. Rents here will increase 5.4 percent during the year to $1,380 a month, according to Marcus & Millichap’s research.