MARKET SNAPSHOT

2025 Kansas City Forecast

2024

FORECASTED ANNUAL CHANGE

2025

$1,318

Q4 AVG. EFFECTIVE RENT

4.3%

FORECASTED ANNUAL CHANGE

$1,375

Q4 Avg. Effective Rent

93.2%

Q4 AVG. OCCUPANCY

+20 BPS

FORECASTED ANNUAL CHANGE

93.4%

Q4 Avg. Occupancy

4,144

2024 COMPLETIONS

4,289

10 Yr. Avg. Annual Completions

4,646

2025 COMPLETIONS

5,362

2024 NET ABSORPTION

3,929

10 Yr. Avg. Annual Net Absorption

4,634

2025 NET ABSORPTION

Source: CoStar
Key Market Themes for 2025
  • CONSTRUCTION PIPELINE DECLINING FROM CYCLE PEAK

    Multifamily development activity remains close to historical averages but is approximately 20% below recent peaks. Only the most viable projects are slated to break ground in 2025, with the majority in Johnson County.

  • OCCUPANCY WILL CONTINUE STABILIZING

    Although the construction pipeline remains near the 10-year average, the market's average occupancy rate improved by 40 basis points at the end of 2024 and is projected to rise an additional 20 basis points by year-end 2025, reaching 93.4%.

  • ROBUST RENTER DEMAND SUPPORTS GREATER RENT GROWTH

    Renter demand, as measured by absorption, is expected to remain strong as improving consumer sentiment and easing inflation bolster the market. Combined with Kansas City's stable occupancy levels, these factors are projected to drive rent growth above 4% by late 2025, significantly exceeding the national average.

2025 SUPPLY TRENDS

MULTIFAMILY STARTS INCREASED IN 2024

MULTIFAMILY STARTS INCREASED IN 2024

2023: 3,182 units > 2024: 4,241 units

Annual Increase of 1,059 units or 25%

10 Yr. Historical Annual Average: 4,493 units

UNITS UNDER CONSTRUCTION TRENDING BELOW THE 10 YEAR AVERAGE

UNITS UNDER CONSTRUCTION TRENDING BELOW THE 10 YEAR AVERAGE

6,469 units under construction as of December 31st 2024

10 Yr. Historical Annual Average Units UC: 6,597

1% Lower than historical average

UNIT COMPLETIONS PROJECTED TO INCREASE IN 2025

UNIT COMPLETIONS PROJECTED TO DECREASE IN 2025

2024: 4,144 units > 2025: 4,646 units

Annual Increase of 502 units or 11%

10 Yr. Avg. Annual Completions: 4,322 units

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%.

2025 RENT & OCCUPANCY TRENDS
ANNUAL RENT GROWTH & OCCUPANCY
OCCUPANCY TRENDS

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.

RENT TRENDS

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.

Submarket Rent & Occupancy

2024 INCOME & EXPENSE ANALYSIS

12-month period ending November 2024

CLICK TO VIEW FORECAST DATA

INCOME

INCOME
Income AssumptionsValue / UnitYear Change (%)
Occupancy (%)93.00%-0.1%
Rental Income / Occupied Unit$14,915.535.4%
Recoverable Expenses / Occupied Unit$868.5510.8%
Other Income / Occupied Unit$977.245.9%
Total Income / Occupied Unit$16,761.325.7%
Operating Income
Rental Income$13,929.415.3%
Recoverable Expenses$811.1410.7%
Other Income$913.675.8%
Total Income$15,654.225.6%

EXPENSES

EXPENSES
Operating ExpensesValue / UnitYear Change (%)
Payroll$1,612.461.1%
Marketing & Advertising$204.174.3%
Repairs & Maintenance$1,368.185.0%
Administrative$429.564.2%
Management Fees$497.80-0.5%
Utilities$1,050.800.9%
Real Estate & Other Taxes$1,578.004.3%
Insurance$642.7619.0%
Other Operating Expensees$10.64
Total Operating Expense$7,394.384.0%
Net Operating Income$8,259.847.0%
Please note that the income and expense data presented in this section is sourced from trusted third-party data providers and does not reflect the entire market. While we strive for accuracy, our firm does not provide any warranty or guarantee regarding the reliability or precision of this information. We recommend users exercise discretion and professional judgment when interpreting and utilizing this data.
MARKET OUTLOOK

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. 

Disclaimer: This multifamily forecast incorporates data from reputable third-party sources, including Costar, Yardi Matrix, the U.S. Census Bureau, the U.S. Bureau of Labor Statistics, and ESRI. While we make every effort to ensure accuracy, we cannot guarantee the reliability of the projections provided. Forecasts are inherently subject to change due to evolving market conditions, economic factors, and unforeseen events. We strongly encourage users to conduct independent due diligence and consult with an MMG Advisor before making any investment decisions based on this information.

Featured Kansas City Research Reports:

To gain further insights into the Kansas City market, contact our local team:

Harry Trotter | Senior Director

Harry Trotter

Senior Advisor
TJ Wahl | Senior Director

TJ Wahl

Senior Advisor
Colson-Bayles

Colson Bayles

Associate Advisor
Brayden Graham_400

Brayden Graham

Associate Advisor
Alex Blagojevich

Alex Blagojevich

Executive Managing Director / Co-Founder
Michael-Sullivan

Michael Sullivan

Executive Managing Director / Co-Founder

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