Gabe Tovar shares ‘silver lining’ about Kansas City multifamily market with Kansas City Business Journal

KANSAS CITY, Kan. (Jan. 3, 2024) — Senior Vice President Gabe Tovar connected with the Kansas City Business Journal for its recent recurring real estate quarterly feature. The section covers new developments announced, completed and changed during the prior quarter. In the article titled, “KC’s apartment pipeline sees flow constrict,” Tovar shared what’s to come in the area’s multifamily pipeline.

According to data from Northmarq’s Kansas City office and apartment research platform Axiometrics, Kansas City’s multifamily pipeline showed 190 known projects (approximately 39,561 units) in early November 2023. In about 71.6% of these projects, builders were in preliminary planning stages. Developers attribute this bottleneck to a mix of economic issues: higher interest rates increasing borrowing costs, high construction costs and high insurance costs.

The area’s geographic distribution has factored into the market’s steady absorption of the record completions, Tovar said. Of the 11 submarkets that Northmarq’s local office monitors, only two — central Kansas City and Shawnee-Lenexa-Mission — are on pace to see more units finished in 2024 than in any of the three previous years.

Current projections foresee a 38.9% decline in completed apartments in 2025 as developers have started fewer units since 2017. In the meantime, Tovar said projects that builders can get off the ground will carry a competitive advantage amid this “bleak” delivery outlook.

“That’s the silver lining in all of this,” he said. “If you are a developer who’s well-capitalized or is able to form a capital stack that allows you to start a project, it’s very likely that you’re delivering into ’26 or ’27 among very few other projects in the submarket.”

Read the full article.

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