MARKET SNAPSHOT
$957 3Q 2024
96.2% 3Q 2024
168 [YTD: 441]
3.2% 3Q 2024
+10 BASIS POINTS
209 [YTD: 548]
Rental demand has maintained a positive trajectory in 2024 with net absorption reaching 441 units through the first three quarters. At this pace, net absorption is positioned to offset new supply added over the same period.
The development pipeline is contracting rapidly, with new construction starts totaling just 215 year to date and none in the third quarter. This slowdown points to a continued decline in future deliveries.
Occupancy rates remain stable and above the national average, supporting accelerated rent growth. Over the past year, average rents rose by 3.2%, outpacing the U.S. benchmark of 1%. Notably, newer high-end properties saw a roughly 5% increase in rents.
Rental demand in the Springfield market—as measured by net absorption—has surged since the beginning of 2024, spiking 240% between the first and second quarters of the year. While absorptions declined slightly to 168 units in the third quarter, this figure remains above the ten-year average of around 100 units and represents a 115% year-over-year increase. Furthermore, net unit absorptions are on track to outpace new completions in 2024, which has not occurred since 2021. This strong demand has sustained high occupancy rates and steady rent growth throughout the market.
Notably, renter demand was strongest in the Greater Greene County submarket, which includes all county lands outside of Springfield and accounted for nearly half of all units absorbed in the metro area over the past year. Christian County and Southeast Springfield followed closely, each representing around 20% of recent absorptions.
After reaching an all-time high in early 2023, Springfield’s apartment development pipeline has steadily declined. The number of units under construction peaked at roughly 1,200 in the first quarter of 2023 but has since dropped to 360 units in the current quarter, marking a 70% decrease and the lowest level since 2019. Although deliveries rose from about 100 to 200 between Q2 and Q3 2024, they are expected to decline rapidly as new groundbreakings have slowed. With only 1.4% of the market’s inventory currently under construction—compared to the national average of 3.5%—the risk of oversupply remains low.
Greater Greene County accounted for the largest share of units delivered over the past year, with Christian County contributing about one-third of the total. Additionally, 60% of the units under construction in the metro area are in the Greater Greene County submarket, primarily due to the Stone Creek Falls development. The initial phases of this 1,400-unit, multi-phase project are underway just southeast of Springfield.
The Springfield market continues to experience above-average occupancy rates, with the overall stabilized rate holding steady between 96.1% and 96.3% over the past six quarters. This consistency places Springfield among the top metro areas in the country for average occupancy. It has remained stable despite the sizable number of recent deliveries, indicating that there is ample pent-up demand to absorb the new supply as soon as it comes online. The metro area’s expanding population and elevated economic activity are primary drivers of this pent-up demand.
Stabilized occupancy rates were fairly consistent across nearly all submarkets in Springfield. Although Central Springfield underperformed somewhat with a stabilized rate of 92.7%, all other submarkets had average occupancy ranging from 96.0% to 98.5%, above the national benchmark (93.6%). All product classes in the region have outperformed the national average, with aggregate occupancy rates starting at 94.6% for new upper-tier properties and climbing to 95.9% and 96.7% for lower- and mid-tier developments, respectively.
Springfield is a more affordable market, with average rents around $960 in the most recent quarter, comparable to other Midwest cities like Wichita and Evansville. Its below-average vacancy rate has contributed to faster rent growth. Over the past year, effective rents in Springfield increased by 3.2%, compared to just 0.9% nationally. With rent growth reaching 25.9% over the past five years—significantly higher than the national average of 18.6%—the Springfield market has become highly attractive to investors. Additionally, upper-tier properties had annual rent growth of 4.8% in the third quarter of 2024, despite facing new competition, while mid- and lower-tier properties saw average increases of 2.8% and 4.0%, respectively.
Springfield presents a diverse range of rental rates. In Southwest Springfield, the average rent is approximately $1,030, with an annual growth rate of 4.7%. This area is characterized by dense development, a strong retail presence and contains Springfield’s Medical Mile, a significant employment center. In contrast, Polk and Dallas Counties, located in the northern and more rural regions of the market, offer average asking rents below $600 per month. Notably, Polk County is the only submarket to report rent growth below the national average, while Greater Greene County still experienced a 3.2% annual increase despite its substantial new supply.
The regional economy remains strong, bolstered by a thriving healthcare sector, a significant tourism industry, and multiple higher-education institutions that contribute to a sizable local student population of over 40,000. As of August 2024, the most recent data available, total nonfarm employment has increased by 2.0% year-over-year, translating to an addition of 4,600 jobs. The sectors experiencing the most significant growth include education and healthcare, which saw an impressive annual increase of 8.2%, followed by leisure and hospitality at 3.8%. The metro area’s current unemployment rate stands at 3.4%, which is 60 basis points higher than in August 2023 but a full percentage point below the national average. Additionally, it is only 20 basis points above its pre-pandemic level for the same month.
August 2024 ANNUAL JOBS CREATED
AUGUST 2024 EMPLOYMENT GROWTH
AUGUST 2024 Unemployment rate
4.2% us August rate
Nominal Change
from August 2023
to August 2024: 6,700
Percent Change: 0.0%
Nominal Change
from August 2023
to August 2024: 3,700
Percent Change: 8.2%
Nominal Change
from August 2023
to August 2024: 1,100
Percent Change: 2.1%
Nominal Change
from August 2023
to August 2024: 900
Percent Change: 3.8%
Nominal Change
from August 2023
to August 2024: 200
Percent Change: 1.0%
| Sector | Nominal Change from August 2023 to August 2024 | Percent Change |
|---|---|---|
| Mining, Logging, and Construction | 6,700 | 0.0% |
| Education and Health Services | 3,700 | 8.2% |
| Trade, Transportation, and Utilities | 1,100 | 2.1% |
| Leisure and Hospitality | 900 | 3.8% |
| Manufacturing | 200 | 1.0% |
| Government | 100 | 0.4% |
| Financial Activities | -200 | -1.6% |
| Other Services | -200 | -2.0% |
| Information | -200 | -6.3% |
| Professional and Business Services | -800 | -3.1% |
The City of Springfield has adopted a redevelopment plan for Lake Springfield, aiming to transform the area into a nature-themed tourism district expected to attract over 800,000 visitors annually.
Renew Jordan Creek is a transformative project to restore the historic Jordan Creek as it flows through the heart of downtown Springfield.
Walmart is constructing a major pharmaceutical processing facility near James River Freeway and Route MM. This warehouse and distribution center will serve as one of the Bentonville-based company’s primary ‘Central Fill’ pharmacy facilities.
Demand in the Springfield rental market is strong and only expected to become stronger in the short-term. Absorptions are forecasted to remain stable through 2025, while the construction pipeline continues to decline, and deliveries drop to an average of around 90 units per quarter. These trends, along with the ongoing population and economic growth in the metro area, will help maintain a consistently high average occupancy rate, above the national benchmark, which will support greater rent growth. According to the latest forecast, annual rent growth is projected to re-accelerate to a level near 4% by the end of 2024, increasing to 5% by mid-2025. Overall, Springfield will remain one of the top-performing metro areas in the country in nearly all performance metrics.
Sources: Costar; ESRI; U.S. Census Bureau; Yardi Matrix; U.S. Bureau of Labor Statistics
