Economy:
After the first nine months of 2026, it has become impossible to ignore the fact that inflation remains a primary concern. The Federal Reserve Bank of Kansas City publishes a monthly survey on manufacturing activity in the Tenth Federal Reserve District, and it includes a “Selected Manufacturing Comments” section. While there are examples of growth and optimism regarding the near- and mid-term future, every report also includes references to increased costs, inability to support wage growth, and genuine fear over the uncertainty regarding energy costs and economic policy. The regional economy has remained resilient and there are positives to be found, but fundamental economic threats remain.
Absorption And Development:
Against those challenges, Kansas City’s multifamily market has continued its strong run. Key metrics have performed well, with absorption of 4,200 units keeping the vacancy rate below 4.0%. Development has been diversified and well spread around the market, although one odd fact is South Overland Park—the third-largest submarket by unit count—is the only part of Kansas City that has not seen any new deliveries this year. Future development has started to raise some concern. At the end of the quarter there were 6,600 units under construction, which is a healthy number to support the market in the near term. Where there is worry is in the statistics on building permits. Through the end of August (the most recent available data), permits for 96 multifamily units had been issued in Kansas City, MO, and all of those were in Platte County. A resumption of development in and around downtown would be encouraging.
Rate Growth:
Effective rates for the market have risen 2.5% over the last 12 months and every submarket has reported growth of at least 1.0%. Kansas City has now outperformed the national effective rate growth over the one-year, three-year, and five-year timeframes. Forecasts call for that growth rate to moderate, but Kansas City should maintain a healthy, sustainable pace.
