Des Moines’ Multifamily Supply Cycle Is Beginning to Turn

After several years of elevated apartment construction, the Des Moines multifamily market is beginning to show signs of a more balanced supply environment. New development has not disappeared, and several meaningful projects remain under construction or in lease-up across the metro, but the pace of new supply is beginning to moderate from the levels that pressured occupancy and leasing conditions over the past two years.

That shift was already becoming visible in 2025. During the first half of last year, only 240 multifamily units broke ground in Des Moines, a 69% decline from the prior year. At the time, occupancy had fallen to 92.4% as new deliveries temporarily outpaced demand, creating increased competition among operators and particularly challenging conditions for newly delivered properties.

A year later, the fundamentals are beginning to move in the opposite direction. Des Moines multifamily occupancy reached 93.2% in the second quarter of 2026, an increase of 70 basis points year over year. More importantly, demand has begun catching up with the recent construction cycle. Over the trailing four quarters, the market absorbed approximately 2,556 units compared with 2,344 units completed, meaning renter demand has now exceeded new supply.

The development pipeline still warrants attention. Projects including Mezzo on Walnut, The Aston, The Falcon, Siena Crossing and Prairie Village Commons represent additional supply that will continue entering the market through the remainder of 2026 and into 2027. Based on MMG's latest pipeline data, roughly 1,000 units remain under construction, in addition to communities already moving through their initial lease-up periods. However, the pipeline behind those projects is considerably more measured than the development wave the market has recently absorbed.

Recent permitting activity reinforces that trend. Through the first six months of 2026, only nine multifamily projects received permits across Des Moines, Grimes, Waukee and West Des Moines. Development is continuing three projects totaling 416 units received permits in June alone but builders and lenders appear to be exercising greater discipline around new starts.

For existing owners, the shift is encouraging, but it is unlikely to translate into immediate rent growth. Annual rent growth remained just 0.5% in Q2, suggesting that operators are still competing for residents and working through recently delivered inventory. The more meaningful near-term benefit may instead come through improving occupancy, reduced concession pressure and greater renewal leverage as fewer new units enter the market.

Looking ahead, Des Moines appears to be transitioning from a period defined by elevated deliveries toward one in which supply and demand are becoming more balanced. If absorption remains healthy while construction continues to moderate, existing multifamily properties could enter 2027 with a more favorable competitive backdrop. For owners, that makes disciplined operations especially important today: maintaining occupancy and growing NOI through the current transition should position well-operated assets to benefit as supply pressure continues to ease.

Sources: MMG Real Estate Advisors, CoStar, Business Record