If you are looking for the right market to invest in commercial real estate, a number of factors (recent trends, current market data, and expert forecasts) all indicate that Kansas City could represent a viable opportunity.
In a previous post, we at Worcester Investments highlighted the data explaining why Kansas City is a thriving real estate market. In this article, we will offer you a Kansas City real estate market update, and discuss why the data continue to indicate that the nation’s most centrally located metropolitan area could represent a strong investment opportunity right now, particularly for multifamily investors.
Kansas City’s 2018 and 2019 economic outlook
In its “2018 Kansas City Market Outlook” report, CBRE (the world’s largest commercial real estate investment firm) cites research by Moody’s Analytics noting that the metro area is now in an economic expansion that will result in a strong local economy over at least the next year, boost median incomes, and yield positive long-term growth for the region. Moody’s also points out that at the end of 2017, Kansas City’s unemployment rate was at its lowest levels in 16 years.
Using these data points, and others cited throughout its report, CBRE describes the metro area’s strong multifamily-property market this way: “Kansas City’s consistent population growth, developing transportation system, and stable economic base have made it a prime target for multifamily investment by national capital.”
Now let’s examine what the data suggest about the future of Kansas City’s broader real estate market – including other types of commercial real estate, and residential properties throughout the metro area.
Kansas City real estate market update
Kansas City’s commercial real estate market update
In addition to the current data on multifamily real estate, CBRE’s 2018 report discusses the other major components of Kansas City’s commercial real estate market, such as industrial, office, and retail. Here’s what those data are showing:
- In 2017, Kansas City enjoyed its highest-ever net-absorption rate for industrial real estate – more than 7.7 million square feet.
- Asking-lease rates for the metro area’s office space increased nearly 8% over the previous year.
- Vacancy rates in Kansas City’s retail-property market fell 180 basis points year over year.
Kansas City’s residential real estate market update
What about the health of Kansas City’s residential real estate market? Even if you are interested in investing only in commercial property, understanding what is happening with the prices of a market’s single-family homes can serve as another helpful proxy to indicate the overall strength of the area’s economic prospects and investors’ confidence in that market.
Here is what the data tell us about Kansas City’s residential market:
- According to Zillow, the median value for Kansas City homes increased 14.4% from 2017 to 2018, and Zillow’s analysts forecast these properties will increase another 10% through 2019.
- The Kansas City Business Journal issued a report in late 2018 predicting that due to tight inventories and steady demand, home prices in the metro area would spike another 8% in 2019.
What this Kansas City real estate market update should suggest to an investor
The Kansas City economic and real estate data we’ve cited in this article tell the story of a thriving metropolitan area that experts predict will continue to enjoy strong real estate market growth in the coming years.
With that in mind, one easy way to invest in the strong Kansas City real estate market (specifically the multifamily market) is to invest in a private fund that specializes in purchasing and efficiently operating multifamily property in the Kansas City metropolitan area. Learn more about The Worcester Fund: the leading fund for Kansas City multifamily real estate, managed by a team of experts that has delivered an annualized 30% ROI to investors over the past decade.
This does not constitute an offer to purchase securities, and that any purchase may be made only through delivery and receipt of a confidential private placement memorandum from the issuer, pursuant to which any potential investor must complete and provide an investor questionnaire, subscription agreement and other things required by the issuer, and are subject to the issuer’s verification of accredited investor status and issuer’s acceptance of the subscription