St. Louis multifamily market booming

The multifamily market in St. Louis is experiencing a major boom. Despite the challenges posed by the pandemic and subsequent economic fallout, multifamily development is getting a lot of attention from investors.

A recent study by Newmark Zimmer, a commercial real estate investment firm, put St. Louis’ multifamily sector as 2nd in nation out of the 22 metro areas surveyed. They cited the regions high occupancy rate and overall economic resilience as promising indicators of growth and stability in the region.

Indeed, while occupancy rates dropped and rent rose in St. Louis during the pandemic, there are numerous signs pointing to a very healthy multifamily market. CBRE research reported that the area also beats out the national average for return on investment in multifamily developments. This is making the region very attractive to investors.

St. Louis is also very diverse in terms of its employment base, which gives it a good baseline level of longterm stability.

And there has been quite a bit of investment. There were $637 million in multifamily apartment complex sales. This is the third highest in the last decade. The price per unit also rose to its highest rate on record of $148,386. This is an increase of 26.3% year over year. Supply has boomed. Since 2013, there have been 14,044 new units in St. Louis with 4,491 currently under construction. A further 9,800 are in various stages of planning, although it is quite likely not all of these will ultimately be completed.

As part of larger population trends, much of this investment is coming from out of state firms. Coastal investors are pouring money into the Midwest as cultural shifts draw people away from the traditional California and Northeast corridors. For example, Miami based Monument Capital Management recently purchased a 528-unit multifamily development in Maryland Heights for $67.3 million.

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