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2nd Quarter 2020 Multifamily Trends | Kansas City

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Multifamily demand in the Kansas City market continues to remain elevated

A Note Regarding COVID-19

As we publish this report, the U.S. and the world at large are facing a tremendous challenge, the scale of which is unprecedented in recent history. The spread of the novel coronavirus (COVID-19) is significantly altering day-to-day life, impacting society, the economy and, by extension, commercial real estate.

The extent, length and severity of this pandemic are unknown and continues to evolve at a rapid pace. The scale of the impact and its timing varies between locations. To better understand trends and emerging adjustments, please subscribe to Colliers’ COVID-19 Knowledge Leader page for resources and recent updates.

Key Takeaways

> The KC market ended Q2 2020 with an occupancy rate of 95.20% 

> Kansas City's overall occupancy rate has remained above 95% for 26 consecutive quarters. Overall occupancy remained in line with the first quarter 2020 and is up 10 basis points from this time a year ago. 

> Multifamily demand in the Kansas City market continues to remain elevated. Total inventory reached 171,419 units at the end of Q2 2020, while another 4,074 units are under active construction, which is well above the five-year average annual supply of 3,388 units. 

> Effective rents remained elevated from a historic standpoint throughout the Kansas City metro. Average monthly rental rates increased to $996 per unit. The average rate per square foot increased to $1.08 at the close of Q2 2020, which represented a 0.2% quarterly increase. 

> Annual rent growth was 1.7% for Q2 2020, which is right in line with the past five years measuring between 1.7% and 3.7%. 

> In Q2 2020, 1,855 units were delivered throughout the Kansas City Metro. Apartment inventory is projected to grow another 2.9% with a total of 4,926 units expected to be delivered in 2020. 

Transactions / Capital Markets News 

Many investors continue to take a cautious approach at this time. Given the upcoming elections and the continued COVID-19 pandemic. Throughout Q2 there was more than $98 million in transactions related to multifamily product, which is well below the output of nearly $200 million recorded in Q1. Last year, the Kansas City multifamily market produced a record $908 million in transactions, while 2020 is well off that pace currently. The second quarter of 2020 saw continued cap rate compression. Even with a softening throughout the quarter, average cap rate decreased and the average price pre unit increased over the same time period a year ago. Large, institutional investors and national developers maintained a presence in the market as the most active buyers and sellers. 

Rental Rates

By the end of Q2 2020, the average effective rental rate per unit was $996 per month of $1.079 PSF. 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 $1,281, $1,157 and $1,041 per unit, respectively. Q2 rents were largely unimpacted as a result of COVID-19 and rent collection has been more stable than originally anticipated. Landlords and investors will continue to keep a watchful eye on rent collections throughout the third quarter with the expiration of the CARES act unemployment benefit of $600 a week that is set to expire at the end of July. At the end of Q2 2020, monthly overall asking rents rose across the Kansas City Metro across all product classes. Class A asking rents slightly declined to $1,325 per unit ($1.41 PSF). Class B monthly rates slightly decreased to an average of $952 per unit ($1.06 PSF), while Class C asking increased to an average of $782 per unit ($0.82 PSF).

Construction Activity

The Kansas City market continues to experience elevated levels of construction activity relative to the historical norm of the market. In Q2 2020, nine different multifamily developments were delivered totaling 1,855 units. At the end of Q2 2020, there were 4,074 units under active construction. Recent completions in Q2 2020 in Johnson County included Cyan Southcreek, The Villas at Ridgeview Falls and The Locale. Urban Core deliveries included West Bottom Flats, The Yards, 44 Washington, RM West II and Quinlan Place. In the Northland, Brighton Crossing Apartments were completed in Q2. Several other multifamily developments are expected to be delivered in Q3 2020 including The Donovan, Element 25, The Westley, Satori and Reverb, among others. 

Multifamily Investment

The underlying multifamily fundamentals were strong at the beginning of the pandemic. As the economy continues to reopen and progress, market activity is expected to rebound quickly. Given the magnitude of the job losses and decrease in economic activity, the U.S. apartment market weathered the storm better than anticipated in terms of occupancy and rental rates to this point. Transaction volume for multifamily assets plunged both nationally and locally during the second quarter. Portfolio and entity-level transactions were virtually nonexistent throughout the second quarter. Opportunistic buyers continue to make their way to the market; however, sellers currently are not willing to part with assets at a discounted price. Multifamily sector remains desirable to investors particularly as a result of renters' desire for flexibility in their living situations and potential prolonged tenancy for some renters as a result of uncertainty with employment and economic conditions. 


2nd Quarter 2020 Multifamily Trends | Kansas City

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Martin Maguire

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Martin Maguire is the Senior Research Director 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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