MARKET SNAPSHOT: Vacancy Hits Lowest Level in Over a Decade in Kansas City
By Philip Shea, Associate Editor
Submarkets across the Kansas City metro area posted substantially improved vacancies in the second quarter of 2012, some as low as 3.5 percent. With employers ramping up job creation and existing supply somewhat limited, areas such as Overland Park and Olathe are becoming saturated with new renters.
Hendricks & Partners reports that local businesses added 3,600 non-farm positions in the last 12 months, translating to an annual gain of 0.4 percent. This is a stark contrast to the prior year, in which only 100 new positions were generated. As such, the area’s unemployment rate dropped 150 basis points to 6.8 percent. A significant portion of the new jobs came from the automotive and railroad sectors.
Furthermore, after a considerable lag in new deliveries, developers restarted construction activity; the 168 units completed in the second quarter were the first deliveries since mid-2011. Hendricks & Partners notes that 369 units are currently under development, with 4,088 in the pipeline for the near future.
Permit issuance also increased in the second quarter of 2012, bringing the year-to-date total to 533 units, already exceeding the annual total for 2010 and edging close to 2011’s overall tally of 607 units.
Metrowide vacancy decreased to 5.6 percent—a major development since this is the lowest vacancy rate posted since Q4 2001. The Overland Park South and Olathe submarkets posted the lowest vacancies—both at 3.5 percent—while Southwest Kansas City was the major outlier, with a vacancy rate of 15 percent.
Overland Park South also had the highest rents of any submarket in the metro, coming in at $990 per month. This was trailed closely by the area near the University of Kansas, which posted an average rent of $820 per month and vacancy rate of 5.5 percent.
Overall, average asking rent across the metro ticked up 1.9 percent over the last year to $731 per month. This rivals rates seen in more prominent regional markets like St. Louis and Cincinnati, providing strong indications that Kansas City is meandering toward a more apartment-driven overall housing sector.
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