IRR-Saint Louis Mid-Year Viewpoint 2015 Local Market Report - Multifamily
The multifamily market throughout the St. Louis MSA remains strong as renting still remains a preferable option as the single family market continues its recovery from a steep economic recession. Capitalization rates for this asset class remain lower than any other asset class typically ranging from 5.25% to 7.0% for investment grade Class A and B properties in stable markets. The overall metro vacancy rate continues to decrease and is estimated to stabilize around 4.0% to 5.0% in the near term.
Apartment development activity has intensified over the past several years and this is expected to continue with various proposed projects in Clayton. Notable developments include The Crossing in Clayton, a proposed mixed-use residential and retail development with 250 apartment units, a 212-space parking garage, and 9,725 square feet of retail space. The project recently received approval from the City of Clayton for development as well as real estate tax abatements. The Vanguard Clayton is also located in Clayton, a proposed five-story building containing 229 units of one, two, and three bedroom apartments, and a 355-space parking garage.
In addition, the Central West End/ Forest Park submarket is seen as a long-term investment opportunity to developers and investors with 764 units currently under construction, accounting for approximately 50% of the region’s construction activity. Population in the area is projected to remain stable in the following years. While population is not growing, personal income levels have increased markedly and the appeal of multi-family housing has grown considerably over the past several years while little new construction has been completed. Overall demand for multifamily housing in the market should remain strong, resulting in steady absorption, low vacancy and moderately increasing rental rates.
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IRR Mid-Year Viewpoint 2015 comprises a National Overview report and 300+ two-page Local Market Reports for all key property types as well as additional resources, including metrics methodology, graphs, and tables; these free reports may be downloaded from IRR’s site here.