$982 2Q 2024
2.5%
89.8% 2Q 2024
-30 BASIS POINTS
774 [YTD: 1,009]
1,085 [YTD: 1,791]
QUARTERLY DEMAND
QUARTERLY COMPLETIONS
Rental demand in the Oklahoma City multifamily market surged in the second quarter of 2024, marking the highest quarterly absorption rate (774 units) since mid-2021. While supply continues to outpace demand, the gap is narrowing, providing a stabilizing effect that is slowing occupancy declines. Demand varied across submarkets in 2Q 2024, with Northwest OKC and Canadian County each absorbing over 200 units during the critical spring leasing season. Urban living remains sought after as well, with Downtown Oklahoma City experiencing a net absorption of 101 units.
The construction pipeline in Oklahoma City has remained relatively stable compared to similar markets. Year to date, construction start permits have been minimal, with only 78 permits issued. Consequently, the total number of units under construction has dropped significantly to 1,500 units as of the second quarter of 2024, down from 4,100 units just one year earlier. Canadian County holds the highest proportion of units under construction in the Oklahoma City market and is emerging as a hotspot for renters. This area, situated immediately west of Oklahoma City, is experiencing notable population growth, contributing to its increasing appeal among renters.
Demand in Oklahoma City has shown notable improvement over the past year, with overall occupancy rates stabilizing just below 90%. As the market recalibrates, we anticipate occupancy rates will tighten back to the long-term average of 91.5% within the next one to two years. Submarket dynamics highlight considerable variation in occupancy rates, however. In the rapidly growing Canadian County, the average occupancy rate is an impressive 94.6%, significantly above the metro average. In contrast, the Central OKC submarket, which tends to attract a younger demographic, has one of the lowest occupancy rates at around 85%. The Central OKC submarket, characterized by a younger and more mobile population, is experiencing increased competition from newly constructed, upscale projects in neighboring submarkets. This competition is likely diverting some renter demand and contributing to the lower occupancy rates observed in Central OKC.
Rent growth in Oklahoma City has demonstrated robust performance compared to national trends, achieving a 2.5% increase over the year ending in June 2024, placing it 11th among the top 50 multifamily markets in the country. Looking ahead, our forecast anticipates further rent growth driven by a manageable supply pipeline and steady demand dynamics. By the end of 2024 and into 2025, we expect rent growth to accelerate closer to 4%. Oklahoma City maintains affordability relative to other markets, with average rents at $982 per month, representing a 39% discount compared to the national average. Luxury properties command higher rents at $1,310 per month, while mid-range properties average around $980 per month, aligning closely with the market’s overall rental average.
Average Monthly Mortgage Payment
Average Monthly Rent
As of mid-2024, the total value of individual conventional multifamily transactions in Oklahoma City stood at approximately $75.2 million, representing a 41% decline from the same period in 2023. The number of deals also fell from 12 in the first half of 2023 to just 8 in the corresponding period of 2024. For historical context, the annual deal volume for single asset trades in Oklahoma City averaged $251 million from 2014 to 2019, indicating that only about 30% of the typical annual transaction volume has been achieved in the first half of 2024. However, with potential rate cuts on the horizon, a rebound in transaction activity may be forthcoming.
* Trailing 4Q average PPU
* Preliminary Data from RCA – Individual transaction $2.5M +
|
Under 35 Years
|
35 to 44 Years
|
45 to 54 Years
|
55 to 64 Years
|
65 to 74 Years
|
75 to 84 Years
|
85 Years & over
|
|---|---|---|---|---|---|---|
|
0.3%
|
0.3%
|
-0.3%
|
-0.4%
|
0.3%
|
0.1%
|
-0.2%
|
Oklahoma City is experiencing growth in renting across various age groups, indicating a rising demand for rental housing that caters to a diverse population. This increasing demand highlights the need for properties that are strategically located near quality school districts, shopping and dining options, and employment hubs to accommodate families. Additionally, proximity to entertainment and nightlife venues is also essential for attracting younger renters. Together, these factors underscore the importance of strategically located properties that meet the diverse needs of Oklahoma City’s expanding rental market.
As we progress further into 2024, Oklahoma City’s economic outlook is strengthening, supported by diversifying industries and robust job growth, especially in the natural resources and mining, as well as health services sectors. This economic momentum is expected to invigorate the multifamily real estate market, with rent growth projected to approach 4.0% by years end, fueled by strengthening demand. Despite a recent downturn in multifamily asset sales, investor interest remains robust, particularly among firms looking for opportunities in smaller, stable markets with more accessible entry points.
Additionally, ongoing urban development initiatives, such as the Metropolitan Area Projects (MAPS) program, continue to stimulate investment in Oklahoma City’s urban areas. These projects are enhancing the city’s attractiveness and further cementing Oklahoma City’s status as an emerging economic center in the central United States.
