Mid-Year 2025 Des Moines Multifamily Market Outlook

As we move through the second half of 2025, the Des Moines multifamily market is beginning to show signs of stabilization. Following two years of aggressive deliveries and shifting investor sentiment, the first half of this year reflects a more balanced dynamic, with a few lingering headwinds and several encouraging developments.

Overall occupancy in the Greater Des Moines area ended Q2 at 93%, a modest decrease from 94% at the end of 2024. This dip is largely attributable to the nearly 3,000 units delivered across the market over the past 24 months, a surge that has taken time to absorb. Still, occupancy remains above pre-pandemic levels, and perhaps more importantly, rent growth has continued. The average asking rent increased by 3.4% year-over-year to $1,160, with gains seen across nearly all major submarkets. In Ankeny, asking rents rose to $1,233 alongside a 5.3% vacancy rate. West Des Moines climbed to $1,215 with 6.4% vacancy, while the CBD reached $1,315 with a slightly elevated vacancy rate of 8.3%. These figures indicate that despite higher vacancy in areas experiencing the most development, underlying demand remains strong.

On the development side, supply growth remains active but is beginning to moderate. The market is on track to deliver 2,063 units in 2025, nearly identical to 2024’s 2,276 units. However, many of these projects are phased deliveries from earlier starts. Currently, 2,920 units are under construction, representing 5.8% of existing inventory, and 3,474 units are in planning, accounting for 6.9% of inventory. Construction activity is heavily concentrated in the CBD, Western Suburbs, and Ankeny. The CBD alone has 1,096 units underway, while 812 are in the Western Suburbs and 530 in Ankeny. Although the numbers are still high, the pace of new starts appears to be slowing, which may help ease absorption pressure heading into 2026.

Transaction activity in the first half of the year was relatively muted, with six transactions involving 50-plus unit properties totaling $68.2 million. However, CBRE notes a growing number of assets currently under contract or being marketed, and there is a real possibility that the second half of 2025 could be one of the strongest on record in terms of sales volume. While cap rates have moved upward, investors are showing renewed interest in stabilized assets or well-progressed lease-ups. The shift in pricing combined with ongoing rent growth is beginning to draw more long-term capital back into the market.

Submarkets like Ankeny and the Western Suburbs continue to command attention from operators and investors alike. Both have experienced significant new supply, but also demonstrate steady rent growth and manageable vacancy. Ankeny, in particular, has delivered nearly 600 units in the past two years, with another 530 on the way. While concessions are still present in some newer communities, the fundamentals suggest they will continue to lease up steadily over the coming quarters.

In our view, Des Moines is working through the tail end of a supply-heavy phase. With rent growth still outpacing inflation, occupancy levels holding above national averages, and construction activity starting to taper, we see an improving trajectory. At Hammer & Hampel, our focus remains on hands-on operational execution, maintaining healthy reserves, and taking advantage of today’s pricing environment to build long-term value. For investors with a long-term horizon, this could prove to be one of the more attractive entry points we’ve seen in recent years.

If deal activity accelerates and absorption holds firm, Des Moines could enter 2026 on much firmer ground. We’re optimistic about the second half of the year and will continue to monitor the market closely for opportunities and shifts.