Advisors Kansas City: Job Growth Fuels Thriving Apartment Market September 28, 2017

by Whit Annibali, Vice President of Investments

Secondary Midwestern apartment markets like Kansas City often seem to get overlooked by investors, but the City of Fountains continues to prove that it’s more than worthy of their attention.

Fueled by a booming central business district and the robust job growth produced by companies like Cerner, greater Kansas City is experiencing strong demand and healthy rent increases. Add it all up, and this apartment market is set to deliver strong yields and immediate cash flow to multifamily owners and investors.

By the Numbers

Underpinning the strength of the metro Kansas City apartment market is the city’s strong job growth, which, according to report by Marcus & Millichap, exceeds the national rate. The growth is particularly notable in the professional and business services sector, where Kansas City added 11,400 jobs in the 12 months ending in June, its biggest annual growth in this segment in more than 25 years, the report says. Overall, the metro is projected to add 20,000 jobs during 2017.

With such a healthy job market in place, Kansas City ended the second quarter with an overall occupancy rate of 94.8 percent – marking the 14th straight quarter that the rate has been over 94 percent, a report by Colliers International says. Effective rents grew by 2.9 percent on a year-over-year basis in the second quarter.

Of course, with increased demand often comes increased development. This year, more than 4,600 new apartment homes will be completed, an increase from 2016’s total of 3,350, according to Marcus & Millichap’s forecast. However, the pace of job expansion means the metro area is well positioned to absorb the new construction. Effective rents should grow by 2.8 percent over 2017, Marcus & Millichap says.

A Bright Future

Like other Midwestern apartment markets, Kansas City isn’t necessarily a place that is firmly on investors’ radars. But with strong job growth and a healthy balance between supply and demand, this is a market that, with the right operator in place, has delivered consistently strong returns and is poised to do so well into the future.

At JVM Realty Corp., we’re committed to the healthy, booming Kansas City apartment market, as is evidenced by the nine communities we own and operate in the metro area.