The figures contained herein focus on metro area multifamily buildings and/or complexes with a minimum of six units. Small-scale multifamily properties consisting of duplexes, townhomes or condos do not accurately affect local capitalization rates (cap rates), vacancy or rental rates and are therefore excluded from this analysis.

Market Overview

Prospective homebuyers continued to grapple with low inventory and high interest rates, leaving renting the most economical option for many.

Both factors contributed to elevated interest in multifamily investment throughout 2023. Of the 11 multifamily buildings sold in the metro, not including mixed-use properties, all but one building was constructed between 1965 and 1978. Many of these properties will require renovations and/or capital investment to remain relevant rental options.

The average capitalization (CAP) rate remained steady at 7.34% in 2023, compared to 7.28% in 2022. The average vacancy rate for the buildings that sold ranged from 3% to 5%.

Looking Ahead

Low vacancy coupled with steady rent growth means multifamily properties will continue to be favored by investors in 2024. Multifamily construction, specifically those units integrated into mixed-use properties, continues with approximately 900 units nearing completion, under construction or proposed for 2024.

Significant transactions announced, in progress, completed or traded

Large-scale mixed-use projects announced, in progress, completed or traded

  • 222 3rd Street SE, Cedar RapidsGuaranty Bank, World Theatre and Dragon Restaurant Block — sold as an adaptive reuse for $2,800,000; the bank will be repurposed with commercial suites on the first floor and 80 market-rate apartments above, the former theatre will be leased to a 10,000 SF gym/training facility and former Dragon restaurant will be first-floor commercial with 13 market-rate apartments above
  • 116 16th Avenue SE, Cedar RapidsVesnice — a six-story residential building was announced with 63 units in addition to a four-story mixed-use building with 22 units plus 1,443 SF of commercial space, $23,700,000 investment
  • 1218-1310 3rd Street SE, Cedar RapidsFulton Lofts (f/k/a Redball Lofts) — construction began on 34 market-rate multifamily rental units with 6,600 SF first-floor commercial space, $9,800,000 investment