IRR-Kansas City Mid-Year Viewpoint 2015 Local Market Report - Multifamily
Kansas City is experiencing the dramatic expansion in the multifamily sector that many other sectors are. Our projections of years passed have been generally consistent with actual events in the market insofar as cap rates and new supply. We have been most surprised by the increase in market rents. We are seeing rents in new Class A suburban product approaching $1.75 per square foot. We also expect completion of two or three new high-rise projects soon.
The first will be available for occupancy early 2016 and others will follow over the subsequent 12 to 18 months. Rents in these projects will top $2.00 per square foot. Millennials are becoming a very relevant and impactful segment of the market in Kansas City driving both urban and suburban development. This has been made possible by business and job growth that has exceeded expectations as well. Amenities have changed dramatically since the past expansion.
These include indoor and outdoor dog parks, concierge car service, and club membership. We are seeing developers from Houston, Baltimore, Indianapolis and Chicago in our market. Buyers are actively seeking Class A product, however most Kansas City owners are reluctant sellers. Land prices are not yet prohibitive, but will certainly test the ability of the Kansas City market to set and increase market rents going forward. Top submarkets are nearing the capacity for new product. Some suburban submarkets have capacity and capital will turn its attention to these underserved areas as the top submarkets reach saturation.
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IRR Mid-Year Viewpoint 2015 comprises a National Overview report and 300+ two-page Local Market Reports for all key property types as well as additional resources, including metrics methodology, graphs, and tables; these free reports may be downloaded from IRR’s site here.