Here’s something renters can complain about: Apartment prices in the Des Moines area jumped in 2015 – and not just a few dollars.
The average rental rate for a one-bedroom apartment increased by 7.7%. Rent for efficiency, or studios, rose 10.3 percent. For larger units, the increase was between 5 and 7 percent, according to an annual survey released Tuesday by West Des Moines-based CBRE / Hubbell Commercial.
While homeowners have been steadily increasing apartment prices in recent years, the report reveals a steeper increase in the past year.
The good news for tenants: some relief may be on the way.
More than 4,000 apartments are under construction around the metro and up to 3,000 of them are expected to open over the next year.
Real estate professionals expect the influx to reduce rental rates. More apartments means tenants have more options and landlords have to offer more competitive rates to attract tenants.
“These increased rental rates, I think, were a little out of the ordinary this year,” said Kyle Gamble, senior vice president and general manager of CBRE / Hubbell Commercial. “Typically, you don’t see double-digit increases. “
The metropolitan average rent was $ 708 for studios, $ 766 for one-bedroom units, $ 834 for two-bedroom units, and $ 1,120 for three-bedroom units. The most expensive area was downtown, where the average rent for a bedroom was $ 911, followed by the western suburbs, where one-bedroom units cost $ 826.
Real estate professionals are quick to point out that rents in the Des Moines area are consistently much lower than in major coastal markets or even large Midwestern cities such as Minneapolis and Kansas City.
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Ryan Jensen, vice president of CBRE / Hubbell Commercial, expects rental rates to increase more modestly this year. But he said rates could rise further thanks to a strong Des Moines economy and a steady supply of tenants as young people delay homeownership and more vacant tenants opt for flexibility. of the rental.
“In the long run, the multi-family sector looks really, really good,” he said.
Affordable housing advocates, however, cringe at the report.
“Ouch” is all Eric Burmiester has said about the 10.3% increase in studio rates.
Burmeister is the Executive Director of the Polk County Housing Trust Fund. Soaring rental rates are making it harder for renters to save money to buy a home, he said. And it’s even more difficult for service level workers to find an apartment.
A 2015 report from PCHT shows a shortage of approximately 10,000 rental units for low- and very low-income households.
“You must be starting to wonder how many people is that price out of the market? Said Burmeister.
The type of apartments under construction also contributes to the rise in rents. Many newer apartments include stone counters, walk-in closets and other high-end amenities that offer premium rental rates.
Thousands of upscale apartments like these are under construction in Waukee and around Jordan Creek in West Des Moines.
Local real estate professionals say they expect the apartment market to slow down in these areas as a result.
Linda Gibbs, senior vice president of CBRE / Hubbell Commercial, said homeowners in the western suburbs are already seeing higher vacancy rates, prompting some to lower rents or offer deals like free parking or cable to attract tenants.
“This tells us that there is starting to be overbuilding in West Des Moines,” she said.
As for downtown, don’t expect rental rates to drop anytime soon, Jensen said. Luxury apartments and rental townhouses are popping up in the heart of the city. Combine these high-end units with a high demand for city living, and the downtown area is about to push rental rates to a new high.
Apartment prices in the Des Moines area
The average cost of renting a one bedroom unit in January and the percentage increase over the previous year.
Downtown: $ 911 (7.1%)
Western suburbs: $ 826 (7.6%)
Ankeny: $ 767 (5.6%)
Altoona: $ 703 (12.1%)
East Coast: $ 662 (14.7%)
South side: $ 651 (7.2%)
Western coast: $ 643 (1.6%)
Indianola: $ 568 (9.4%)
Source: CBRE / Hubbell Commercial