The multifamily sector has been booming across the Midwest. This sector has been so strong for so long, that it’s natural to expect at least a bit of a slowdown in the coming months.
But in St. Louis? That slowdown might not be coming anytime soon.
Matt Bukhshtaber, executive vice president with the St. Louis office of CBRE, said that demand for apartment units remains strong in his market. And because consumers are increasingly seeking to rent, this means that multifamily developers and investors remain busy here.
“There is no shortage of multifamily interest today,” Bukhshtaber said. “It is a very recession-proof asset class. People always need a place to live. There is no shortage today of investors looking at multifamily.”
A slowdown might be long in the coming largely because the St. Louis area doesn’t offer nearly as many modern multifamily developments as demand for these properties warrants. Bukhshtaber said that the supply of multifamily units in St. Louis is some of the lowest in the country.
This makes it challenging for consumers who are looking to rent in the downtown heart of the city.
“Compared to other markets, our supply of multifamily is incredibly low,” Bukhshtaber said. “And I’m not just comparing our supply on a national basis. I’m comparing it to other markets in the Midwest. We just don’t have as much supply as other Midwest markets can offer.”
Fortunately, developers are acting. Recognizing the demand for multifamily, developers have proposed or planned several big downtown apartment projects recently.
The second phase of the Ballpark Village project, for instance, includes plans for a 29-story apartment project. The St. Louis Cardinals held a ground-breaking ceremony in mid-December last year for this project. The Central West End neighborhood will soon be getting its own 36-story apartment tower, while a 25-story tower is planned for 411 N. Eighth St.
The best news? The multifamily market isn’t the only strong one in the St. Louis area. Bukhshtaber said that office, retail and industrial are all performing well today, too.
“There is phenomenal interest in St. Louis,” he said. “We have a very stable market. We are not a primary market like Chicago or New York. But we are large enough for investors who are looking for better yields.”
Bukhshtaber pointed to the biggest employers in the region. Three out of five of them are hospitals. Medical centers and hospitals certainly qualify as recession-proof employers. The fact that hospitals are such big employers, then, helps keep the St. Louis market stable even when the national economy is struggling.
“There is more new capital that continues to enter the market every single year from both coasts,” Bukhshtaber said. “There is pent-up demand here. There is just not enough product for investor demand. There is a lot more equity out there looking to buy into St. Louis than there are opportunities at this point.”
