average rent
average occupancy rate
ytd sales volume
YoY rent change
yoy occupancy change
individual transactions
QUARTERLY DEMAND
YTD: 1,619
QUARTERLY COMPLETIONS
YTD: 2,696
Average Monthly Mortgage Payment
Average Monthly Rent
In Q2 2023, Kansas City apartment operators and investors had reason to celebrate as rental demand rebounded in conjunction with an influx of newly completed properties. This revival in rental demand boosted the occupancy rate by 10 basis points from the previous quarter, reaching 94.9%. Despite the occupancy rate still lagging behind the rate of the same quarter last year, the quarter-to-quarter increase halted the trend of four consecutive quarters of declining occupancy rates. Class B properties remained highly occupied with an average rate of 95.3%. Concurrently, Class A properties, which had been suffering from a severe drop in occupancy due to an influx of new supply, saw a 20-basis point quarterly improvement, bringing the occupancy rate up to 94.6%. Class C properties also improved by 10 basis points, rounding off the market with an occupancy rate of 94.7%.
North Overland Park boasted the highest occupancy rate, while the emerging South Kansas City / Grandview submarket had the lowest rate at 93.1%. Overall, the rental market in Kansas City stands out as one of the top performers among the county’s top 50 apartment markets, demonstrating its stability even in uncertain times.
Reflecting the trend observed in virtually all apartment markets across the county, the growth rate of rent prices in Kansas City is decelerating from the peak gains of the previous year. Even so, Kansas City is an exception. Despite the slowing growth, Kansas City holds the sixth-highest rate for rent growth among the 50 largest apartment markets in the U.S., registering a growth rate of 5.0% in the second quarter of 2023. This percentage translates to an average rent of $1,276. Moreover, it is worth noting that despite many markets reverting to their long-term averages or even dipping below, Kansas City maintains a steady lead above its historical average growth rate of 2.2%.
Class C properties experienced the highest annual increase at 6.1%, followed by Class B at 4.9% and Class A at 4.5%. Submarket performance varied, with North Overland Park leading at 7.2% and Central Kansas City lagging at 3.0%, likely due to increased competition from a surge in supply added to the inventory in the past 24 months.
| Submarket Name | Average Occupancy | Annual Occupancy Change | Average Monthly Rent | Annual Rent Change |
|---|---|---|---|---|
| Central Kansas City | 93.5% | -1.7% | $1,484 | 3.0% |
| Clay County | 94.6% | -2.6% | $1,130 | 6.3% |
| Independence/East Kansas City | 93.6% | -3.5% | $1,121 | 5.4% |
| Lee's Summit/Blue Springs/Raytown | 94.2% | -0.5% | $1,245 | 3.5% |
| North Overland Park | 95.6% | -2.1% | $1,286 | 7.2% |
| Olathe/Gardner | 96.5% | -1.4% | $1,258 | 5.6% |
| Platte County | 94.8% | -1.8% | $1,215 | 5.1% |
| Shawnee/Lenexa/Mission | 96.5% | -1.0% | $1,352 | 5.8% |
| South Kansas City/Grandview | 93.1% | -4.0% | $976 | 6.6% |
| South Overland Park | 95.8% | -1.7% | $1,479 | 4.0% |
| Wyandotte County/Leavenworth | 93.5% | -2.5% | $1,080 | 4.5% |
| Kansas City, MO-KS | 94.9% | -1.9% | $1,276 | 5.0% |
Units Under Construction
Units UC Delivering In the Next 4 Quarters
While the significant drop in transaction volume between the first half of 2022 and 2023 may attract attention, a more detailed analysis of historical data provides a more balanced perspective. Examining transaction activity in the pre-COVID period from 2014 to 2019, first half volume varied from $460 million in 2016 to $153.8 million in 2018, with an average of $283 million. With a preliminary figure of $287 million for the first half of 2023, it is evident that despite the challenging capital markets landscape, deals are still being successfully completed. This suggests that the market, though impacted, continues to exhibit resilience, and maintain a notable level of transactional activity.
Sentinel Real Estate
Capital RE (CO)
Pineview Equity Group
Cohen-Esrey
Boston Capital
* Trailing 4Q average PPU
* Preliminary Data from RCA – Individual transaction $2.5M +
In May 2023, the Kansas City Metro continued to demonstrate robust job growth, adding 34,200 new positions as reported by the Bureau of Labor Statistics (BLS). The job growth rate of 3.1% remained steady from the previously reported rate in March. The region experienced significant job gains across various sectors, with the leisure and hospitality sector leading the way again by adding 8,700 new jobs (growth rate of 7.8%). This was followed by the professional and business services sector which added 8,100 jobs (growth rate of 4.3%). The financial activities sector also added 3,000 jobs, growing at a rate of 3.9%. Kansas City’s unemployment rate in May stood at a low 2.8%, outperforming the national average of 3.4%. The region continues to display strong economic performance with growth across multiple job sectors and wages nearing the national average.
May Annual Jobs Created
May 23 Employment growth
May 23 Unemployment rate
3.4% us may rate
Change from May 2022
to May 2023: 8,700
Percent Change: 7.8%
Change from May 2022
to May 2023: 8,100
Percent Change: 4.3%
Change from May 2022
to May 2023 : 5,400
Percent Change: 3.4%
Change from May 2022
to May 2023 : 4.000
Percent Change: 6.9%
Change from May 2022
to May 2023: 3,000
Percent Change: 3.9%
| Sector | Change from May 2022 to May 2023 | Percent Change | ||
|---|---|---|---|---|
| Leisure and hospitality | 8,700 | 7.8% | ||
| Professional and business services | 8,100 | 4.3% | ||
| Education and health services | 5,400 | 3.4% | ||
| Mining, logging, and construction | 4,000 | 6.9% | ||
| Financial activities | 3,000 | 3.9% | ||
| Government | 2,800 | 1.9% | ||
| Manufacturing | 1,300 | 1.6% | ||
| Other services | 700 | 1.6% | ||
| Information | 100 | 0.6% | ||
| Trade, transportation, and utilities | 100 | 0.0% |
Despite a general slowing trend across the nation, Kansas City remains a bastion of economic strength, showcasing a resilient job market and consistent economic growth. The end of the second quarter in 2023 saw over 8,500 housing units in progress, with 3,800 of those units anticipated to be completed in over the next four quarters. This increase in supply might introduce some challenges to the market. However, this shouldn’t raise any alarms as nearly every submarket is predicted to experience some degree of growth in their supply in the next year, with the Olathe/Gardner area leading the pack with approximately 1,200 units. Even though market dynamics may experience some fluctuation, both rent growth and occupancy rates are expected to hold firm and display resilience. As we move into the second quarter, the outlook remains largely unchanged, with Kansas City’s economy continuing its robust performance.
