Historic Absorption in 4Q2024 for Apartments

Historic Absorption in 4Q2024 for Apartments - KC Focus

🏢 Q4 2024 Multifamily Market Overview – RECORD PERFORMANCE

🔥 Record-Setting Absorption

🏙️ Every Market Grew

All 69 tracked markets recorded positive net absorption — first time on record for Q4.
Top Q4 markets:

📉 Vacancy Rate

💰 Investment Volume

$43.4B in Q4, up 59% YoY.
Annual 2024 total: $142.6B, a 19% increase over 2023.
Multifamily accounted for 36% of total CRE investment for both Q4 and full-year 2024.
Cap rates compressed to 5.4% in Q4 (down from 5.6% in Q3).

📊 Rent Trends

Effective rent growth averaged 0.5% YoY in Q4.
Midwest led regional rent growth at 2.8%, followed by Northeast (2.3%) and Pacific (0.4%).
Negative rent growth persisted in Mountain (-2.8%), South Central (-2.5%), and Southeast (-1.1%), though moderating.

🏗️ Construction Pipeline

608,400 units under construction as of Q4 (3.4% of inventory).
New York (58,800 units), Dallas (34,100), and Austin (27,800) lead in new supply.

KC Focus

📊 Market Fundamentals

Net Absorption: In Q3 2024, Kansas City recorded a net absorption of 1,635 units, marking a 70% increase compared to the same period in 2023. Year-to-date absorption reached 4,580 units, significantly outpacing the 2,974 units delivered during the same timeframe. MMG Real Estate Advisors
Occupancy: The average occupancy rate rose to 93.5% by the end of Q3 2024, with submarkets like Johnson County achieving rates as high as 95.1%. MMG Real Estate Advisors
Rent Growth: Average rents increased by 3.3% year-over-year in Q3 2024, placing Kansas City among the top-performing U.S. markets for rent growth. Submarkets such as Johnson County and Leavenworth County reported rent increases of 4.8% and 4.1%, respectively. MMG Real Estate Advisors

🏗️ Development Pipeline

Under Construction: As of Q3 2024, approximately 6,100 multifamily units were under construction in Kansas City, representing 3.5% of the total inventory. This level is slightly above the 10-year average but below the national average of 3.7%. MMG Real Estate Advisors
Future Deliveries: With fewer than 1,000 units slated for completion in Q4 2024, the market is on track for absorption to surpass deliveries for the first time since 2021. MMG Real Estate Advisors+1Medium+1

💼 Investment Landscape

Sales Volume: In 2023, Kansas City's multifamily sales volume totaled $2.2 billion, a 34.9% decrease compared to the prior five-year average. Newmark Zimmer
Asset Performance: Class B and C assets constituted the majority of transactions, with median prices per unit ranging from $75,000 to $96,000. NorthMarq

📈 Economic Indicators

Employment Growth: The Kansas City metro area added 13,400 net jobs in the 12 months ending November 2024, with sectors like education, health services, and leisure and hospitality contributing significantly. Yardi Matrix
Unemployment Rate: As of December 2024, the unemployment rate stood at 3.2%, below the national average of 4.1%. Yardi Matrix

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