Post on 22-Jun-2022
MARKETVIEW
Q2 2021 MULTIFAMILY © 2021 CBRE|Hubbell Commercial
MARKETVIEW SNAPSHOT - Q2 2021
Number of Apartment Homes Surveyed35,775
RENT
AverageAsking Rent$973
H1 Deliveries565
Occupancy94.7%
Units UnderConstruction1,191
PERFORMANCE HIGHLIGHTS • A strong spring leasing season paired with no new
deliveries in Q1 resulted in positive net absorption of approximately 530 units in Q2, lowering overall vacancy 150 bps to 5.3% (See Figure 1). All 8 submarkets experienced increased occupancy in Q2, most notably the Western Suburbs, which recorded approximately 330 units of positive net absorption – lowering vacancy by 200 bps to 4.4%. CBD fundamentals also saw notable improvements in Q2 as downtown vacancy fell 120 bps to 8%.
• While some use of rent concessions continues to persist in softer submarkets, strong Q2 absorption facilitated a notable burn off, particularly throughout the CBD. A Q2 survey indicated 13 of the 36 downtown projects surveyed were offering rent concessions in the form of free rent -- down nearly 40% from Q1 levels.
• Six projects totaling 565 units delivered in Q2 – dwindling the active construction pipeline to 1,191 units. We anticipate an additional 688 units will deliver by year-end, bringing the 2021 projected total to 1,253 units – approximately 40% below the previous 5-year average of new deliveries (See Figure 2).
• Hubbell Realty’s latest project “Level” (114 units) in the Bridge District neighborhood of the East Village was the only new project to break ground in Q2. We anticipate this will be the only market rate project to deliver in the CBD in 2022 – representing a healthy pullback from the previous 5-year average of 580 annual CBD deliveries.
• Sales volume totaled $162M across 79 deals in the first half (H1) of 2021, up 73% in total volume and 37% in number of deals year-over-year (See Figure 8). Greater Des Moines’ strong underlying fundamentals continue to attract national capital as all three of the quarters top transactions were new-to-market buyers. We expect investment activity will remain robust in the second half of the year due to strengthening market performance, sustained investor appetite and new buyers coming into the market. We anticipate 2020’s record sales volume of $257M will be eclipsed as a result (See Figure 3).
MOVING FORWARDSustainable levels of upcoming new supply, widespread vaccinations, an improving economy and a return of office workers will all contribute to further multifamily market improvement for the balance of the year. Steady absorption gains should encourage continued concession burn-off, allowing for restored economic occupancy and effective rent growth over the next two quarters.
Strong Spring Leasing Drives Q2 Absorption Gains
Figure 1: Overall Vacancy Trend & Deliveries
248
199
72
565
0
565
7.3%
6.8% 6.7%6.6%
6.8%
5.30%
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
7.0%
7.5%
8.0%
0
100
200
300
400
500
600
Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021
Unit Deliveries Overall Vacancy
Figure 2: Greater Des Moines Units Delivered/Projected
2,350 2,317
1,0841,253
0
500
1,000
1,500
2,000
2,500
2016-2018 Avg. 2019 2020 Projected 2021
Unit Deliveries Previous 5-Year Avg.
Figure 3: Historical Sales Volume & Number of Deals
49 53
89
5866
97
79
0
20
40
60
80
100
120
$0
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
$300,000,000
2015 2016 2017 2018 2019 2020 H1 2021
Sales Volume # of Deals
Q2 2021 MULTIFAMILY © 2021 CBRE|Hubbell Commercial
MARKETVIEW DES MOINES MULTIFAMILYMARKETVIEW DES MOINES MULTIFAMILY
RECENT TRANSACTIONS
Submarket Units Vacancy Average Rent Per Unit
Average Rent Per SF
Units Under Construction Vacancy by Unit Type Average Rent by Unit Type
Studio 1-Bed 2-Bed 3-Bed Studio 1-Bed 2-Bed 3-Bed
East 1,226 4.3% $768 $0.90 140 6.40% 5.10% 2.20% 7.00% $529 $571 $768 $1,021
South 4,590 5.9% $807 $0.96 0 7.00% 4.80% 7.00% 3.90% $577 $713 $816 $1,018
West 3,268 5.1% $824 $1.12 0 4.30% 5.10% 6.10% 8.00% $628 $764 $915 $1,298
CBD 4,277 8.0% $1,150 $1.47 185 7.90% 7.90% 8.60% 5.90% $845 $1,040 $1,410 $1,937
Western Suburbs 16,962 4.4% $1,019 $1.08 329 4.50% 4.30% 4.90% 3.20% $830 $905 $1,027 $1,341
Subtotal/Average - Greater Des Moines 30,323 5.2% $976 $1.11 654 5.20% 5.10% 5.50% 3.50% $782 $878 $989 $1,301
Altoona 1,304 3.5% $1,094 $1.13 237 3.40% 1.90% 4.30% 2.80% $608 $972 $1,123 $1,250
Ankeny 3,638 6.7% $1,027 $1.01 300 7.10% 8.00% 7.90% 3.70% $803 $897 $1,098 $1,320
Indianola 510 6.9% $750 $0.80 0 8.70% 9.40% 6.50% 4.00% $550 $610 $850 $920
Total/Average -- All Units Surveyed 35,775 5.3% $973 $1.08 1,191 5.30% 5.50% 5.70% 3.10% $782 $872 $995 $1,240
City Rent $/SF Vacancy Units Under Construction
West Des Moines $1,014 $1.08 4.50% 140
Waukee $1,196 $1.13 5.30% 189
Urbandale/Clive $847 $1.00 3.20% 0
Grimes/Johnston $1,066 $1.12 5.00% 0
Western Suburbs $1,019 $1.08 4.40% 329
FIGURE 5: WESTERN SUBURBS FUNDAMENTALS
Nbhd Rent $/SF VacancyUnits Under Construction
Downtown Core $1,147 $1.48 7.40% 0
South of MLK $1,228 $1.47 10.00% 41
East Village $1,153 $1.55 8.10% 114
West Downtown $918 $1.27 4.10% 30
CBD Overall $1,150 $1.47 8.00% 185
FIGURE 6: CBD FUNDAMENTALS
By Year 1960 - 1979 1980 - 1999 2000 - 2019
Unit Type Rent $/SF Vacancy Rent $/SF Vacancy Rent $/SF Vacancy
Studio $675 $1.50 5.00% $711 $1.49 5.70% $906 $1.59 6.60%
1-Bed $723 $1.07 5.60% $796 $1.18 4.20% $1,014 $1.35 5.50%
2-Bed $794 $0.91 5.80% $881 $0.96 3.90% $1,277 $1.15 5.90%
3-Bed $1,007 $0.88 5.60% $935 $0.75 1.50% $1,434 $1.05 3.30%
Overall $767 $0.97 5.60% $863 $0.97 3.70% $1,190 $1.20 5.30%
FIGURE 7: GREATER DES MOINES FUNDAMENTALS BY YEAR BUILT
Deal Size # of Deals Sales Volume
H1 2020 H1 2021 H1 2020 H1 2021
Less than $1M 41 60 $12,628,050 $19,663,950
$1M - $5M 7 11 $15,171,000 $33,778,600
$5M - $10M 2 4 $16,260,710 $28,719,000
$10M+ 0 4 $0 $79,913,360
Total 50 79 $44,059,760 $162,074,910
FIGURE 8: TRANSACTION DIVERSITY YOY
FIGURE 4: GREATER DES MOINES FUNDAMENTALS
HICKMAN FLATS WILLOW PARK & THE RIDGES PORTFOLIO WHITE OAKS
City Des Moines Des Moines Johnston
Sale Date June, 2021 June, 2021 June, 2021
# of Properties 1 2 1
# of Units 203 360 88
Price $8,729,000 $18,300,000 $11,913,360
Price/Unit $43,000 $50,833 $135,379
Q2 2021 MULTIFAMILY © 2021 CBRE|Hubbell Commercial
MARKETVIEW DES MOINES MULTIFAMILYMARKETVIEW DES MOINES MULTIFAMILY
Under Construction Address Project Developer Submarket Units Under
ConstructionTotal Unitsof Project
ExpectedDelivery
1 1435 SW 11th St, Ankeny, IA Chalet at Prairie Trail Townhomes Phase II Caliber Ankeny 52 104 Q3 - Q4, 2021
2 1335 SW Merchant St, Ankeny, IA District Lofts Caliber Ankeny 48 48 Q3,2021
3 NE Otterview Cir & NE 36th St, Ankeny The Standard at 36th Caliber Ankeny 200 200 2022
4 1490 34th Ave SW, Altoona The Emory Phase II Haverkamp Altoona 75 300 Q3, 2021
5 1401 Adventureland Dr NW, Altoona Blue Ridge Commons Phase I Signature Companies Altoona 162 324 Q4, 2021
6 19th & Crocker St, Des Moines, IA Bricktop Lofts Caliber CBD 30 30 Q4, 2021
7 12th and Tuttle Street, Des Moines, IA Linc III Hubbell CBD 41 45 Q3, 2021
8 E 4th & E 2nd St, Des Moines, IA Level Apartments Hubbell CBD 114 114 2022
9 6901 Martha L Miller Dr, Pleasant Hill, IA Rising Ridge Knapp East 140 140 Q1,2022
10 1260 S Jordan Creek Pky, West Des Moines, IA Strathmore Apartment Homes Phase III Edward Rose & Sons Western Suburbs 140 528 Q3 - Q4, 2021
11 SE University Ave & SE LA Grant Parkway, Waukee, IA Centennial Crossing Townhomes Phase I & II Hubbell Western Suburbs 129 129 2021-2022
12 NE Horizon Dr & NE Westgate Dr, Waukee, IA Bricktowne at Prairie Crossing Phase I Jensen Group Western Suburbs 60 300 Q3, 2021
Potential Starts Address Project Developer Submarket Expected
Start Proposed
Units Potential Delivery
1 Adventureland Dr, Altoona, IA Blue Ridge Commons Phase II Signature Companies Altoona 2022 162 2023
2 SW Elm St - Prairie Trail The Sterling North Phase I SB Communities Ankeny Q3,2021 200 2022-2023
3 1490 34th Ave SW, Altoona The Emory Phase III & IIII Haverkamp Altoona 2021-2022 150 2022-2023
4 415 SW 11th St, Des Moines, IA The Nexus Phase II Sherman Associates CBD Q4,2021 175 2023
5 E 6th St & Walnut St, Des Moines, IA The Lab Heart of America Group CBD TBD 110 2023-2024
6 NW Sunrise Dr & NW 10th St, Waukee Stratford Pointe Dan Dolan Homes Western Suburbs Q4,2021 149 2022-2023
7 Grand Prairie Pkwy & SE Encompass Dr, Waukee Kettlestone Apartments John Fischer Western Suburbs 2022 87 2023
8 SWC of Jordan Creek Pkwy & Ashworth Rd, WDM TBA Great Lakes Capital Western Suburbs Q4,2021 199 2022-2023
9 S 88th St & EP True Pkwy, West Des Moines 88th Street Lofts TWG Western Suburbs Q4,2021 49 2022
10 1260 S Jordan Creek Pky, West Des Moines, IA Strathmore Apartment Homes Phase IIII+ Edward Rose & Sons Western Suburbs 2022-2023 283 2022-2024
11 NE Horizon Dr & NE Westgate Dr, Waukee, IA Bricktowne at Prairie Crossing Phase II Jensen Group Western Suburbs 2021-2022 120 2022-2023
Lease Up Address Project Developer Submarket Units in Lease-Up Total Units of
ProjectDelivered
1 1490 34th Ave SW, Altoona The Emory Phase I Haverkamp Altoona 75 300 Q2,2021
2 401 SE 6th St, Des Moines, IA Connolly Lofts Newbury Development CBD 57 57 Q2,2021
3 200 SW 11th St, Des Moines, IA Linc Phase II Hubbell CBD 142 227 Q2,2021
4 2415 Paine St, Bondurant, IA Parkside Apartments Phase II Larson Development East 90 120 Q2,2021
5 935 SE Silkwood Ln, Grimes, IA The Reserve at Destination Pointe Phase II Edward Rose & Sons Western Suburbs 96 384 Q4,2020
6 1704 NE Gateway Ct, Grimes, IA Ascend at Heritage Phase II D.R. Horton Western Suburbs 110 323 Q4,2020
7 175 NW Common Pl, Waukee, IA The Commons at Greenway Park Phase II Llyod Western Suburbs 81 162 Q2,2021
8 731 NE Venture Dr, Waukee Bricktowne at Prairie Crossing Phase I Jensen Group Western Suburbs 120 300 Q2,2021
Total Units Under Construction Potential Starts (Units)
Western Suburbs 329 937
CBD 185 285
Ankeny 300 200
Altoona 237 312
Greater DSM 1191 1684
MARKETVIEW DES MOINES MULTIFAMILY
2021 - Hubbell Commercial Brokers, L.C., d/b/a CBRE|Hubbell Commercial and Commercial Appraisers, Inc. The information contained herein has been obtained from sources believed reliable. While we do not doubt its accuracy, we make no guarantee, warranty or representation, either expressed or implied, as to its accuracy or completeness.
Population692,292 (2019)
Unemployment Rate3.1%
Sources: US Bureau of Labor Statistics
GREATER DES MOINES ECONOMIC DATA
Population Growth: 2010 - 2018
Employment Growth: July 2018-July 2019
0.4% 0.6%1.3%
6.7%
8.4% 8.9%
15.1%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
Chicago St.Louis Milwaukee Kansas City Minneapolis Omaha DSM
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PrincipalPark
Iowa EventsCenter
BotanicalCenter
East Village
Western Gateway Park
801 Grand Civic
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State Historical
Museum
Court Avenue
District
Downtown - North-235, South-MLK, East-Des Moines River, West-15th St
East Village - North-235, South-MLK, East- E 14th St, West-Des Moines River
South of MLK - North-MLK, South-Raccoon River*, East- SE 14th st, West-MLK
West of Downtown - North-235, South-MLK, East-15th St, West-MLK
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CARLISLE
NORWALKCUMMING
URBANDALE
DES MOINES
CLIVE
WESTDES MOINES
WARRENCOUNTY
MADISONCOUNTY
WAUKEE
JOHNSTONGRIMES
BONDURANT
ALTOONA
PLEASANTHILL
ANKENY
POLKCOUNTY
DALLASCOUNTY
WINDSORHEIGHTS
CBD
SOUTH
NENW
WESTSUBURBS
Sources: US Bureau of Labor Statistics
Sources: US Bureau of Labor Statistics Sources: US Bureau of Labor Statistics
Metro
CBD
Sources: CoStar Group, Polk County Assessor, Dallas County Assessor, Greater Des Moines Partnership, Bureau of Economic Analysis and US Bureau of Labor Statistics