East Lansing, MI | Midwest Multifamily | Investment Highlights

Exceptionally Strong Rental Market Supported by Fed's Ed's & Med's

Author

Michael McClafferty
May 28, 2024

East Lansing, Michigan, ranks as a top rental market in the State of Michigan. The Michigan State University campus spans 5,300 acres making it one of the largest in the nation. With over 50,000 students enrolled, the residential rental market is a hot market for investors to keep an eye on.

During my years at Michigan State (2011-2015), not only did students camp out for Izzone MSU Basketball tickets, but once per year, anxious students would camp out in front of the property management offices in order to secure their spot in an off campus rental house for the following year. Check out some of my throwback MSU photos at the end of this article.

Since 2015, East Lansing has seen an increase in multifamily developments, driven by the steady influx of students and professionals. The area around Michigan State University has particularly been a hotspot for new apartments and condos, catering to the growing demand for housing close to campus and city amenities. This article will highlight the top 3 developments along with the market fundamentals that support occupancy and rent...

27% of Greater Lansing's residents are within The key renter age group of 18 to 35 years old..

Investors have shifted their focus towards high-density, mixed-use properties that combine residential units with retail and office spaces. This trend aligns with the younger demographic's preference for living spaces that offer convenience and lifestyle amenities. The average investment yields have seen a slight increase, reflecting the healthy demand in the rental market.

The Hub East Lansing amenities are listed under The Top Developments Section.

Rental Demand

Demand for rental housing in this area is primarily driven by the 'Feds ‘Eds and Meds’ sectors, which refers to the dominant employment drivers of government, education, and healthcare. The economy is anchored by Michigan State University, which has over 51,000 enrolled students (2024), and Sparrow Health System (recently acquired by UM Health), with 7,500 employees.

The East Lansing/Lansing MSA has a large number of government jobs, startups, and automotive-focused employers, creating a wide range of job opportunities. The constant flow of students, along with young professionals and families, ensures a high demand for rental housing.

Net Operating Income (NOI) is equal to Effective Gross Income (EGI) minus Operating Expenses. The chart below illustrates that income (rent) has increased more rapidly than operating expenses as it relates to multifamily property operations in the Lansing/East Lansing MSA since 2007.

All data limited to multifamily properties. Value/NOI are per unit and calculated using the average Effective Rent, Vacancy, and Expense Ratio for the Market that year. Primary/Secondary/Tertiary reflects the average value for markets of that type. Sourced from Real Capital Analytics, Inc, Yardi, and Axiometrics, a RealPage Company. Data through 3/2024

Occupancy

East Lansing has historically maintained high occupancy rates in its multifamily housing sector. Currently, there are approximately 300 multifamily units under construction, with an expected delivery in the first quarter of 2025. Over the next 12 months, this influx of new units is anticipated to meet the growing demand for housing in the area, potentially stabilizing the market and maintaining the high occupancy levels that East Lansing is known for. 

Community and Lifestyle Appeal

East Lansing offers a blend of amenities and small-town charm. With numerous green areas, venues, and world famous night life, it appeals to a wide range of residents. This quality of life enhances tenant retention and attracts a stable tenant base, which is crucial for maintaining high occupancy rates and ensuring consistent rental income. Read about 5 major construction projects to watch on Michigan State's Campus totaling approximately $390M.

Top 3 Developments

#1 The Abbot - Built in 2020, a 398 Bed student housing complex at the corner of Abbot and Grand River.

233 Abbot Rd - The Abbot

Featuring:

  • Fully Furnished - Studio, 1-, 2-, and 3-Bedroom Residences

  • In Unit Washer and Dryer

  • Fitness Center / Spa / Steam Room

  • Rooftop Terrace and Adjoining Club Room

  • Study zones and meeting rooms

  • First Floor retail

  • Adjacent to the world famous Rick's American Café

#2 The Hub- Built in 2019, a 581 bed student housing complex at the corner of Bouge St. and Grand River.

918 E Grand River Ave - Hub on Campus East Lansing

Featuring:

  • Rooftop Sundeck, Pool & Hot Tub

  • Built-In Seating & Outdoor Lounge With BBQ Area

  • Fitness Center With State-Of-The-Art Fitness Equipment

  • Spa With Sauna

  • Fully Furnished With Modern, Custom-Designed Furniture

  • In Unit Washer and Dryer

  • Adjacent to the world famous two-story McDonald's

#3 Landmark on Grand River- Built in 2019, a 464 bed student housing complex on Grand River Ave. between Abbot and MAC Ave.

205 E Grand River Ave - Landmark on Grand River

Featuring:

  • First floor Retail (Grocery/Convenience)

  • Studio, 1, 2, and 3-bedroom floor plans

  • 24 Hour Fitness Center

  • Private Study Rooms

  • Fully Furnished

  • In Unit Washer and Dryer

Bonus Throwback Photos:

I had the opportunity to watch this game courtside with a few of my colleagues.

Pictured from left to right on the court: Cassius Winston, Joshua Langford, Mike McClafferty, Nick Ward

Sigma Alpha Epsilon Fraternity House 2015:

More than $3.5 million was invested in the former Sigma Alpha Epsilon house on North Harrison Rd., where I resided for 1 year. This investment doubled the house's size and significantly improved its livability.

342 N. Harrison Rd. East Lansing, MI 48823

Post Renovation Photo 2018:

Read more about the Michigan Gamma renovation here: Link to Article

Total Renovation cost was over $3.5M

Conclusion:

East Lansing, Michigan, presents a promising opportunity for multifamily property investors. Its economic stability, strong rental demand, and appealing community make it an attractive market. By understanding the local market, securing appropriate financing, ensuring effective property management, and maintaining a long-term investment perspective, investors can capitalize on this market.

The Berkadia Investment Sales team has identified multifamily investment opportunities available now in East Lansing ranging from $2M-$40M. If you're interested in learning more about these investment opportunities, feel free to reach out to your trusted Berkadia advisor. Let's discuss how you can take advantage of this market! Click here to schedule a call with me.

#MultifamilyInvestments #RentalDemand #EconomicGrowth #DevelopmentPotential #EastLansing #MidwestMultifamily

Disclaimer: The data and other information contained herein (together with all presentation methodologies, the "Information") shall be used only by authorized recipient(s) approved by Berkadia. Distribution of Information to any other person and/or its unauthorized use is strictly prohibited. All Information is being provided for informational purposes only and is not intended as investment advice nor as an offer or solicitation for the purchase or sale of any real property. Berkadia makes no warranties or representations whatsoever (either expressed or implied) regarding the accuracy or completeness of any Information and in no event shall Berkadia or any of its affiliates be liable for any inaccuracies or errors in, or omissions from, any and all Information.