Kansas City 2Q23
Multifamily Market Report

$1,276

average rent

94.9%

average occupancy rate

$287M

ytd sales volume

5.0%

YoY rent change

-1.9 POINTS

yoy occupancy change

10 YTD

individual transactions

Supply & Demand

2Q23

1,230 Units

QUARTERLY DEMAND
YTD: 1,619

1,240 Units

QUARTERLY COMPLETIONS
YTD: 2,696

Annual Demand vs Completions

2018
3,129
3,455
2019
3,645
2,343
2020
4,175
4,865
2021
7,178
4,625
2022
507
3,365
2023 YTD
1,619
2,696
  • Planned
    Completions
  • Pre-Planned
    Demand

Demand Trends

  • In Q2 2023, the Kansas City apartment market experienced a resurgence in demand with renters absorbing over 1,200 net units, slightly below the seasonal average, but nonetheless highlighting the resilience of the Kansas City apartment market.

 

  • Eight out of 11 submarkets posted positive net absorption, with the South Kansas / Grandview submarket leading for absorbed units due to the opening and leasing commencement at two new Class A communities in Belton, which added 700 new units to the submarket.

Completion Trends

  • Q2 2023 saw Kansas City's apartment inventory expand by 1,240 units, with the South Kansas City / Grandview submarket contributing over half with 700 units.

 

  • This submarket's rapid growth has caught developers’ attention. Over the past four quarters 1,372 units have been added to the submarket’s inventory, significantly outpacing the Shawnee / Lenexa / Mission submarket's 544 units over the same time frame.

Demand Outlook

  • The overall Kansas City, MO-KS apartment market is projected to experience sustained demand over the next four quarters, with an anticipated absorption of 3,052 units. This underscores a steady market outlook for the upcoming period.

 

  • Central Kansas City and Olathe/Gardner submarkets are projected to be significant demand hotspots, with expected annual demands of 1,017 units and 1,031 units respectively.

New Supply Outlook

  • The Kansas City, MO-KS apartment market is set to further expand its inventory over the next four quarters, with a substantial increase of 3,809 units projected.

 

  • The Olathe / Gardner and Central Kansas City submarkets are poised to contribute significantly to the new supply, with anticipated additions of 1,224 units and 1,094 units respectively.

Demand Trends

  • In Q2 2023, the Kansas City apartment market experienced a resurgence in demand with renters absorbing over 1,200 net units, slightly below the seasonal average, but nonetheless highlighting the resilience of the Kansas City apartment market.

 

  • Eight out of 11 submarkets posted positive net absorption, with the South Kansas / Grandview submarket leading for absorbed units due to the opening and leasing commencement at two new Class A communities in Belton, which added 700 new units to the submarket.

Completion Trends

  • Q2 2023 saw Kansas City's apartment inventory expand by 1,240 units, with the South Kansas City / Grandview submarket contributing over half with 700 units.

 

  • This submarket's rapid growth has caught developers’ attention. Over the past four quarters 1,372 units have been added to the submarket’s inventory, significantly outpacing the Shawnee / Lenexa / Mission submarket's 544 units over the same time frame.

Demand Outlook

  • The overall Kansas City, MO-KS apartment market is projected to experience sustained demand over the next four quarters, with an anticipated absorption of 3,052 units. This underscores a steady market outlook for the upcoming period.

 

  • Central Kansas City and Olathe/Gardner submarkets are projected to be significant demand hotspots, with expected annual demands of 1,017 units and 1,031 units respectively.

New Supply Outlook

  • The Kansas City, MO-KS apartment market is set to further expand its inventory over the next four quarters, with a substantial increase of 3,809 units projected.

 

  • The Olathe / Gardner and Central Kansas City submarkets are poised to contribute significantly to the new supply, with anticipated additions of 1,224 units and 1,094 units respectively.

Occupancy & Rent Trends

RENT VS OWN
MONTHLY PAYMENT

$2,380

Average Monthly Mortgage Payment

$1,276

Average Monthly Rent

Occupancy trends

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.

RENTAL TRENDS

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 Rent & Occupancy

Submarket NameAverage
Occupancy
Annual
Occupancy Change
Average
Monthly Rent
Annual
Rent Change
Central Kansas City93.5%-1.7%$1,4843.0%
Clay County94.6%-2.6%$1,1306.3%
Independence/East Kansas City93.6%-3.5%$1,1215.4%
Lee's Summit/Blue Springs/Raytown94.2%-0.5%$1,2453.5%
North Overland Park95.6%-2.1%$1,2867.2%
Olathe/Gardner96.5%-1.4%$1,2585.6%
Platte County94.8%-1.8%$1,2155.1%
Shawnee/Lenexa/Mission96.5%-1.0%$1,3525.8%
South Kansas City/Grandview93.1%-4.0%$9766.6%
South Overland Park95.8%-1.7%$1,4794.0%
Wyandotte County/Leavenworth93.5%-2.5%$1,0804.5%
Kansas City, MO-KS94.9%-1.9%$1,2765.0%

Units by Submarket Delivering in 2023

8,582

Units Under Construction

3,809

Units UC Delivering In the Next 4 Quarters

Units Under Construction

Central Kansas City - 2,183
0%
Clay County - 824
0%
Independence/East Kansas City - 275
0%
Lee's Summit/Blue Springs/Raytown - 287
0%
North Overland Park - 182
0%
Olathe/Gardner - 1,224
0%
Platte County - 90
0%
Shawnee/Lenexa/Mission - 1,617
0%
South Kansas City/Grandview - 509
0%
South Overland Park - 684
0%
Wyandotte County/Leavenworth - 707
0%

Units Delivering Next 4Q

Central Kansas City - 1,094
0%
Clay County - 372
0%
Independence/East Kansas City - 39
0%
Lee's Summit/Blue Springs/Raytown - 128
0%
North Overland Park - 60
0%
Olathe/Gardner - 1,224
0%
Platte County - 90
0%
Shawnee/Lenexa/Mission - 262
0%
South Kansas City/Grandview - 337
0%
South Overland Park - 47
0%
Wyandotte County/Leavenworth - 156
0%

Sales Activity

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.

  1. Sentinel Real Estate

  2. Capital RE (CO)

  3. Pineview Equity Group

  4. Cohen-Esrey

  5. Boston Capital

  1. Crow Holdings
  2. Van Trust RE
  3. Hunt Midwest
  4. Copaken Brooks
  5. Maxus Realty Trust

TRANSACTION VOLUME


YTD Transaction Volume


Y-O-Y Change


Individual Transaction Count


Price Per Unit


Annual Price Change

* Trailing 4Q average PPU

* Preliminary Data from RCA – Individual transaction $2.5M +

Economy

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.

34.2k

May Annual Jobs Created

3.1%

May 23 Employment growth

2.8%

May 23 Unemployment rate
3.4% us may rate

Top 5 Employment Sector Annual Change

<br>Leisure & Hospitality

Change from May 2022
to May 2023: 8,700

 

Percent Change: 7.8%

<br>Professional & Business Services

Change from May 2022
to May 2023: 8,100

 

Percent Change: 4.3%

<br>Education & Health Services

Change from May 2022
to May 2023 : 5,400

 

Percent Change: 3.4%

<br>Mining, Logging & Constr.

Change from May 2022
to May 2023 : 4.000

 

Percent Change: 6.9%

<br>Financial Activities

Change from May 2022
to May 2023: 3,000

 

Percent Change: 3.9%

Hover over circles to view data
SectorChange from May 2022
to May 2023
Percent Change
Leisure and hospitality8,7007.8%
Professional and business services8,1004.3%
Education and health services5,4003.4%
Mining, logging, and construction4,0006.9%
Financial activities3,0003.9%
Government2,8001.9%
Manufacturing1,3001.6%
Other services7001.6%
Information1000.6%
Trade, transportation, and utilities1000.0%

Major Economic Developments

$4B EV Gigafactory coming to De Soto

4,000 New Jobs

$4B Investment

De Soto Location

1Q23 Construction
Commenced

Spring 2025 Operational

a white square with a blue logo on it

Meta announces $800M data center in KC

$800M Investment

100 Jobs Created

1,300 Jobs generated
during construction

2024 New data
center opens

Northland Location

royals flaglets

KC Royals Envision $2B Downtown Ballpark District

$2B Estimated total
investment

Mixed-use
Project
Including hotel,
office, retail &
residential uses

Largest
public-private project in
KC history
No increased taxes for
Jackson County residents

Market Outlook

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.

Sources: RealPage; BLS; MSCI; Kansas City Business Journal; Economic Development Corporation of Kansas City; The Kansas City Star

To Gain Further Insights Into The Kansas City Market Please Reach Out To Our local Team

Image of Matt

Matt Ledom

Senior Director

Image of TJ

TJ Wahl

Senior Advisor

Harry Trotter

Senior Advisor

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Jake Sullivan

Associate Advisor