3rd Quarter 2019 Multifamily Trends | Kansas City

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  • The KC market ended Q3 2019 with an occupancy rate of 95.9%, which is an all-time high for the metro. Strong leasing continued throughout Johnson County and Central Kansas City during the third quarter.
  • Kansas City’s overall occupancy rate has remained above 94% for 23 consecutive quarters.  Overall occupancy increased by 60 basis-points relative to the previous quarter, and is up 30 basis-points from this time a year ago.
  • Multifamily demand in the Kansas City market continues to remain elevated. Total inventory reached 167,948 units at the end of Q3 2019, while another 5,467 units are under active construction which is well above the five-year average annual supply of 3,516 units.
  • Effective rents remained elevated from a historic standpoint throughout the Kansas City metro. Average monthly rentals rates increased to $975 per unit. The average rate per square foot increased to $1.06 at the close of the Q3 2019 which represented a 0.9% quarterly increase.
  • Annual rent growth was 2.5% for Q3 2019, which is right in line with the past five years measuring between 1.8 % and 3.7%. 
  • In Q3 2019, 655 units were delivered throughout the Kansas City Metro. Total deliveries year to date total 1,973 units. Apartment inventory is projected to grow another 2.6% with the addition of an estimated 4,300 to be delivered in 2020.
  • The most active submarkets for construction activity remain in North and South Johnson County submarkets, however construction units are slowing relative to previous quarters. The urban core currently has several apartment developments under construction at the current time. 

Rental Rates

  • By the end of Q3 2019, the average effective rental rate per unit was $975 per month or $1.06 per square foot. Central Kansas City, South Overland Park and the Shawnee/Lenexa/Mission submarkets continue to command the highest monthly rents within the metro. Those submarkets command rent of $1,247, $1,144 and $1,022 per unit respectively. Lee’s Summit/Blue Springs/Raytown submarket experienced the largest quarterly rent growth change of 2.9% while Shawnee/Lenexa/Mission increased by 2.1%
  • At the end of Q3 2019 monthly overall asking rents rose across the Kansas City Metro. Class A asking rents lowered slightly to $1,311 per unit ($1.42/SF). Class B monthly rates remained steady at an average of $941 per unit ($1.04/SF), while Class C asking increased to an average of $752 per unit ($0.79/SF).
  • Annual rental rate growth climbed to 2.7%, the highest reading since Q3 2018.
     

Construction Activity

  • The Kansas City market continues to experience elevated levels of construction activity relative to the historical norm of the market. At the end of Q3 2019, there are currently 5,467 units under active construction. 
  • The majority of recent construction deliveries and construction starts continues to be concentrated within the urban core. Downtown redevelopment projects, especially near the Crossroads Arts District continue to cater to the demand of renters seeking to live close to a vibrant downtown. Mixed used developments in suburban areas such as Lenexa City Center, and downtown Overland Park remain highly sought after as well. 
  • Recent completions  in Q3 2019 including three projects in Overland Park;  The Vue in downtown Overland Park, phase II of the Promontory in Overland Park, WaterWalk . Gallerie also completed construction near Crown Center.
     

Economic Activity

  • The USDA team completed their metro-wide search after looking at several 120,000 SF options across the Kansas City metro to house the two agencies new to the metro. The USDA selected 805 Pennsylvania which will add more than 500 jobs to downtown Kansas City.
  • Waddell & Reed plans to move their existing North Johnson County headquarter office to downtown Kansas City starting in 2022. While the building location is still unknown, the company plans to bring over 900 jobs to Downtown Kansas City as part of the relocation. 
  • Faith Technologies purchased the former PacSun distribution facility in Olathe. The Wisconsin-based electrical and engineering contractor will house it manufacturing division and 30,000 SF office space for their Faith Technologies University.  The company expects to add more than 780 positions in Kansas City over the next few years.

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3rd Quarter 2019 Multifamily Trends | Kansas City

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Martin Maguire

Senior Director Research

Kansas City

Martin Maguire is the Research Services Manager for Colliers International, Kansas City. As part of this role, he coordinates and supervises the various resources and personnel in the research department. Martin is responsible for the aggregation, analysis, interpretation, and reporting of market research, including all quarterly and annual market reports for the Kansas City and Lawrence markets. He establishes procedures for acquiring, entering and verifying real estate marketing data related to properties, listings, tenants and comparable transactions for all local divisions tracked within the database, while maintaining data integrity. He works with all transaction service professionals in serving clients by providing an elevated set of skills, analysis and project management. He is in charge of producing all reports and gathering data for use in analysis, marketing and presentations to corporate clients. He develops client-oriented interpretations and market trend graphics for client understanding. 

 

Martin has been with the firm since July 2012.  Prior to his association with the firm, Martin was employed by Cohen Financial, a commercial real estate investment banking company specializing in loan servicing with the asset management team.  Prior to his move to Kansas City, Martin previously worked with Capital One N.A. as a disposition analyst within the REO Division, as well as with CoStar Group Inc. as a research associate.

 

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