Kansas City's multifamily sector is on a roll — so says Marcus & Millichap's second-quarter outlook on Missouri's largest city. The report credits the metro's central business district's rapid growth, as well as improving dynamics in the suburban reaches, for the city's strong outlook. The brokerage firm expects rents to climb by 8.4% for the year.
Rents in the central business district alone grew by 8.9% in 2021, a strong rebound compared to the 1.8% drop registered in 2020 amidst the pandemic's early days. Tighter vacancies are one indicator that rent growth is not about to slow: The central area reported a 340-basis-point fall — that's 3.4% — in the first quarter, hitting a five-year low.
In Kansas City's suburban reaches, the outlook is even brighter. The Marcus & Millichap report highlights rent growth of 11.3% last year, owing to changes in many renters' lifestyles. Those renters looking to work from home in larger apartments, away from congested, busier areas naturally shifted toward suburbia.
That said, the suburban submarkets with the fastest rent growth were those with the easiest access to downtown K.C.: South Kansas–Grandview and Independence. While those a bit further afield may not have seen the highest increases, further rent expansion is likely on the way: Take Olathe, Kan., for example, which registered a vacancy drop of 1.6% last year, ending up at 2.2%, the lowest vacancy in the metro.
Due to heightened demand, development activity has naturally taken off in Kansas City's suburbs — even more so than in the city proper. But it's unlikely to eclipse last year's volume, with expected completions for the market totaling around 3,500 units for 2022.