Kansas City build-to-rent properties continue to expand

Kansas City build-to-rent market overview

The Kansas City build-to-rent sector has expanded in recent years. There are currently projects totaling roughly 4,800 existing units. Approximately half of the units currently in the local inventory have been delivered since the beginning of 2022. While the added supply of the past few years has resulted in some volatility in area vacancy levels, rents have been on an extended upward trend. Annual rent growth has remained between 1% and 4% since 2020. Developers have been much more active in the Missouri segment of the market, with about 80% of the region’s build-to-rent properties located in Missouri. While the bulk of the existing inventory is located in Missouri, the development pipeline includes projects in both Kansas and Missouri. Projects totaling roughly 700 units are currently under construction in the area, and more than 400 of these units are located in Kansas. Additionally, nearly 40% of the planned or proposed units in the market are in Kansas.

Momentum in the Kansas City build-to-rent investment market picked up beginning in the second half of last year. Sallee Development was involved in a large portfolio sale, which likely led to some level of price discovery following a period of minimal transaction activity. Following the four-property portfolio sale in September, four more build-to-rent properties have changed hands in Kansas City. Sallee’s portfolio was comprised entirely of townhomes, with most of the following sales being for properties centered around detached, traditional homes. Transaction volume has been almost exclusive to Missouri, with sales occurring in Blue Springs and Belton during the past 12 months. While activity is up, pricing has been inconsistent. In transactions where pricing was available, the median price during the past year was $191,600 per unit, down from $232,600 per unit in 2023 and $270,900 per unit in 2021.

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