March 13, 2025

Multifamily Deliveries in Kansas City Maintain Steady Pace as Rents Rise

Q4 2024

Multifamily property fundamentals in Kansas City performed well in 2024, although vacancies crept higher at the end of the year. Developers continued to bring new properties to the market at a steady pace; projects totaling more than 4,000 units came online for the full year. Deliveries have been concentrated in parts of the metro area with some of the strongest demographics. The Johnson County submarket accounted for 30 percent of the projects completed in 2024, nearly doubling levels recorded in 2023. With new development concentrated in parts of the region where demand is the strongest, overall vacancy levels have been steady during the past four years. Since 2021, vacancy has remained between 5 percent and 6 percent while most other major markets have recorded more volatile conditions.

After only a handful of properties traded at the beginning of the year, sales activity in the Kansas City multifamily investment market returned closer to normal levels in the final three quarters. The result was an investment market that lagged the region’s long-term average but still topped the 2023 transactions total by more than 50 percent. Some of the most significant increases occurred in the top-tier, where activity picked up significantly during the second half. Class A properties made up approximately one-third of all sales in 2024, similar to levels achieved in 2021 and 2022. Outside of the Class A segment, pricing softened, with the median price in Class B and Class C transactions dipping by 30 percent and 21 percent, respectively, from 2023 to 2024.

Looking ahead

Property performance trends recorded during the past year will likely carry over into 2025. One of the most consistent elements of the Kansas City multifamily market in recent years has been the pace of new development, which has remained within a fairly tight range and is forecast to be steady again in the coming year. Projects totaling 4,000 units are expected to come online in 2025 which would mark four consecutive years of annual deliveries between 4,000 and 4,400 units. Demand drivers should also track long-term trends, with employers expected to expand payrolls at a steady pace, supporting continued renter demand for units.

The multifamily investment market in Kansas City should be poised to gain some momentum in the coming year. After slowing in 2023 and at the beginning of 2024, deal flow resumed at a sustainable pace in the final three quarters of the year. This trend should continue in 2025, with investors targeting Midwest markets with steady rent increases. Additionally, investment activity in Kansas City regained momentum in the Class A segment in the second half of 2024. Top-tier properties played a substantial role in generating transaction volume in recent years before slowing in 2023 and the first half of 2024. The influx of more than 12,700 new units during the past three years should create many opportunities for Class A sales in the coming years.