By the end of 2nd quarter we will have expanded our rental coverage to every major metropolitan area and almost every minor metropolitan area. This month we will look at the northern Midwest states of Michigan, Wisconsin and Minnesota.
MICHIGAN
We are currently tracking 2800 properties in Michigan with almost 400,000 units. That ranks Michigan 10th in the states for number of units and the average of 143 units per property ranks Michigan 12th in that category. The average community is 35 years old in Michigan, landing it 16th highest in average age among the states (including District of Columbia). Michigan ranks 31st in the country with an average of $932 in Effective Rent per unit. Here’s a look at the 2 major market subdivisions that we have defined for Michigan.
Detroit
We have subdivided Detroit into 14 submarkets stretching from the Canadian border west to Lansing and north to Genesee and Lapeer counties. We are tracking 2500 properties with about 317,000 units. Of those, 1086 properties are conventional with more than 50 units. Occupancy in the central and eastern Michigan area is at an impressive 95.4%, having several submarkets higher than 96%. Recent new construction has pushed average occupancy in the downtown submarket to 77% and prices more than 20% higher than the next highest priced submarkets. Overall, effective rents are averaging $938 per unit and $1.02 per square foot.
Grand Rapids/Kalamazoo/Battle Creek
Occupancy rates are high in Western Michigan as well, though prices are substantially lower. There are 911 communities in the area with almost 90,000 unite. Of those, about 60,000 units are in conventional properties with more than 50 units. The eight submarkets in the southwestern Michigan area are averaging 95.6% occupancy with no submarkets averaging less than 94% occupancy. Average effective rent in the region is $768 per unit and $0.94 per square foot. Grand Rapids is getting the highest rents in the region with an average of $1.02 per square foot.
WISCONSIN
We are currently tracking almost 180,000 units in 2640 properties in Wisconsin for an average of 68 units per property – well below the US state average. Only Montana, South Dakota, Vermont and Maine have fewer units per property. Even if you only count the properties built since 2010, the average only goes up to 76 units per property. Wisconsin ranks 20th highest in average age per property, which is 34 years old. It also ranks right in the middle at 25th among states with an average effective rent of $1018 per unit.
We have delineated 2 metro areas in Wisconsin for further review: Milwaukee and Madison.
Milwaukee
Milwaukee has 106,000 units in 1738 properties, and 60,000 of those units are in conventional properties with more than 50 units. The combined 12 submarkets in the greater Milwaukee are averaging a solid 95% occupancy. Only the Kenosha submarket is under 90%. Downtown Milwaukee is averaging more than 94% occupancy while still pulling in rents that are well north of 20% higher than the average price for the surrounding areas.
Madison
Madison has almost 60,000 multifamily units in just over 1000 properties for an average of only 59 units per property. Nearly 400 of those properties are conventional communities with 50 units or more. Because the average occupancy is averaging 97.6% in the conventional properties, it’s no surprise that rents in this market are the priciest in the state.
MINNESOTA
The average property in Minnesota is 37 years old, ranking it 9th in the country for oldest average age per property. There are almost 218,000 multifamily units in around 2700 communities in Minnesota, ranking it 21st among the states in unit count. The vast majority of the multifamily units are in the greater Minneapolis area, though about 30 Minnesota properties are in the Fargo, North Dakota market.
Minneapolis
The greater Minneapolis market stretches (for our purposes) from the southern Minnesota counties up to St. Cloud and into Pierce and St. Croix counties in Wisconsin. The market has 2229 properties and about 198,000 units, and about 150,000 of those units are in conventional properties with more than 50 units. Like the other markets we have touched on, the Minneapolis market is enjoying solid occupancy numbers with an average of 94.6% market-wide. Central St. Paul is down to an average of 85.1% due to new construction while central Minneapolis is faring much better with 94.2% occupancy. Overall, effective rent is at $1,159 per unit and $1.27 per sq. ft.
With the advanced age of many of the properties in these markets and the occupancy numbers comfortably in the mid-90’s, the next few quarters will be an opportune time to consider replacing the older product. Furthermore, look to see more conventional properties with modern amenities become a larger portion of the multifamily product in these markets in the next few years.
As of March 1st, 2017, ALN Apartment Data Inc. covers 111 markets in 36 states, with more markets going live each month! For a complete list of available and upcoming markets, please visit our website. If you would like additional information on the markets covered in this article or any of our other markets, call 800-643-6416 and dial extension 3, or email Sales@alndata.com.