Report shows healthy job creation fueled renter demand
OVERLAND PARK, KANSAS (DEC. 6, 2018) — NorthMarq Multifamily has published its first market research report for the Kansas City region, offering in-depth research and on-the-ground expertise about multifamily market conditions and trends. The company continues to grow its multifamily investment sales platform and added the Kansas City market earlier this fall.
“This research supports our clients’ investment strategies as they consider the Kansas City market for new or expanded investment,” said Jeff Lamott, managing director – NorthMarq Multifamily’s Kansas City group. “Our goal with the report is to ensure that multifamily investors have a complete picture of the submarkets, pricing and vacancy trends.”
“The report released today shows that economic activity is prompting new apartment construction, and 2018 will mark the fourth consecutive year where developers have delivered at least 3,000 rental units. The pace of new construction has pushed vacancy a bit higher in recent years, but with the rate still sitting below 5 percent, operators have been able to continue to implement rent increases,” said Pete O’Neil, director of research, NorthMarq Multifamily.
Key findings for Kansas City:
- The Kansas City multifamily market was somewhat mixed in the third quarter, with the vacancy rate inching higher but rents posting strong gains. Recent vacancy increases have been the result of new construction, rather than a decline in renter demand.
- Vacancy inched up 30 basis points during the third quarter, reaching 4.7 percent. The rate has risen in each of the past two quarters and remained in a fairly tight range over the past several years.
- Investment activity surged in the third quarter following a slower period of transactions in the second quarter. The median price dipped a bit in the most recent period but is up nearly 10 percent from the 2017 median price. Cap rates have averaged approximately 6 percent for much of 2018, with the Class A assets trading between 5.2 percent and 5.5 percent on average.
- Even with vacancy ticking higher in recent quarters, rents continue to rise. Asking rents gained 1.3 percent in the third quarter and have increased 4.3 percent in the past year to $913 per month.