Des Moines 2Q23
Multifamily Market Report

$1,139

average rent

95.3%

average occupancy rate

$99.9M

ytd sales volume

4.6%

YoY rent change

-1.6 POINT

yoy occupancy change

8 YTD

individual transactions

Supply & Demand

2Q23

152 Units

QUARTERLY DEMAND
YTD: 106

250 Units

QUARTERLY COMPLETIONS
YTD: 526

Annual Demand vs Completions

2018
1,414
1,713
2019
1,546
1,203
2020
1,068
1,400
2021
2,177
1,011
2022
774
971
2023 YTD
109
526
  • Planned
    Completions
  • Pre-Planned
    Demand

Demand Trends

  • In Q2 2023, the Des Moines apartment market demonstrated its resilience by returning to positive absorption. Renters absorbed over 152 net units in the quarter.

 

  • While this was slightly below the seasonal average, it nonetheless underscored the ongoing strength of the Des Moines apartment market.

Completion Trends

  • In Q2 2023, the apartment inventory in Des Moines expanded by 250 units. with 106 in West Des added in the Moines/Dallas County submarket and 104 in Northeast Des Moines/Ankeny submarket.

 

  • Over the last four quarters, Des Moines’s apartment inventory grew by 928 units, with 67% of the new units located in the West Des Moines/Dallas County submarket.

Demand Outlook

  • Demand in Des Moines is expected to continue rebounding over the next four quarters, with a projected annual absorption of 1,583 units by 2Q 2024.

 

  • The West Des Moines/Dallas County submarket is predicted to experience the most pronounced demand, with a forecasted absorption of 964 units over the next four quarters.

New Supply Outlook

  • The Des Moines apartment market is slated for further inventory expansion over the next four quarters, with an expected increase of 1,583 units.

 

  • In line with the elevated demand, the West Des Moines/Dallas County Submarket will receive the majority of new units – 930 are slated for delivery here, over the next four quarters.

Occupancy & Rent Trends

RENT VS OWN
MONTHLY PAYMENT

$1,869

Average Monthly Mortgage Payment

$1,139

Average Monthly Rent

Occupancy trends

A mismatch between demand and the number of apartment completions led to a 160-basis point drop in occupancy to 95.3% in the year ending Q2 2022. The decline has slowed on a quarterly basis, with only a 20-basis point drop, and a return to normal demand levels over the next four quarters is expected to reverse the trend. Despite the decline, the current occupancy rate remains above the five-year average of 94.8%. Submarket occupancy levels showed little variation, ranging from 94.0% in South Des Moines/Warren County to 95.9% in Northeast Des Moines/Ankeny. Similarly, product class variances were minimal, with Class A and C assets reporting average occupancy at 95.3%, and Class B slightly higher at 95.4%.

RENTAL TRENDS

Mirroring trends seen in nearly all apartment markets nationwide, the growth rate of rent prices in Des Moines easily surpassed the national and five-year local averages in Q2 2023. Despite a slight deceleration, Des Moines saw a healthy annual rental growth rate of 4.5%, exceeding the national rate of 2.4% for the same period and the local five-year average of 2.5%. Performance varied across submarkets, from a low of 1.5% in the South Des Moines/Warren County submarket to a high of 6.0% in the West Des Moines/Dallas County submarket. Class B properties experienced the largest annual increase at 6.4%, with Class A following at 5.5%, and Class C trailing at 1.4%.

Submarket Rent & Occupancy

SubmarketAverage OccupancyAnnual Occupancy ChangeAverage Monthly RentAnnual Rent Change
Northeast Des Moines/Ankeny95.9%-0.9%$1,2324.6%
Northwest Des Moines/Urbandale94.5%-1.4%$1,0713.1%
West Des Moines/Dallas County95.7%-1.9%$1,1876.0%
South Des Moines/Warren County94.0%-2.6%$8521.5%

Units by Submarket Delivering in 2023

2,314

Units Under Construction

1,583

Units UC Delivering In the Next 4 Quarters

Percentage of Units Under Construction

Northeast Des Moines / Ankeny - 782
0%
Northwest Des Moines / Urbandale - 72
0%
West Des Moines / Dallas County - 1,460
0%
South Des Moines / Warren County - 0
0%

Percentage of Units Delivering Next 4Q

Northeast Des Moines / Ankeny - 611
0%
Northwest Des Moines / Urbandale - 42
0%
West Des Moines / Dallas County - 930
0%
South Des Moines / Warren County - 0
0%

Sales Activity

Year-to-date transaction volume for multi-family properties in Des Moines, IA, in the first half of 2023 reached $99.9M, representing a year-on-year increase of 20.6%. This growth was achieved across a total of 8 individual transactions. However, despite the increase in transaction volume, the average price per unit (PPU) witnessed a decrease of 6.8% annually, standing at $129,500. This suggests a higher quantity of lower-priced units being transacted, contributing to both the increased volume and decreased PPU.

  1. Four Mile Capital
  2. BAM Capital
  3. Tricap Chicago
  1. Hubbell Realty Company
  2. Christensen Development
  3. Roers Investments

TRANSACTION VOLUME


YTD Transaction Volume


Y-O-Y Change


Individual Transaction Count


Price Per Unit


Annual Price Change

* Trailing 4Q average PPU

* Preliminary Data from RCA – Individual transaction $2.5M +

Economy

In May 2023, the Des Moines metro area displayed steady job growth, adding 10,800 new positions for a 2.8% growth rate, according to data from the Bureau of Labor Statistics (BLS). The region saw significant job gains across various sectors. The education and health services sector led the way, adding 5,200 jobs, which is an impressive growth rate of 10.0%. The government sector and the trade, transportation, and utilities sector also made significant contributions, adding 2,500 and 2,800 jobs respectively, corresponding to growth rates of 5.3% and 3.8%. In total, nonfarm employment in Des Moines stood at 394.7 thousand in May 2023. The city’s unemployment rate in May was a low 2.4%, significantly outperforming the national average of 3.4%. The diverse range of growth across sectors, coupled with the low unemployment rate, underscores the region’s economic resilience and stability.

10.8k

May Annual Jobs Created

2.8%

May 23 Employment growth

2.4%

May 23 Unemployment rate
3.4% us may rate

Top 5 Employment Sector Annual Change

education & health services

education & health services

Change from May 2022 to May 2023:
5,200

Percent Change:
10.0%

trade, transportation & utilities

trade, transportation & utilities

Change from May 2022 to May 2023:
2,800

Percent Change:
3.8%

government

government

Change from May 2022 to May 2023:
2,500

Percent Change:
5.3%

manufacturing

manufacturing

Change from May 2022 to May 2023:
800

Percent Change:
3.5%

other services

other services

Change from May 2022 to May 2023:
700

Percent Change:
5.5%

Hover over icons to view data
SectorChange from May 2022 to May 2023 Percent Change
Education and health services5,200 10.0%
Trade, transportation, and utilities2,800 3.8%
Government2,500 5.3%
Manufacturing800 3.5%
Other services700 5.5%
Leisure and hospitality400 1.1%
Professional and business services100 0.2%
Information(100)-1.6%
Mining, logging, and construction(200)-0.8%
Financial activities(1,400)-2.5%

Major Economic Developments

Downtown Stadium District

$550M Total Investment

Mix-Use 6,500 Seat Stadium, Residential, Retail & Office

West End Location

10-15 Year Buildout Timeline

Market District Mixed-Use Project

$700M Investment

Mix-Use Residential, Entertainment, Office & Retail

South of Des Moines' East Village Location

10 Year Anticipated Buildout Timeline

photo of outer space

Data Centers in Des Moines

$7B+ Total capital investment over last decade

Meta, Microsoft & Apple Companies

1,500 Total employment

$1.4B Latest investment for Apple's data center in Waukee

Market Outlook

Despite national economic fluctuations, Des Moines continues to exhibit a robust economy, highlighted by a strong job market and consistent growth. Over the next four quarters, demand is projected to return to typical levels, with an anticipated absorption of 1,905 units by 2Q 2024. This demand is expected to exceed the new supply during the same period, contributing to a projected rise in the average occupancy rate to 96.0% by next spring. Rent growth will remain steady, with an annual increase of 2.3% forecasted for 2Q 2024, which illustrates the market’s resilience. While the introduction of new supply may introduce some fluctuations, these are likely to be mitigated by solid demand and strong occupancy rates. As we move into the second half of the year, the market outlook for Des Moines remains optimistic. The city’s economy is expected to uphold its robust performance, reinforcing Des Moines as a resilient and dynamic market.

Sources: RealPage; BLS; MSCI; Des Moines Business Journal; Economic Development Corporation of Des Moines

To Gain Further Insights Into The Des Moines Market Please Reach Out To Our local Team

Image of BJ

BJ Connolly

Senior Director