Awards Midwest Multifamily Focused on Midwest Multifamily April 20, 2021


During the pandemic, much press coverage has been dedicated to the commercial real estate industry as office and retail property tenants could either not operate at all or could only do so at a reduced capacity. On the other end of the spectrum, industrial and apartment properties continued operations virtually uninterrupted throughout 2020, posting 8.8% and 8.3% year-over-year price gains, respectively.(1)

Rent Payment Resiliency

A major contributor to the multifamily sector’s overall price performance is its built-in resiliency. Historically, tenants have placed a high priority on making their rent payments. This trend continued throughout 2020 despite the pandemic. From April-December 2020, 94.7% of renters of professionally managed properties paid rent, representing a decrease of just 150 basis points compared to the same period in 2019.(2) The duration of the pandemic and recession as well as government stimulus payments will affect tenants’ future ability to make rent payments.

Strong Occupancy & Rent Growth

The overall U.S. average multifamily occupancy declined by 0.01% in 2020. Some large metro markets like San Francisco and New York-White Plains declined 3.5% and 2.0% respectively.(3) Midwest markets, like Kansas City and Indianapolis experienced modest occupancy increases of 0.01% and 0.7% respectively.(3)

Many markets experienced rent declines that are yet to be fully realized. However, according to CBRE, four of 40 markets recently analyzed never experienced rent declines in 2020. All four of these markets are in the Midwest – Columbus, Indianapolis, Kansas City and St. Louis.4 These markets started 2021 on even round with a positive near-term outlook that favors suburban properties over urban.3 In contrast, some coastal markets are predicted to slide into 10% to 20% rent loss territory before starting their recovery well into 2021.(4)

Supply & Demand

New apartment supply for 2020 was 344,380 apartments in the United States. While demand increased in the second half of 2020, bringing overall demand for the year to a healthy level, it was not enough. The year ended with an oversupply of about 48,830 units.(5) Across the top 150 largest U.S. markets, apartment demand for 2021 is expected to exceed 300,000 units.(2) With more than 583,280 market-rate units under construction at the end of 2020, 2021 deliveries are expected to exceed 400,000, a 17% increase over 2020.(5)

Markets that have kept new supply in balance with demand – like Midwest markets – should be able to absorb the new apartments added, with continued rent growth. Areas with a substantial number of apartments coming to market – like many located in gateway and Sunbelt markets – may experience difficulty absorbing them, which can drive rent prices down.

Urban Flight

As renters reconsider a big metro urban lifestyle, many are relocating to smaller metro markets or suburban apartments with more space for a home-centric lifestyle that accommodates remote work and school. Others are interested in a change to a less densely populated area due to health reasons, and in low- to mid-rise apartments that don’t require the use of an elevator. Additionally, with unprecedented job losses in the last year, a number of tenants are seeking lower-cost-of-living areas.

Midwest vs. Sunbelt

Two multifamily markets that have garnered attention recently, in light of the urban flight trend, are the Midwest and the Sunbelt. Both meet the criteria that many renters moving from large urban markets are seeking. However, the Midwest market – particularly Columbus, Indianapolis and Kansas City – is deemed most likely to attract tenants transitioning from large gateway cities to suburban areas.(6) These markets offer a scaled down version of a large metro lifestyle and cultural amenities. The Midwest has experienced population growth of 3% since 2010.(7)

Additionally, cities like Indianapolis and Kansas City posted some of the nation’s strongest job numbers thus far during the current recession. These markets’ significantly lower job losses than the average(6) is partly attributable to broad employment diversification in the Midwest. The average age of Midwestern residents has been trending downward, with a median age of 38(8)(9) bringing more families to the market. The median Midwest household income is approximately $62,000, trending below the national average of about $68,000(9) which coincides with the area’s lower cost of living.

From 2000-2016, the Sunbelt’s population grew by approximately 25%, with the majority of growth occurring in the under 18 and 65+ age groups.(10) As a large number of renters have migrated to the Sunbelt, challenges have materialized.

The economies of large Sunbelt metros are growing fast, but job growth is uneven. Most has occurred in the high- and low-paying sectors, potentially leaving middle- market renters with job insecurity.(9) Poverty also appears to be growing faster in large Sunbelt metro areas than large metros elsewhere in the country.(10) And while the Sunbelt has historically had a reputation for affordable housing, rising prices may jeopardize that reputation and price low- to middle-income renters out of the market.(10) There is a wide range of household incomes across the Sunbelt, but they generally trend above the national average, coinciding with an increasing cost of living.

Midwest Multifamily Investor Appeal

In addition to the tenant appeal of the Midwest, investors also find this secondary market appealing. Primary markets – also known as gateway markets – like New York, Los Angeles, San Francisco and Boston – are longstanding centers of commerce and population. As such, they experience intense investment competition by institutional equity, REITS and foreign investors.

Secondary markets – like Kansas City, Indianapolis and St. Louis – have experienced increased population and healthy economies. These markets typically experience less competition for investments, leading to better deal pricing. Additionally, multifamily property owners within secondary markets are better able to increase tenant rents to support healthy net operating income, largely due to supply and demand being in check and by updating Class B multifamily properties to move them to Class A where higher rents can be charged.

JVM’s Longstanding Focus on Midwestern Multifamily

Since 1975, JVM has been dedicated to the Midwestern multifamily market. JVM has managed its portfolio of apartment properties through varying economic cycles as well as demographic trends. JVM believes today’s trends are in favor of the secondary markets it targets in the Midwest. Demand for less densely populated urban and suburban areas along with the need for more space for those tenants working from home is expected to continue, drawing people to lower-cost-of-living areas to meet their changing lifestyle needs. JVM believes these factors paired with the limited development projected for Midwest markets in 2021 will strengthen occupancy, provide rent growth and allow JVM to deliver positive performance to its shareholders.


  1. “Industrial, Apartment Prices Bolster S. Growth in December,” Real Capital Analytics, January 21, 2021. us-prices-dec-2020-rcacppi/
  2. “2021 S. Apartment Outlook,” RealPage, January 12, 2021.
  3. “U.S. Apartment Performance Divide Persists Across Metros,” Real Page, January 5, apartment-performance-divide-persists-across-metros/
  4. “All Eyes on 2021 Recovery – Cycle Timing by Metro,” CBRE, January 22,
  5. “Lots More Apartments Are on the Way in 2021,” RealPage, January 7, way-2021/
  6. “Secondary Midwest Markets: Investor Refuge or Flavor of the Month?” REBUSINESS Online, November 5, https://rebusinessonline. com/red-capital-investor-refuge-or-flavor-of-the-month-secondary-midwest-markets/
  7. S. Census Bureau, 2017.
  8. “Midwest Home to Most of the Counties with Decreases in Median Age,” S. Census Bureau, June 21, 2018. newsroom/press-releases/2018/popest-characteristics.html
  9. Census Reporter,
  10. “The Urban Sun Belt: An Overview,” Rice Kinder Institute for Urban Research, June

The contents of this whitepaper is neither an offer to sell nor a solicitation of an offer to buy interests in any funds (The Funds) sponsored by JVM Realty Corporation (JVM). An offering is made only by the Private Placement Memorandum (PPM) which will include important information about the risks, fees and expenses of the Funds. Neither the Securities and Exchange Commission nor any state securities regulator has passed on or endorsed the merits of any JVM-sponsored funds. Any representation to the contrary is unlawful.

Neither JVM, The Funds nor any of its affiliated entities offer or provide any legal, accounting or other advice that requires a professional license. None of the materials are intended or should be considered legal, accounting, or other similar advice. JVM encourages and advises anyone receiving these materials to consult with their own independent attorneys, CPAs and other professionals to evaluate an investment in The Funds.

Past performance is no guarantee of future results.