OAK IQ INVESTMENTS • MARKET PERSPECTIVE • Q1 2026 KANSAS CITY MULTIFAMILY MARKET RECAP

Why We’re Still All In on Kansas City Multifamily

The markets nobody talks about are often the ones quietly outperforming. Here’s why Kansas City remains our conviction market in 2026 and beyond... and the numbers backing it up.

Conventional wisdom in multifamily investing goes something like this: follow the growth, follow the migration, follow the headlines.

For the last few years, that pushed capital toward markets like Florida, Austin, Phoenix, and Nashville. Everybody saw the population surge data and made the same call.

But in this Q1 2026 Kansas City multifamily market recap, the scoreboard on that call looks rough. Austin posted negative 5.4 percent rent growth.

Phoenix was down 3 percent. Denver was down 3.6 percent. Tampa vacancy crossed 10 percent. Jacksonville hit 12 percent.

Cape Coral lost 9 percent of rents in a single year.

Understanding Where Every Market Sits Right Now

Not all markets are experiencing the same thing. There are three distinct buckets, and whichbucket a market is in determines which way the wind is blowing, and whether you'reoperating with the wind or against it.

Bucket 1

Supply Constrained

Kansas City. Cincinnati. Cleveland. Milwaukee. Chicago. Upper Midwest and parts of the rustbelt. These markets didn't get overbuilt in the last cycle, but maintain steady demand. Almost nothing under construction. Best rent growth in the country, quietly.

Bucket 2

Overbuilt,
But Recovering

Phoenix. Nashville. Denver. Columbus. Got hammered by supply. The current construction pipeline is collapsing, and the demand is still real. These markets should rebalance, but it could still take a couple of years. Patience is key.

Bucket 3

Overbuilt + Structural Headwinds

Kansas City. Cincinnati. Cleveland. Milwaukee. Chicago. Upper Midwest and parts of the rustbelt. These markets didn't get overbuilt in the last cycle, but maintain steady demand. Almost nothing under construction. Best rent growth in the country, quietly.
      

Kansas City at 3.7 percent rent growth. Chicago matching it. Nobody is writing headlinesabout these places. That's the point. The opportunity is almost always in the market nobody'stalking about. Not because it's second-rate, but because it hasn't been over-loved yet.

And there's a structural reason these markets keep outperforming: the cost structure issimply better. Property insurance in Florida averages nearly $6,000 a year per property,more than double the national average, roughly three times what you pay in Ohio or theMidwest. Texas carries some of the highest property tax burdens in the country. These aren'tcyclical headwinds. They're permanent costs that suppress profit margin, and they are builtinto the operating model.

In Kansas City, those inputs are stable. Operating costs are more predictable. And when rentsgrow, more of that growth flows through to NOI instead of being absorbed by insurance ortaxes.

"Growth is not safety. Growth is not yield. And growth, all by itself, does not protect your capital."

Why Higher Rates Are Actually a Tailwind for KC

Most people hear "higher-for-longer" and assume it's bad news across the board. For supply-constrained markets, it's the opposite.

Higher financing costs make new development harder to pencil and capitalize in mostmarkets. That means fewer new development starts. Fewer starts mean less new supplycoming online in 2027, 2028, even 2029.

Markets that were already tight get tighter. Subsequently rents continue to move up. Thecash flow thesis only gets stronger with market capital constraints.

For the Bucket 3 markets, the dynamic is uglier. Sponsors on floating rate debt can'trefinance. Insurance keeps climbing. Property tax assessments induce panic attacks. Themargin doesn't ease, and the growth headlines just aren't enough to cover the structural costinflation.

That's the difference between a cyclical correction and a structural problem. And it's whywhere you invest matters as much as what you invest in.

The Reserve at Copper Creek: Proof of Concept

We broke ground on The Reserve at Copper Creek in Lenexa, Kansas at the end of 2025.Vertical construction is underway right now. Hold your applause...but, it's kind of a big deal.

And the numbers at the project level tell the full Kansas City story.

Hard costs for luxury multifamily in Kansas City are running $175–$250 per square foot. OurGMP contract on The Reserve at Copper Creek came in at $176. Across most coastal gatewaymarkets, the same product costs $300, $350, $380 or more per square foot. In many cases,those markets are delivering lower rents per square foot than Kansas City right now, due toelevated vacancy and concession pressure.

The math creates a margin of safety that simply doesn't exist in overheated markets. You'rebuilding at a lower cost basis. You're delivering into a market with less competitive supply.And you're capturing rent premiums in a submarket, Johnson County, that attracts exactlythe high-income renter who wants a luxury product and will pay for it.

The spread between what it costs to build and what the market will pay in rent is the core ofthe investment thesis. You can't just "find a cheaper place to build" or "find a cheaper way tobuild." You have to find a market where the rent-to-cost ratio justifies the capital stack andstill leaves room for investor returns.

In most markets, the build cost bar is taller than the rent bar. The math doesn't work, at leastnot without significant appreciation assumptions or compressed yield expectations. InKansas City, it flips. The rent bar leads. That's a fundamentally different risk profile, and it'sthe reason we broke ground when we did.

Three Questions to Ask Before You Allocate Capital

Before placing capital in any multifamily opportunity, there are three questions that separatethe right market from the wrong one:

Those three questions tell you which bucket you're in. And over the next three to five years,the bucket matters more than the headline growth story you heard at a conference.

The Bottom Line

Kansas City is not a story about chasing the next hot market. It's the opposite. It's a storyabout recognizing that the quiet, overlooked, cost-stable market with real demand and nosupply pressure is the right answer, even when it doesn't make for a good cocktail partyconversation.

The Reserve at Copper Creek is proof the thesis works at the project level. Hard costs lockedat $176 per square foot. Luxury finishes. Strong submarket demand. Rent targets above $2per square foot. Ground broken. Vertical construction underway.

We said Kansas City in 2025. We're saying it again in 2026. The fundamentals haven'tchanged. They've only gotten stronger as the higher-rate environment chokes off new supplyand leaves the market tighter than it was when we started.

If you want to understand how we underwrote this deal, what the full capital structure lookslike, or how the submarket thesis holds up under stress, reach out. We're happy to walkthrough it.

Oak IQ Investments• Caleb Edwards, Managing Partner

This communication is for informational purposes only and does not constitute an offer to sellor solicitation of an offer to buy any security. Past performance is not indicative of futureresults. All projections are forward-looking and subject to change.