MARKET SNAPSHOT
$1,316 3Q 2024
93.5% 3Q 2024
1,635 [YTD: 4,580]
3.3% 3Q 2024
+10 BASIS POINTS
1,210 [YTD: 2,974]
Net absorption in the Kansas City multifamily market maintained strong momentum in Q3 2024, with renters absorbing over 1,600 units—a 70% increase compared to the same period one year earlier.
Kansas City’s average rental growth rate surged to the seventh-highest among major U.S. metropolitan areas, recording a significant 3.3% increase in Q3 2024.
With one of the highest rental growth rates among major multifamily markets, Kansas City is expected to offer a more favorable landscape for landlords heading into 2025; rent growth is projected to exceed 4.0% over the next two quarters, while occupancy rates are forecasted to remain stable.
Net absorption in the Kansas City multifamily market maintained strong momentum in the third quarter of 2024, with renters absorbing over 1,600 units—a 70% increase over the same period one year earlier. This positioned quarterly net demand in Q3 2024 as the second-highest third-quarter total in the past ten years, surpassed only by the 1,946 units absorbed in Q3 2021. Through the first three quarters of the year, the Kansas City multifamily market is clearly on an upswing. Year-to-date demand has totaled 4,580 units, significantly outpacing the 2,974 units delivered in the same period. This robust absorption has driven rent growth well beyond the national pace and has helped raise local occupancy levels on an annual basis. Over the past year, the submarkets of Johnson County and Northland have been particularly popular with renters, recording a combined absorption of 570 units, which accounts for over 35% of this quarter’s demand.
As of the end of the third quarter of 2024, Kansas City contained 6,100 multifamily units that were under construction, representing 3.5% of the total inventory. This development pipeline slightly exceeds its 10-year average but trails the national average of 3.7%. Despite this, construction activity has decelerated as developers respond to higher borrowing costs and increased construction expenses. Over the past three quarters, approximately 2,500 units have started construction—the lowest level for the first three quarters since 2017. This suggests that supply-side pressures in Kansas City have likely peaked and are now diminishing.
Through the first three quarters of 2024, Kansas City’s multifamily market has witnessed strong renter demand, with a net absorption of 4,580 units—significantly outpacing the 2,974 units completed during the same period. This surge has contributed to a notable annual increase in the average occupancy rate across the market, rising by a healthy 10 basis points to reach 93.5% at the conclusion of the third quarter. With fewer than 1,000 units slated for completion in the fourth quarter of this year, 2024 is on track to see absorption surpass deliveries for the first time since 2021—a positive development for the market’s property owners and operators.
At a more detailed level, most of Kansas City’s submarkets observed stability or improvement in their average occupancy rates on an annual basis. The Inner Jackson County submarket saw a notable 170-basis-point increase in its stabilized occupancy rate, rising to 88.1%. Johnson County, Kansas City’s largest submarket by inventory, recorded the highest average occupancy rate among submarkets with at least 1,000 units of inventory at 95.1%. In contrast, five submarkets noted declines in their stabilized average occupancy rates, led by the less developed Cass County submarket, which experienced an annual decrease of 190 basis points, bringing average occupancy down to 93.0% in this locale.
Kansas City’s multifamily market remains ahead of the curve, nationally in regards to rent growth. Owners and operators have experienced robust performance compared to other major U.S. markets. Throughout 2023 and 2024, Kansas City has consistently ranked among the top ten of the 50 largest U.S. markets for annual rent growth. At the conclusion of the third quarter of 2024, this trend extended for a seventh consecutive quarter. By the end of the most recent quarter, Kansas City’s average rental growth rate surged to the seventh-highest position among major U.S. metropolitan areas, recording a significant 3.3% increase. This growth far exceeded the national average, which has languished below 1.0% for five consecutive quarters now.
In terms of submarkets, Johnson County and Leavenworth County reported impressive annual rent growth rates of 4.8% and 4.1%, respectively. The 4.8% increase in Johnson County is noteworthy given the influx of new units delivered in this area in recent quarters. However, for owners and operators in Johnson County, the high rate of completed units is beginning to level off, with a reduced pipeline forecasted by mid-2025.
While rental growth in Kansas City’s urban core lagged behind the broader metro area, the Downtown Kansas City submarket pivoted from an annual decline in rents in Q2 2024 to a modest annual increase of 1.2% at the end of Q3 2024. The other urban core submarket, Midtown Kansas City, recorded the weakest rent growth in the third quarter; however, it was still positive, with average rents increasing by 1.0%. As pressure from new supply subsides, rent growth is forecasted to approach the upper bounds of 4.0% by this time next year, with all submarkets projected to see rent growth exceed 2.0%.
In August 2024, the job market in the Kansas City, MO Metro area exhibited remarkable strength, according to the Bureau of Labor Statistics. The region added 19,300 new positions, reflecting a job growth rate of 1.7%. Various sectors contributed to this expansion, with the Leisure and Hospitality sector leading by adding 6,800 new jobs—a notable 5.7% annual increase. The Manufacturing sector followed closely, adding 6,300 jobs and growing by an impressive 7.6%, largely due to the scaling up of operations at Panasonic’s new EV battery plant in De Soto, KS. The unemployment rate in Kansas City remained low at 3.7% in August, well below the national average of 4.2%. These figures underscore the resilience of Kansas City’s economy, characterized by its diverse range of industries.
August 2024 ANNUAL JOBS CREATED
AUGUST 2024 EMPLOYMENT GROWTH
AUGUST 2024 Unemployment rate
4.2% us August rate
Nominal Change
from August 2023
to August 2024: 6,800
Percent Change: 5.7%
Nominal Change
from August 2023
to August 2024: 6,300
Percent Change: 7.6%
Nominal Change
from August 2023
to August 2024: 3,700
Percent Change: 2.2%
Nominal Change
from August 2023
to August 2024: 3,200
Percent Change: 1.4%
Nominal Change
from August 2023
to August 2024: 1,300
Percent Change: 2.1%
| Sector | Nominal Change from August 2023 to August 2024 | Percent Change |
|---|---|---|
| Leisure and Hospitality | 6,800 | 5.7% |
| Manufacturing | 6,300 | 7.6% |
| Education and Health Services | 3,700 | 2.2% |
| Trade, Transportation, and Utilities | 3,200 | 1.4% |
| Mining, Logging, and Construction | 1,300 | 2.1% |
| Government | 1,200 | 0.8% |
| Financial Activities | 600 | 0.8% |
| Other Services | 0 | 0.0% |
| Information | -800 | -4.5% |
| Professional and Business Services | -2,800 | -1.5% |
Development of 13 projects to add housing, infrastructure, and economic growth to the neighborhood.
Panasonic Energy’s electric vehicle battery plant in De Soto, KS will be the biggest battery plant in the world.
Multi-tenant industrial park that could be one of the Kansas City area’s largest when all phases are complete.
As we move into the fourth quarter of 2024, Kansas City is poised to witness annual rental demand outpace annual new supply—a trend not seen since 2021. With one of the highest rental growth rates among major multifamily markets in the country, the metro is expected to offer a more favorable landscape for landlords heading into 2025. Based on current projections, rent growth is anticipated to exceed 4.0% over the next two quarters, while occupancy rates are forecasted to remain stable. This positions the Kansas City multifamily market among those transitioning into growth mode, contrasting with Sunbelt markets still contending with substantial supply overhangs which will likely persist for the foreseeable future.
Sources: Costar; ESRI; U.S. Census Bureau; Yardi Matrix; U.S. Bureau of Labor Statistics
