Thoughts From Jared
The future is easy to predict when we have so many examples from the past to draw upon, history has a tendency to repeat itself; or so we like to convince ourselves as investors. But what do we do when something that’s never happened before happens? What happens when history resets itself with an event that changes everything; like COVID-19? These are the thoughts I am having as I look at the Iowa real estate market because, we are setting new records almost every year…things are happening that have never happened before.
In the last quarter Iowa just became an international marketplace now attracting investments from Canada which was also the largest sale in Iowa’s history, beating the previous record by 300%! For perspective, this one deal dwarfs entire years’ of sale volume prior to 2020; just in one transaction. Things are happening in Iowa that have never happened before…
On one side, we’re seeing large multifamily deals trading at eye-popping prices, attracting serious interest from national and even international buyers (yes—international capital is starting to circle Iowa, if the rumors are true). On the other side, smaller assets are dragging the market down as banks and appraisers apply more pressure—lower valuations, stricter lending, and less tolerance for optimistic projections…
While this is all new for Iowa and we cannot predict what this will mean for the future, we can look backwards to what previous records have done for the Iowa apartment market. For example, the previous record for a large sale in 2020 of $55 million signaled the birthplace of institutional capital investing in Iowa which, coupled with the government incentives, triggered a substantial boom and wave of capital hitting the Iowa market drastically driving up prices.
Will this new sale trigger more of the same? How is the Iowa market changed so much in the past few years? In the past quarter? These are questions we at The KataLYST Team strive to answer and predict and are questions we are going to dive into in this report and in our quarterly webinar breakdown…
Let’s dive in and see if we can answer these questions together AND together… make some more money!
Executive Summary
What Does this Report Say in Less than 3-Minutes?
Central Iowa Apartment Market Q3-2025 Performance
- Sales Volume: $347.3 Million Sales Volume
- Price Per Unit: $116,360
- Price Per Square Foot: $123.03
- Cap Rate: 6.30%
Des Moines Multifamily Market Insights
- Occupancy Rate: 91.5%
- Rent Growth: 0.1% Year-over-Year
- Development: 3,991 Units Developed OR Being Developed in the last 12-months with Only 1,065 Units Absorbed
Three Things to ALWAYS Consider…
- Buying Opportunities
- Strong lending relationships right now are winning deals as capital within banks and the syndication industry are soft/tightening.
- Holding & Refinancing
- Real rates are actually higher today than 1-year ago; wait for the potential 2-rate cuts before refinancing; worth noting, the week PRIOR to any announcement in rates we see real borrowing rates lower than the week following the interest rate decision.
- Selling or Disposing
- In the last 5-years we have seen pricing up 24%-29% respectively in our market; annualized our values are keeping pace with inflation or slightly ahead. This is creating a compelling story for investors nationally and internationally as a place to invest and “beat” inflation.
What Does This Mean for Investors?
- Buyers: The ability to close and provide confidence to sellers is the “Ace up the sleeve” currently.
- Sellers: If you own larger (and newer) assets there are strong buyers looking to purchase your property as well as smaller investors looking to get in. The medium-sized apartment complexes are seeing the most “pain.”
The Iowa Market Summarized in Two Sentences…
In the last 3-months we saw sales volume ($347 Million) that was ALMOST greater than 2023-2024 combined; these large sales and new records are re-defining the Iowa apartment market.
Central Iowa Multifamily
How Did Central Iowa’s Apartment Market Perform Last Quarter?
For the 3rd Quarter we saw a new record sale take place that was 300% higher in price and unit count than the last record set. This sale coupled with others created $347.3 million in sales volume (a number that dwarfs entire years of sales volume). Overall we saw 19 transactions take place with an average price per unit of: $116,360, average price per sq. ft. of $123.03, and an average cap rate of: 6.30%. Furthermore, the average sale was 1527 units built in 1982.
What trends did WE identify in the Statistics?
- Iowa has officially become an “International” market with the introduction of Canadian investment.
- The last 3-months Sales Volume was the highest we have EVER seen in Iowa due to the Denner Portfolio sale of: 1,610 units at $183 Million.
- In the last 5-years we have 50 transactions take place that are over $10+ Million; a number rarely seen prior to this period. These 50 deals are dramatically changing the Iowa apartment landscape.
How will these trends affect?
- Buying or Acquiring?
- The Iowa Market has appreciated 24%-29% annually over the last 5-years beating inflation; if you are looking for an “inflation” resistant asset now is always a good time to purchase.
- Holding or Refinancing?
- Last year the real interest rates were lower than today; if you are looking to refinance, we suggest waiting for further rate cuts before moving forward.
- Worth noting; the real borrowing rates have traditionally been lower the week PRIOR to any interest rate decision.
- Selling of Disposing?
- We are beginning to see a massive uptick not only in new listings but sales and investor activity in the last 8-weeks, to discuss a sale OR how to position your property for a sale – Please Contact Us!
Iowa Economy
How do we track the Iowa Economy?
Annualized the Iowa economy is showing growth of around 1.5% with 5 of the 8 leading indicators showing positive over the first half of 2025. However, while the Iowa economy continues to grow, the Des Moines and Central Iowa market continues to dominate with new capital from international markets now investing in the local economy. Coupling these new investments with the lowering of interest rates and it appears that Central Iowa real estate should continue to perform and appreciate well in the face of higher inflation which is limiting growth in net operating income numbers.
What I’m Watching?
- The introduction to Canadian money is a massive shift in the Iowa marketplace and will continue to drive further interest in larger and new asset classes. With the lowering of interest rates, we will begin to see a K-Shaped local economy where smaller assets struggle to cash flow while larger assets appreciate and attract interest.
What I’m Hearing?
- Banks are continuing to be tight with capital and underwriting metrics where larger properties are attracting government and life-insurance money. This is making it challenging on smaller and medium sized borrowers and asset classes; especially those working with regional banks.
What I’m Seeing?
- Deals are beginning to happen again, and the market is picking up. In talking to other bankers, brokers/agents, as well as buyers it appears that the last two years of slow deal flow due to higher interest rates is starting to unlock.
National Economy
What is Happening Nationally In the Multifamily Market?
Nationally the multifamily sector is still up 0.7% annually for rents; however, this is a far cry from the annual inflation rate of 2.9% signaling that net-operating incomes continue to be challenged in the face of higher expenses and a historical wave of inventory hitting the market that continues to be absorbed. With that being said, some markets, according to the Mueller report, are already beginning to see an upswing in their apartment market coming into 2026 which could be a bright spot in looking out over the next 18-36 months.
What are Some Trends Nationally?
The economy continues to struggle, and the Federal Reserve has signaled that they will begin to ease interest rates; however, if this will translate to real borrowing rates OR if banks will pass those savings onto the consumer remain to be seen.
In August the month-to-month rental rate fell 0.23% and we are seeing 90% occupancy rates common across all asset types in Multifamily while the market continues to absorb the new supply that has been built over the previous 36 months.
How do you Profit?
- Buying or Acquiring?
- There is a divergence happening in the market with newer assets that have over 100+ units being highly competitive by national and international buyers; local buyers can win in the medium sized deals of 16-100 unit sizes.
- Holding or Refinancing?
- With rates coming down potentially two more times this year, now may be the time to consider starting the refinance process; local lenders continue to be more aggressive than national and regional banks.
- Selling or Disposing?
- If your asset is newer than 1980 and over 100+ units there are many buyers active looking for properties like yours; additionally, smaller properties under 16 units continue to attract buyers and now may be a good time to consider a sale.
What have WE been Selling and LYSTing JUST in 2025?
ACTIVE
2411 Welbeck Rd, Des Moines, IA
ACTIVE
600 8th St SW, Altoona, IA
ACTIVE
1513 N Ankeny Blvd, Ankeny, IA
SOLD
149 Chestnut Ave, Earlham, IA
SOLD AS A PACKAGE
708 13th St. & 828 12th St.
West Des Moines, IA
SOLD
60-64 Miller Ave SW, Cedar Rapids IA
For more information on Listed, Sold, or Sale Pending properties please contact me! Thank you.
Disclaimer
Provider is a licensed real estate agent and has the rights to sell real estate in the state of Iowa.
All information was obtained via 3rd parties including but not limited to Yardi Matrix, Iowa-Leading Economic Indicators, CoStar, and more. All effort was made to ensure the accuracy, timeliness, and completeness of information provided for publication. KW Commercial does not guarantee, warrant, or represent that all information is accurate or complete and is not liable for any loss, claim, or demand arising from the direct or indirect use or reliance upon information provided.
Behind the Desk
Jared is a 3rd generation real estate entrepreneur growing up with a grandfather who was a homebuilder and investor; a father who was an electrician, developer, and investor; and a mother who was a residential investor, manager, and bookkeeper. With this extensive knowledge as well as being an owner himself for over 15+ years and involved in over 200+ individual transactions he has extensive experience in; financing, operations, management, development, construction, bookkeeping, brokerage, and entrepreneurial activities.
Having helped clients purchase and sell over $100+ Million of real estate personally as an agent-advisor Jared has helped his average client earn over 26.95% rate of return on their real estate investments.
In his spare time has has many hobbies which include but are not limited to: traveling, mountain climbing, hiking, piano, ballroom dancing, Latin dancing, pilot, Spanish lessons, and is always looking for a new adventure.