RMWest is a 137-unit project located in the River Market, and the first new construction to be completed in downtown Kansas City since Market Station in 2009.
CBRE’s local multifamily team is celebrating a record sales year in 2015 with more than $480 million worth of transactions completed. The team, consisting of Jeff Stingley, Jeff Lamott and Bayley Pinney, capped off 2015 with 18 multifamily sales, representing 4,620 total units. According to CBRE, nearly half of those sales brought new ownership groups into the Kansas City market, illustrating the metro’s appeal to national capital sources.
“Our team’s broad platform can be seen in the variety of transaction types we completed in 2015,” Stingley said. “These included pre-sale, pre-stabilized, core, core plus and value-added offerings.”
Manor Homes of Prairie Trace, a 280-unit development at US Hwy 69 and 135th Street in Overland Park, sold in July of 2015.
The total sales volume for multifamily properties in Kansas City in 2015 marked $950 million, far exceeding the last record volume milestone set in 2012 at $650 million. Class A properties represented roughly half of that volume, while Class B and C represented a quarter of that.
“With new construction raising the rent ceiling in the metro, investors are able to substantiate the rent growth needed to complete significant value-added investment in well-located older vintage assets,” Stingley said. “As a result, in-place cap rates for Class B and C properties in Class A and B locations are comparable to the in-place cap rates being obtained for newer core assets.”
The Villas at Carrington Square, a 278-unit project completed in 2008 at 135th Street and Switzer, sold in March 2015.
Stingley has high hopes for 2016, as well. He says developers of recently constructed assets are hitting stabilized occupancies and may opt to test the market. He also says that a handful of newly constructed assets were sold prior to construction or during lease up in the past year or two, with the closing scheduled to occur during stabilization.
Despite the more than 8,000 units delivered to the market in 2014 and 2015, that local apartment fundamentals remained extremely strong through the third quarter of 2015. The absorption of 3,300 apartment units marked the Kansas City metro’s highest demand since 2000, while average vacancy of 4.2 percent and average rent of $903 per unit were the lowest and highest, respectively, to ever be obtained in Kansas City.
New construction is expected to begin slow in 2016 and 2017, which Stingley says will ease any supply-and-demand pressure of recent years, and allow for continued rent growth.