Metro Multi-Family Construction

[Riverite]

I’m sure KC proper was the majority of the addition, do you know what standard number of people living in multi family is?

I've typically seen around 1.5 to 1.7 people per unit for multifamily in KC.

Hopefully they can keep that up, if they keep occupancy high could be an extra 4000 just in the core which is great.

[earthling]

KC metro has grown by 1% per year at best last 10 years so 3%/yr is a huge increase of units especially considering 1.5+ ppu. If new MF construction continues at that pace for years, it may be at the expense of fewer single family homes unless KC growth booms.

[normalthings]

it may be at the expense of fewer single family homes unless KC growth booms.

wonderful!

[earthling]

Exactly

[Riverite]

Either way good news

[KCtoBrooklyn]

I have noticed that KC seems to build a higher percentage of multifamily than most Midwest peer cities, based on building permit data from the Census Bureau - at least for the last few years, since I have been tracking it. Here are the latest YTD numbers available, through June.

KC - 5,736 total permits . 36% Multifamily
Cinci - 4,628 total permits . 34% Multifamily
Columbus -5,133 total permits - 32% Multifamily
Cleveland - 1,653 total permits . 9% Multifamily
Indianapolis - 6,233 total permits. 15% Multifamily
St Louis - 3,905 total permits. 22% Multifamily

That percentage for KC is actually down from recent years. It was 43% Multifamily in 2020 and 48% in 2019.

[alejandro46]

I have noticed that KC seems to build a higher percentage of multifamily than most Midwest peer cities, based on building permit data from the Census Bureau - at least for the last few years, since I have been tracking it. Here are the latest YTD numbers available, through June.

KC - 5,736 total permits . 36% Multifamily
Cinci - 4,628 total permits . 34% Multifamily
Columbus -5,133 total permits - 32% Multifamily
Cleveland - 1,653 total permits . 9% Multifamily
Indianapolis - 6,233 total permits. 15% Multifamily
St Louis - 3,905 total permits. 22% Multifamily

That percentage for KC is actually down from recent years. It was 43% Multifamily in 2020 and 48% in 2019.

I would just like to note that KC has an excellent streetcar downtown which may correlate/causate to a lot of jump in those apartments. Cinci also has a somewhat less successful streetcar but I could say that ours may be one factor helping drive downtown development boom. Another one is a lot of downtown parking lots to infill.

[AlkaliAxel]

it may be at the expense of fewer single family homes unless KC growth booms.

wonderful!

What's the good news? I'm not a development guy

[FangKC]

it may be at the expense of fewer single family homes unless KC growth booms.

wonderful!

What's the good news? I'm not a development guy

Kansas City has a density problem. It's not dense enough per sq. mile to pay for things. Multifamily creates more revenue for the City at less cost.

[AlkaliAxel]

wonderful!

What's the good news? I'm not a development guy

Kansas City has a density problem. It's not dense enough per sq. mile to pay for things. Multifamily creates more revenue for the City at less cost.

So we're getting denser (or projected to get alot denser) is what you're saying?

[FangKC]

As long as we don't continue to overbuild single family houses as a ratio of overall housing units. We need to build a lot of multifamily at a higher rate to make up for our low density rates. We can still build single family houses, but we should be mindful of creating them on smaller lots and closer together to contain the sprawl of the Metro.

We need to do this for demographic reasons as well. We have fewer people living in houses now than in the past because families are smaller, and because we have an aging population. So it's harder to create density than it was in the past.

[earthling]

wonderful!

What's the good news? I'm not a development guy

Kansas City has a density problem. It's not dense enough per sq. mile to pay for things. Multifamily creates more revenue for the City at less cost.

Yes and another way to put it is that a 300 unit apt/condo building in urban area (compared to a 300 single family homes sprawled suburban neighborhood) uses a tiny comparison of roads, sewers, water plumbing, streetlights, sidewalks, power distribution, etc. Far lower maintenance for the city over 50+ years as well.

[earthling]

Here is Yardi Matrix multifamily completions forecast through end of 2021. KC expected to rank in top 25 deliveries, 2nd in Midwest. Oddly Chicago not on list.



https://www.yardimatrix.com/media/downl ... gnup=false

[Riverite]

Nor is New York

[earthling]

^NYC on list 5 notches above KC. CBRE also showed Chicago deliveries really slowed down Q1 this year (in this post). They typically have far more permits than KC but apparently many Chicago projects have been killed or delayed in some form.

[Riverite]

Oh cool didn't see that thanks. Really solid numbers hopefully we push them up even higher in the next few quarters.

[earthling]

These are completions so we have an idea of projects actively under construction relative to other markets. Not sure but don't expect KC to climb the completions list any further. Columbus and Indy are hot too as well as most southern markets. Is also a little concerning if KC can absorb this many units. Absorption rate has recently not been at the rate of hot markets yet supply growth is in that territory.

Permits for future units are still high but will be interesting to see if most actually happen. Would expect the hottest areas of metro to continue (along steetcar line and extensions, S JoCo) but net metro absorption could become an issue unless metro growth takes off more than KC's typical avg. KC's pro biz services job growth is taking off above US avg so might keep things humming but many moving here are families that would want SF homes.

[normalthings]

These are completions so we have an idea of projects actively under construction relative to other markets. Not sure but don't expect KC to climb the completions list any further. Columbus and Indy are hot too as well as most southern markets. Is also a little concerning if KC can absorb this many units. Absorption rate has recently not been at the rate of hot markets yet supply growth is in that territory.

Permits for future units are still high but will be interesting to see if most actually happen. Would expect the hottest areas of metro to continue (along steetcar line and extensions, S JoCo) but net metro absorption could become an issue unless metro growth takes off more than KC's typical avg. KC's pro biz services job growth is taking off above US avg so might keep things humming but many moving here are families that would want SF homes.

Know ALOT of families that have moved from for-sale suburban SFH to new suburban apartments now that their kids are in middle & high school. The resort style amenities are great for families. If dig deeper, the walkability from home to amenities and friends in these complexes is not unlike what urban living would provide. The missing piece is the quality of suburban vs urban schools (or the perception of them).

[earthling]

^May be the case but ultimately absorption rate recently not keeping up with significant supply increase. Absorption is pretty healthy but the supply growth is unusually high.

Edit: Berkadia projects a slowdown of deliveries in KC over next several years (page 3). It could be wrong though as developers are taking advantage of low interest rates and so far still hot on KC. Actual absorption rates may drive which direction occurs or developers/lenders may be willing to accept longer term ROIs and go for it. Would think streetcar corridor to be lowest risk for lenders in the long term.

[AlkaliAxel]

It’s possible that KC’s growth just goes higher than before, or that we’ve seen it several decades.