The Kansas City apartment market vacancy rate was 5.5% in the second quarter of 2012, down 10 basis points from the prior quarter and down 140 over 12 months. Occupancy has been fairly steady here for the past year, although the rate just passed 9.0% during 2009, when the economic downturn was at its worst. The rate was down 10 basis points in July. Reis reports Class A vacancy at 4.9%, unchanged over the quarter and down 150 basis points over 12 months, and Class B/C vacancy at 5.9%, down 160 year-over-year and 20 over the quarter. Net absorption remains solid, if not impressive, in the second quarter, at 344 units. This brings the net absorption total to 914 units year-to-date, placing 2012 on track to surpass the 811-unit average annual totals recorded here from 2002 to 2011. New construction averaged 1,220 units in that time span. Demand did not quite keep pace, but was never far behind. Thus far in 2012, 152 market-rate units have completed, according to Reis’ latest data, and another 78 are forecast to finish by year-end. The projected absorption of 1,675 units sets the stage for further vacancy declines.
Asking and effective rents posted second quarter 2012 gains of 1.1% and 1.3%, for respective measures of $731 and $685 per month. These rates represent increases of 2.0% and 2.7% over 12 months. For a modest rental market like Kansas City, these are excellent gains. For July, Reis reports asking and effective rent increases of 0.2% and 0.3%, respectively. After 2011’s minimal gains, rents are improving, and are on tap to increase by 3.3% and 4.2%, asking and effective, in 2012, according to Reis.
“In the first half of 2012, Kansas City’s apartment market produced its hottest performance in years. Occupancy and rents were up and the frequency of concessions was down. The patterns were almost universal across classes and submarkets,” according to Cassidy Turley. “The average per-square-foot rent at mid-year was $0.84. This was the highest average the market has achieved,” this source reports.