MARKET SNAPSHOT
At the end of 2024, the Kansas City market had approximately 6,500 units under construction, representing 3.4% of the current inventory and aligning closely with the national average of 3.3%. While the development pipeline remains near the 10-year average, it is roughly 20% below its recent peak. Construction starts and new completions have followed similar trends, hovering around 10-year averages but declining by 20% to 25%, respectively, from their peak levels.
Development activity has slowed to more historically typical levels as developers reassess projects in light of higher borrowing costs and stricter lending requirements. Despite the surge in development prior to this slowdown, the market maintained a stable overall occupancy rate throughout 2024, consistent with its 10-year average. This stability suggests there has been sufficient pent-up demand to absorb new supply as it enters the market.
Local developers report that numerous projects are ready for construction but note that the current capital environment allows only the most viable projects to advance, with many of these concentrated in Johnson County. This submarket, supported by a significant government employment base and growing industrial development, is expected to account for 40% of the metro’s completions in 2025, followed by Downtown KC, which is projected to contribute approximately 20%.
Kansas City has experienced a strong rebound in demand after bottoming out in mid-2023. In 2024, the market recorded over 5,300 units of absorption, a 70% increase compared to the previous year. This growth raised the overall occupancy rate to 93.2%, a year-over-year improvement of 40 basis points. This increase marks a recovery from recent lows, bringing occupancy levels closer to the national average. With supply and demand imbalances continuing to stabilize, Kansas City’s occupancy rate is expected to remain steady through most of 2025, outperforming the national average, and is projected to rise again by early 2026.
Renters were most active in the Johnson County and Northland submarkets, where absorption closely followed new developments. Both areas are expected to maintain their strong performance, with elevated demand supporting stable occupancy rates near 95% throughout 2025.
Although rent growth in Kansas City has moderated from record highs, the market still achieved a 3.3% increase in 2024, ranking it among the top 10 markets with at least 75,000 units. Rent growth has been accelerating as demand rebounded in 2024, recovering from earlier lows. Following this recent surge, the average rent reached $1,318—the highest in the market’s history and comparable to rents in Columbus and San Antonio. Annual rent growth is projected to continue rising into the first half of 2025, with forecasts suggesting rents will increase by approximately 4% by mid-year, as demand is expected to remain above its pace from 2022 and 2023.
Rents are highest in the Downtown and Johnson County submarkets, driven by a high concentration of new development and upper-tier properties. Nearly 70% of Downtown’s inventory consists of such properties, while Johnson County is expected to lead the market in rent growth in 2025, with an average increase nearing 5%, similar to gains anticipated in Cass and Leavenworth Counties.
12-month period ending November 2024
Kansas City’s multifamily market is positioned for continued growth and stabilization in 2025, driven by a strong rebound in renter demand and steady absorption. This stability highlights the easing of supply and demand imbalances and indicates substantial pent-up demand to accommodate new inventory. Following a 20% decline in under construction inventory from its 2022 peak, consistently strong demand is expected to keep the occupancy rate stable throughout 2025, exceeding the national benchmark, with further improvements anticipated in 2026.
Demand is expected to remain strong, driven by the metro’s growing population and expanding economy. According to ESRI, the number of households in the region is projected to increase by 3% by 2029, while MMG’s 2024 Employment Expansion Trend Report anticipates a 5% growth in the employment base over the same period. These factors are anticipated to drive rent growth above 4% by mid-2025, significantly outpacing the national average. Additionally, local developers have reported challenges in launching new projects, suggesting a potential decline in completions after 2025, which could further pressure rents upwards. Consequently, investors may find increasingly favorable market conditions in 2025 and beyond, as rent growth is likely to continue exceeding the U.S. benchmark level.
