State of the Multi-family Market in Kansas City

If you are looking for a great metropolitan area to invest in multi-family real estate properties, the Kansas City Region is a great place to do so. The last several years, Kansas City has seen a revival in the multi-family housing market and investors have placed a great amount of money and effort in helping to create new opportunities in this sector of the real estate market. There has been renewed focus placed on constructing A Class assets, in addition to a number of rehabilitation projects in areas such as Hyde Park, Valentine, Downtown and Midtown. While the economy continues to expand and population growth remains steady, money managers are suggesting that their investors diversify their portfolios through real estate acquisitions.   In Johnson County, developers are on pace for the delivery of hundreds of units totally 4% of the entire multi-family market by the conclusion of this year. It remains to be seen, however, if the market can absorb this number of units. Developments north of I-435 should be safe due to the location of the project and amenities offered. The projects further west and south, such as Prairie Fire, West End at City Center, and Park Edge are risker investments that could see some growing pains but will likely provide good returns for their investors.   Projects in the delivery pipeline by John Cordish and Nathaniel Hagedorn with The Cordish Companies and Northpoint Development respectively, are also lofty initiatives that will undoubtedly help the ongoing revival of the Downtown region of Kansas City. These projects require lengthy tax abatements, so ideally their clientele will make up for lost revenues by injecting dollars into Jackson County goods and services.   In the Midtown areas of Kansas City, investors and developers have completed a number of rehabilitations of historic properties and there are a number of new deliveries scheduled. The redevelopment of historic properties is appealing to a number of investors due to government redevelopment subsidies and long-term tax credits available to those that engage in these types of investment activities. There are a number of investors that actually wholesale these tax credits after completing renovations of these historic properties. Transactions on this level are complex and there are only a handful of individuals that have the expertise to make these endeavors wholly successful.   The current average occupancy rates for the Kansas City Metropolitan Area as a whole remain very high, holding at above 90%. This has led to a very aggressive market for multi-family units and we project that this trend will continue for the next four to five years. The low number of vacancies has led to great revenues for local property management companies including KCPMG Inc. It also allows for aggressive rental increases and allows owners to be more selective in terms of who rents their units.   As we move into the second half of the decade, look for investors to continue using real estate as a safe haven for investment funds. When the overall population begins its decline, as projected in the middle 2020s, multi-family properties, and real estate as a whole will face challenges to keep occupancy rates high and overall values will likely see negative growth.