Focus' Justin Pelej on Bisnow Panel: 'The Darling Of The Party': Investors Flock To Midwestern Multifamily As They Flee Struggling Asset Classes
20 June 2024
Chicago’s red-hot industrial market is cooling. Retail’s biggest brag is that now “we suck less, finally.” Office assets are struggling mightily, to put it lightly.
June 17, 2024 Ryan Wangman, Chicago
In a CRE climate featuring more ugly ducklings than Cinderellas, investors say the glass slipper fits best on Midwestern multifamily assets, which are standing out as a relative bright spot these days.
Constrained supply has led to better rent growth in Chicago and other formerly overlooked Midwestern and Northeastern cities. This is leading to a general sense of optimism from investors in the asset class, panelists said at Bisnow’s Multifamily Annual Conference Midwest on Thursday at The Ritz-Carlton Chicago.
“Most investors would look at multi as the darling of the party,” said Scott Zwilling, principal at Spirit Investment Partners. “There's been a lot of investors of other asset classes that have flooded into multi over the last three, four years.”
The Sun Belt benefited from most of the spoils in the early years after the onset of the pandemic. But now the focus has shifted north.
Four of the nation’s six strongest rental markets were in the Midwest at the end of 2023: suburban Chicago, Milwaukee, Grand Rapids, Michigan, and Omaha, Nebraska, according to a RentCafe year-end multifamily report.
Yardi Matrix projects Chicago at 2.2% rent growth in 2024, according to its summer 2024 multifamily outlook. That is a marked difference from several other once-hot metros across the country with projected rent declines, like Austin's anticipated 4.1% fall, Atlanta's 2.2% drop and Raleigh-Durham's 1.7% dip.