2024: The Year of Midwest Multifamily Real Estate?

At Midloch, we invest across the U.S. and in all types of income-producing real estate assets. But we’re based in the Midwest and many of our team members grew up in the Midwest, so it holds a special place in our hearts.

Midwest real estate also hold a special place in our investment portfolio. About 67% of our holdings based on invested equity are invested in the Midwest and about 54% are invested in multifamily, which is why we noticed this data (see chart) and were struck by it.

One of the reasons the Midwest is so appealing — year in and year out — is that most Midwestern markets don’t overheat like so many other areas. In other words, they’re not prone to hyper-growth. As a value investor, we don’t chase hyper-anything. Rather, most of our preferred Midwest markets are consistently consistent, with solid, stable demographics, supply and demand generally in balance, and some nice growth tailwinds expected over the medium term (say three, five or seven years).

This data from CoStar suggests something more: That the Midwest, generally, isn’t just resilient, but that 2024 will be the “Year of Midwest Multifamily.” By this data, asking rents in these Midwest markets are predicted to rise by a higher rate, year over year, than the national average and relative to a number of Sunbelt cities. This is for a variety of reasons, but mainly because some of the Sunbelt cities are working through pockets of oversupply.

At Midloch, we sometimes invest in Sunbelt markets where we identify attractive value-add opportunities (typically discounted or distressed properties). Still, this macro-market data is interesting and notable.