Discovery of the Des Moines Multifamily Market

May 10, 2023

Des Moines, Iowa, one of the fastest growing metros in the midwest, is coming off record-setting multifamily investment transaction volume. Traditionally a relatively quiet market, one transaction sparked an institutional investment craze. In 2020, Spruce Properties purchased BBK Apartments' six-property portfolio, totaling 507 units, for $56.75 million. Marking the single largest apartment transaction in Iowa's history. According to Jared Husmann, this opened the floodgates for institutional and out-of-state capital looking to enter the Des Moines market. Jared Hussman is the President of the KataLYST Team, an associate broker of KW Commercial Realty based in Des Moines, Iowa. Hussman and his team focus on multifamily investment sales throughout the state.  

Investment Demand

To gain some perspective on the multifamily investment demand, 2017 recorded $170 million in transaction volume, and then in 2020, transaction volume totaled $225 million. The peak multifamily sales volume for Greater Des Moines was in 2021, totaling $501 million. Although there has been some pullback during this economic cycle, multifamily transaction volume totaled $440 million last year. According to Husmann, the leap in sales volume from 2020 to 2021 can be partially attributed to the Spruce Properties deal. "It set the tone going forward because it was the first time Des Moines and Iowa had seen Wall Street money enter the market."

Before the BBK portfolio sale in 2020, it was uncommon to see a transaction over $20 million in Des Moines. The market averages 65 - 75 transactions a year, with about 20% being $10 million and higher. Of the "institutional-grade" investments, 51% are completed by local investors and 49% by out-of-state investors. Iowa provides an attractive mid-west yield and the benefits of landlord-friendly legislation.

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Median Securitized Cap Rate (data through year-end 2022) Data Powered by Rockval™ & Trepp®
Population Growth

The Greater Des Moines population of nearly 700,000 residents is currently projected to reach 1,000,000 by 2040. Growing annually by 1.4%, it easily outpaces its midwest peers, including Chicago, Omaha, and Kansas City. The suburbs with the most growth are Ankeny, Grimes, and Norwalk, nearly doubling in population over the last decade. In addition, the metro is an affordable place to live, with a relatively low rent-to-income ratio of 18.2%.


Des Moines is known as an insurance hub, with over 80 insurance companies headquartered here, and has the highest concentration of employment in insurance and financial services in the US. Advanced Manufacturing is the largest industry, accounting for 45% of total employment. In addition, Apple, Microsoft, and Meta have also planted their roots to capitalize on the low cost of doing business. For example, Meta's data center in Altoona will soon become the company's largest by 2025, expanding to five million sqft. As of 2020, data centers in the metro employed more than 70,000 workers. Between 2010 and 2021, the Greater Des Moines area had a 17% increase in employment growth; the median household income is $77,640.

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Source: Greater Des Moines Partnership
Residential Insight

Population increase and increased housing costs due to suburban demand decreased apartment vacancy to 4.0%. In 2020, the overall vacancy rate was over 7%. Sub 2.5% vacancies can be found in the Waukee and West Des Moines markets. The low vacancy rates have pushed average market rents over 9% since 2020. Waukee has seen the highest rent growth over the same period; rent increased 16% over the previous two years. The market still has a lot of room to grow because of the low rent-to-income ratio.

Re:Cap Key Takeaway

Although Des Moines has been leading the midwest in economic and population growth before 2020, the recent influx of institutional capital cemented its future as a leader in the midwest multifamily market for years to come. One thing to consider is the area has recently been hit by multiple Derecho Storms, causing insurance premiums to rise. Overall, the market provides a strong and stable economic future with room for higher returns than coastal multifamily markets.

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