Q4 2022 Multifamily Real Estate Report: Kansas City, MO
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Kansas City, MO’s multifamily real estate market performed well overall in Q4 2022 amidst increasing transaction volume and multifamily rental rates.
The population of the city is 1,711,000, with a 0.77% growth rate. The unemployment rate in the city reached 2.3% at the close of the year.
General Area Overview & Demographics
Kansas City, Missouri is the 37th largest city in the United States. The largest ethnic groups in Kansas City are White (71%) followed by African-American (25%) and Hispanic or Latino (6%). The city’s population is split almost evenly between males and females.
Kansas City, MO Median Household Income & Population
The median household income in Kansas City is approximately $47,000. Additionally, more than 15% of households in Kansas City make less than $25,000 per year and about 21% of households make between $25,000 and $50,000. Finally, approximately 15% of households in Kansas City have incomes greater than $100,000 each year. According to recent data, rent costs Kansas residents the lowest percentage of their income.
The largest age demographic in Kansas City is 25-44 years old, representing 35% of the total population. This is followed by 45-64 years old (25%), 15-24 years old (19%), and 65+ (17%). On average, residents of Kansas City have a median age of 38.
Several higher-education institutions are located in the city, including the University of Missouri-Kansas City, Park University, and Kansas City Art Institute. Additionally, numerous other colleges and universities are offering undergraduate degrees in the area.
Numerous landmarks and attractions are in the city, including the Union Station, the Kauffman Center for the Performing Arts, and the historic Westport district. Additionally, popular attractions include the National World War I Museum and Memorial, the Nelson-Atkins Museum of Art, and Legoland Discovery Center.
Kansas City experiences four distinct seasons throughout the year, with hot and humid summers, mild springs, cool and wet autumns, and cold winters. Average temperatures in July range from 75-90 Fahrenheit (24-32 Celsius). On average, the area receives around 38 inches (97 cm) of precipitation annually.
Summary of Kansas City Multifamily Real Estate Performance in Q4 2022
The multifamily vacancy rate for Kansas City reached 4.7% in Q4 2022, a 0.5% rate change year-over-year.
The Wyandotte County submarket experienced the highest multifamily vacancy at 5.9%, while the Olathe submarket saw the lowest at 3.1%.
Absorption for Kansas City’s multifamily real estate market in 2022 reached 5,500 units. The River-Crowne-Plaza submarket saw the highest absorption at 2,208 units.
What are multifamily rents like in Kansas City?
The average effective rent for Kansas City multifamily real estate reached $1.35 per square foot in Q4: The average monthly rent per unit was about $1,230.
The highest rental rate per unit, per month was seen in the River-Crowne-Plaza submarket at $1,490, while the lowest was seen in the South Kansas City and Grandview submarket at $959.
Purchase & Leasing Activity
Transaction volume rose 40% quarter-over-quarter for Kansas City multifamily real estate in Q4 2022. The median sales price among properties that changed hands was about $157,100 per unit in Q4 2022.
For all of 2022, the median sales price was about $183,900 per unit. The median sales price for Class A properties was $250,000 per unit overall for the year.
Notable Multifamily Real Estate Deals in Kansas City in Q4 2022
There were several notable deals that took place for Kansas City’s multifamily real estate in Q4 2022:
- Artistry KC sold for $94,000,000 at $275,660 per unit.
- The Wilder sold for $73,000,000 at $143,137 per unit.
- Park Place sold for $66,500,000 at $257,752 per unit.
- The Village at Mission Farms sold for $65,200,000 at $307,547 per unit.
These are select examples among other activity.
New Multifamily Real Estate Development Activity in Kansas City in Q4 2022
New multifamily deliveries for the year in Kansas City reached 3,080 units. The River-Crowne-Plaza submarket saw the highest number of deliveries at 768 units.
Approximately 1,325 new multifamily units were delivered in total in Q4 2022. There were 4,600 multifamily units under construction in Kansas City at the close of 2022.
Market Forecast for Kansas City’s Multifamily Real Estate Market
Construction completions for Kansas City multifamily are projected to be high in 2023, a potential cause for increased vacancies as tenants favor new space.
Average multifamily rent is also projected to rise in 2023 by 3.2%, making the average about $1,200 a month per unit.
Takeaways for Multifamily Real Estate Investors
Investors may want to consider Class A property investment in the coming year: Kansas City’s Class A multifamily properties have seen healthy investment activity in recent months.
Several new constructions are also expected to come online in 2023, including Class A property, which investors may do well to acquire for lucrative opportunities.
Do your research, stay diligent, and happy investing.
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