The Multifamily Advantage in the Great Plains

In today’s dynamic multifamily market, discerning investors seeking a blend of strong renter demand, affordability, and market stability are increasingly turning their focus to the Great Plains region, encompassing Oklahoma, Nebraska, and Kansas. This area presents a compelling value proposition, attracting students and remote workers relocating from larger cities in pursuit of affordable living and enhanced career opportunities. With rents remaining attractive on a national scale, there’s a consistent flow from renters. Additionally, measured construction activity ensures a balanced supply-demand dynamic, preventing oversaturation and promoting long-term market health. The region’s stability is further reinforced by the renaissance of the domestic manufacturing sector which has supported robust fundamentals, including high occupancy rates and steady rent growth. This unique combination of factors positions the Great Plains as an ideal destination for multifamily investors seeking a strategically advantageous market with lasting appeal.

Construction at a Measured Pace

As most major apartment markets across the nation grapple with surging construction activity, these secondary and tertiary markets in the Great Plains display a noticeable controlled development environment with units under construction as a percentage of total inventory below 3% for all but one market (Oklahoma City). This stands in contrast to the national average of 4.6%, as evident of potentially saturated markets in some areas. As of the start of 2024, smaller markets with inventory below 30,000 units, with the exception of Topeka, KS, have muted development pipelines.  More midsize markets are exhibiting a moderate number of units under construction. This tapered growth pattern reflects a sensible approach to meet demand while avoiding oversaturation.

Click below to view construction data
Great Plains Construction Activity
MarketInventory UnitsCurrent Number of Units Under ConstructionConstruction as % of Total Inventory4Q 2024 Forecasted Rent Growth
Enid, OK1,77700.0%2.4%
Grand Island, NE1,84400.0%3.0%
Manhattan, KS5,62600.0%3.2%
Lawton, OK6,67500.0%2.8%
Topeka, KS9,8661341.4%5.0%
Lawrence, KS12,23400.0%4.1%
Lincoln, NE32,2576502.0%2.5%
Wichita, KS35,4577302.1%2.8%
Tulsa, OK63,57817092.7%3.3%
Omaha, NE81,85724112.9%4.0%
Oklahoma City, OK97,31635073.6%3.7%
</p><h5>Source: Costar</h5>

Supply and Demand Dynamics Strikes a Delicate Balance

One of the key factors driving the appeal of the Great Plains multifamily market is the healthy balance between supply and demand. Unlike many sunbelt markets experiencing an oversupply of units, the Great Plains region has seen minimal completions in recent years. This has helped to maintain stable occupancy rates and minimize downward pressure on rents. Despite the challenges posed by the recent economic climate, the multifamily market in the region has demonstrated resilience. At the start of 2024, positive absorption was noted among six of eleven regional markets with seven markets forecasted to maintain positive absorption by 2024 year-end. Notably, smaller markets like Lawrence, KS, Grand Island, NE, and Topeka, KS exemplify the balanced dynamics of the region, presenting potential for healthy growth. This delicate balance between absorption, delivered units, and forecasted performance underscores a region poised for resilience. Investors navigating this landscape can anticipate stable rent growth and occupancy rates, fostering a positive outlook for the Great Plains multifamily market.

Steady Rent Growth and Resilient Occupancy

The current state of the multifamily market in the Great Plains region reflects stability and potential for growth. Among the key indicators are the forecasted rent growth for the fourth quarter of 2024. Occupancy rates and rent growth are critical factors for investors. Cities like Grand Island, NE (97.0% occupancy, 6.1% YTD annual rent growth) and Lawrence, KS (97.1% occupancy, 4.3% YTD annual rent growth) showcase a balance between demand and profitability.

The Great Plains region boasts impressive numbers compared to the national average. The national average YTD annual rent growth sits at 0.7%, while the eleven Great Plains markets in our analysis average 2.3%, with most exceeding the national benchmark. Similarly, the current national average occupancy rate is 93.8%, while the Great Plains markets range from 82.2% to 97.1%, with almost half of all markets exceeding the national average. Furthermore, by year end, markets like Topeka, KS (5.0%), Lawrence, KS (4.1%), and Omaha, NE (4.0%) are forecasted for robust rent growth, maintaining a lead over the national average (2.5%).

Click below to view rent growth & occupancy data
Great Plains Rent Growth & Occupancy
MarketYTD annual Rent GrowthForecasted annual 2024 Rent GrowthYTD OccupancyForecasted 2024 Occupancy
Grand Island, NE6.1%3.0%97.0%96.5%
Lawrence, KS4.3%4.1%97.1%96.8%
Tulsa, OK3.6%3.3%91.4%91.4%
Manhattan, KS3.1%3.2%94.1%94.0%
Topeka, KS2.6%5.0%91.8%91.2%
Wichita, KS2.5%2.8%92.4%91.9%
Oklahoma City, OK2.1%3.7%89.2%89.3%
Omaha, NE2.1%4.0%94.9%94.9%
Lincoln, NE1.5%2.5%96.3%96.3%
Enid, OK0.9%2.4%89.3%88.7%
Lawton, OK0.5%2.8%82.6%82.2%
</p><h5>Source: Costar</h5>

NEBRASKA Hover map points to view data

KANSAS Hover map points to view data

OKLAHOMA Hover map points to view data

Acknowledging the Affordability Appeal of the Great Plains Markets

While the Sun Belt and coastal regions boast sunshine and proximity to world class cities, their multifamily markets often face challenges with affordability. In contrast, the Great Plains stands out for its balanced market dynamics, with measured construction, healthy absorption, and consistent rent growth, all at a more affordable price point compared to the national average. This makes the Great Plains attractive to residents seeking value, such as young professionals, families, and retirees, while still offering strong investment returns due to its stability and controlled growth. This combination positions the Great Plains as a compelling alternative to the often volatile and expensive multifamily markets in other regions of the US.

Omaha: A Multifamily Magnet in the Great Plains

Omaha is quickly becoming a star in the multifamily market. Ranked 6th among the most competitive rental markets in 2023 by a recent RentCafe report, Omaha boasts a thriving scene that benefits both residents and investors. Newcomers are flocking to the city, fueling strong demand for apartments. Despite a 2.9% increase in new units, vacancies were reported to fill faster than anywhere else in the US, typically within 28 days. According to the report, each vacant apartment attracts an impressive 13 applicants, highlighting the intense competition for rental units. This surge in demand, coupled with controlled growth, positions Omaha as a compelling example of investment opportunities in the Great Plains.

Looking Ahead: A Strategic Approach for Investors

For investors traditionally fixated on the larger Midwest markets, the current dynamics across the great plains offer a compelling case for diversification. Small and mid-sized markets in Nebraska, Oklahoma, and Kansas offer a balanced supply-demand equation, acting as a buffer against larger market volatility and providing unique growth opportunities. The appeal lies in potential short-term rent gains, lower entry barriers, and growth trajectories in emerging markets.

This dual focus allows investors to capitalize on immediate upside in smaller markets, leveraging stability while positioning for eventual rebalancing and sustained growth in larger markets. Smaller markets like Enid, Grand Island, and Lawrence emphasize controlled growth for stability, while more mid-sized markets like Tulsa and Oklahoma City attract risk-tolerant investors with larger inventories and potential returns. This diversity enables tailored strategies, optimizing success across the Great Plains.