Lexington Multifamily Market Report

Market Overview

Lexington’s multifamily market stands resilient against economic fluctuations, supported by a strong economic landscape. Non-cyclical sectors like government and education, supported by major employers such as the University of Kentucky and Baptist Health, anchor the city’s economic foundation. Furthermore, the presence of Fortune 500 companies like Xerox and IBM adds to Lexington’s allure for business expansions and investment, bolstering confidence in the multifamily sector. Despite economic challenges, demand for multifamily units remains solid, with annual net absorption totaling 1,300 units, surpassing historical averages.

 

Despite economic challenges, demand for multifamily units remains solid, with an annual net absorption totaling 1,300 units, surpassing historical averages.

 

Market Performance

Lexington’s multifamily market exhibits strength, with steady demand outpacing historical averages. Lexington’s vacancy rate, at 6.4% as of Q1 2024, is below the national benchmark of 7.7%. Despite nationwide increases driven by record-level deliveries, Lexington experiences downward pressure on its vacancy rate due to limited development activity and local demand. Rent growth in Q1 2024 is stable at around 4.1%, in line with the 10-year average of 4.0%. Deliveries in the past year surged to approximately 1,100 units, marking a notable 45% increase over the annual average recorded in the last five years. Despite this uptick, the development pipeline in Lexington remains subdued, with just 400 units underway, representing a mere 1.0% of inventory compared to the national benchmark of 4.7%.

 

Investment activity in Lexington’s multifamily sector is moderate, with around $73.2 million traded over the past 12 months. In the same time frame, private buyers comprised over 70% of sales volume, with national investors representing over 90% of buyers in Lexington. Noteworthy sales include the Shillito Park apartments, which traded hands for $33 million in Q1 2023.

 

Lexington By The Numbers | Past 12 Months | Source: CoStar

• Vacancy Rate: 6.4%
• Rent Growth: 4.1%
• Units Delivered: 1,141
• Units Absorbed: 1,281
• Sales Volume: $73.2M