As the multifamily investment landscape shifts in 2024, the Midwest multifamily investment is rapidly emerging as a more stable, high-potential alternative to overheated Sunbelt markets.
While national trends raise concerns—rising vacancy rates, slowed rent growth, and saturated development pipelines—data shows that Midwest multifamily markets are quietly delivering stronger fundamentals and more risk-adjusted upside.
Midwest Rent Growth Outpaces Expectations
According to Michael Gerrity of The World Property Journal, a nationwide surge in apartment deliveries during 2023 pushed national vacancy rates above 5% and slowed overall rent growth. But the Midwest defied this slowdown.
- Midwest Rent Growth: 2.7% YOY increase in Q4 2023
- Northeast Rent Growth: 2.4% YOY
- All Other Regions: Negative rent growth
Midwestern cities have maintained lower-than-average vacancy rates—with Madison leading the pack at just 2.8%—thanks to a much more disciplined approach to new construction. This supply-demand balance sets the region apart.
Construction Pipeline Remains In Check
Unlike the South and Southwest, which are dealing with a glut of new units, Midwest metros have kept development in line with demand. Markets like Chicago, Columbus, and Cleveland are now early favorites for outperforming in 2024, according to RealPage data.
These metros benefit from:
- Growing populations
- Strong economic fundamentals
- Controlled new supply pipelines
- High occupancy rates and rent growth
This combination positions the Midwest not only as a safe haven but as an emerging growth engine in the multifamily space.
Migration Trends Strengthen Midwest Demand
Bloomberg and Bank of America data reveal a clear demographic trend: renters are leaving high-cost coastal hubs like San Francisco and Los Angeles for more affordable cities. Columbus, Ohio, led all large U.S. cities in population growth in 2023, with a 1.1% increase. Austin came in second.
Why the shift? Affordability.
Bank of America analysts found a direct relationship between median mortgage costs and population changes. As homeownership becomes less attainable in coastal cities, the Midwest offers a compelling value proposition—fueling renter demand.
“There’s a close relationship between a metropolitan area’s median mortgage payment and that area’s change of population last year.” — Bloomberg, Feb. 5, 2024
The Midwest Multifamily Investment Advantage
For multifamily investors seeking a compelling mix of stability, upside, and risk mitigation, the Midwest stands out. Here’s why:
- Affordability & Yield: Lower acquisition costs and operating expenses, with higher yields than Sunbelt counterparts.
- Economic Diversity: Cities like Columbus and Cincinnati are supported by broad-based employment drivers, helping reduce volatility.
- Demand Durability: Migration and demographic shifts are creating long-term rental demand across the region.
- Value-Add Opportunity: Controlled construction creates room for attractive value-add investments in strong neighborhoods.
Final Take on Midwest Multifamily Investment
While no investment is without risk, the data speaks clearly: Midwest multifamily investment in 2024 offers a strong risk-reward profile that outshines many better-known markets.
For investors seeking long-term growth with less exposure to overbuilt submarkets, the Midwest is no longer just a “safe bet”—it’s a smart one.
Click here to learn more about our strategy in Midwest multifamily investment.